Monday, December 31, 2012

2013- The Year of Living Fiscally?

By Dale Bowling

Unless something happens today we're headed over the Fiscal Cliff, so we can only hope that 2013 will be the year that Republicans and Democrats can reach some compromises on America's fiscal future.

The Fiscal Cliff is merely a ploy that politicians created to force both sides to table to negotiate about deficit reduction. It doesn't mean that the US is about to default on debts or the deficit will soar as a result. Quite the opposite actually. The automatic spending cuts and tax increases associated with the Fiscal Cliff will cause the deficit to shrink drastically.

This sounds great, doesn't it? Why would we want to avert the first serious attempt at deficit reduction in years?

Because a fragile economic recovery is not the time for a sharp increase in taxes on people already struggling and is certainly not the time to gut a badly-needed social safety net.

Congress can always renew tax cuts for the Middle Class after the first of the year and make that renewal retroactive to Jan.1, 2013. So even going over the Cliff, it's possible to avoid the worst of it. They can prevent the worst effects of cutting the social safety net too after the first of the year. They just have to want to do it badly enough.

Republicans for their part have tried very hard to make the narrative of the Fiscal Cliff one of runaway government spending - that we reached this sorry state because of spending on programs like Social Security and Medicare.

Of course, this is utter malarkey. Social Security doesn't add to the deficit and cuts to Social Security don't help the deficit. Period. It's kept in a separate trust fund and has been for years. Republicans know this, but like to pretend to forget it when it's politically expedient.

Medicare is a deficit issue since the cost of medical care continues to grow faster than the rest of the economy, but increased Medicare spending was not a primary cause of the deficit.

As you may remember, when President Bill Clinton left office the government had a projected budget surplus. It wasn't increased Medicare spending that did away with that.

The Bush Administration did away with that surplus. As far as the deficit goes, Republicans finally found something they built without the rest of us.

The Wars in Iraq and Afghanistan were the first wars in American history not to be accompanied by increased taxes to pay for them. In fact, enormous tax cuts were given at the same time. And you have to remember that Republicans held both Congress and the White House for the first six years of Bush's presidency and in that time President Bush never vetoed a spending bill. Want a bridge to nowhere? Done. So much for Republican fiscal discipline.

In the Golden Age of Republican-Democratic cooperation between WWII and the Reagan Revolution, deficit hawks on both sides of the aisle were concerned about having the money to pay for the things that government did. That meant there were a lot of Republicans that supported tax increases from time to time. And there were Democrats who supported spending cuts when they made sense.

But Republican politicians see the Fiscal Cliff, not as a discussion about fiscal policy or how to deal with deficits, but as an opportunity to strike a blow to Big Government. And that is why the Fiscal Cliff talks have gone no where and 2013 will not be any better if we can't return to productive cooperation on the real issues at hand.

Happy 2013 Everyone!

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