Fiscal Cliff Notes

After careful consideration of all the possible “fiscal cliff” outcomes we have concluded there is no way that President Obama can lose or the congressional Republicans can win.If your only rooting interest is for the country at large, well, that also doesn’t look good.
For those who have been blissfully unaware of the goings-on in Washington, the fiscal cliff is what the country will fall off of if the Bush-era tax rates are allowed to expire at the beginning of next year. This would mean a tax increase for nearly everyone who actually pays federal income taxes, which almost every conservative economist believes would result in a severe recession, and it would also cut $1.2 trillion from the federal budget over the next 10 years, which every liberal economist believes would not only cause a recession but also push the earth out of its orbit and send it hurtling into the sun.
With such near-unanimity of opinion that the fiscal cliff is not something any sane nation would want to go over one might expect a quick agreement on the matter, but alas, this nation is insane. The original sticking point was on taxes, with Republicans preferring to retain the current rates for everyone and Democrats absolutely hell-bent on a tax hike for the hated top 2 percent of earners, but now comes word that the president’s list of demands has grown to include $255 billion in “stimulus” spending and no more congressional authority over the government’s credit limit. Although the demands might seem outrageous, if you consider the president’s personality and political position it is more surprising he didn’t insist on an immediate repeal of the twenty-second amendment and a new constitutional arrangement along the lines of what his pal Mohamed Morsi has decreed for himself in Egypt.
Why not? If the Republicans capitulate, always a distinct possibility, Obama will enjoy unprecedented spending power to buy all the votes needed for that third term. If the Republicans resist even at the price of going over the fiscal cliff, they’ll be widely blamed for the dire economic consequences.
That the Republicans would lose in the court of public opinion is a foregone conclusion. Not because of Obama’s vaunted rhetorical powers, which have proved wildly overrated, but because the still-powerful Washington news media and their colleagues on the comedy shows will constantly reiterate that Republican intransigence forced the country into an avoidable recession. The newly unemployed will get louder and more sympathetic than at any time in the past four years, with every sob story conveying the familiar message that Republicans care only for the rich. What little there is of conservative media will argue on the Republicans’ behalf that it would have been irreparably disastrous to hand Obama an unlimited line of credit, but they made the same sensible argument during the election and the result is what has led the country to its current sorry condition.
Nor should the Republicans doubt that Obama is entirely willing to take the country over the fiscal cliff, a destination that looks quite acceptable from his unique perspective. Taking the fiscal cliff dive would allow Obama to raise taxes on everybody, a Democrat’s dream, and do so without political consequences, something beyond the Democrats’ wildest dream. The automatic budget cuts will come mainly from national defense, which Obama has always wanted to gut anyway, and the rest of the spending can quickly restored by the Democratic House that is installed 2014. Spending cuts can always be rectified, but the tax money will never be returned.
The estimable Charles Krauthammer has argued that Obama won’t want his second term marred by a deep recession, but we fear that on this rare occasion he gives the president too much credit. A lousy economy that persisted through his first term didn’t prove sufficiently harmful to Obama’s political standing to prevent his re-election, and he has no reason to believe that his uncanny luck will change now. What’s more, a second recession will give him the same opportunities that the first afforded to push pork-laden stimulus spending and extraordinary money-printing to pay off his loyal constituencies.
There are the millions of Americans who will suffer greatly from the loss of jobs and wealth if the fiscal cliff recession comes to pass, but we doubt their plight will trouble Obama much during his upcoming multi-million dollar vacation. If their suffering helps the president achieve his dream of expanding the welfare state even further he can always console himself that it was well worth the price. We realize this is a very harsh assessment of an American president, but four years of watching his actions, rather than just listening to his lofty speeches, have led us to this conclusion.
No matter the outcome of the current negotiations, the country will continue its headlong rush toward financial insolvency. If the government can’t stop short of this relatively shallow fiscal cliff, don’t expect it will avoid that grand canyon.

— Bud Norman

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