We’re starting to hear a lot these days about the fiscal cliff. Hi, this is Charles Goyette.
The fiscal cliff refers to the upcoming conjunction of several economic events. And while they all matter, the hard truth is that one piece of economic new extracted from a report the other day, shows that we have already gone over the cliff.
At year-end, the Bush tax cuts will expire, the payroll tax holiday, and $110 billion in automatic defense and domestic spending cuts, part of the 2011 debt ceiling increase package, are scheduled to kick in. At about the same time, the Federal debt ceiling of $16.3 trillion will be breached.
Of course you can’t expect to see these issues met in advance. After all, it’s an election year, the party conventions get underway in a couple of weeks, and the presidential campaign crowds out everything else from then until the election November 6. And then the parties start juggling for political advantage for the next election cycle.
So the delays and temporary measures that we have come to expect from legislators will be the rule of the day. Extend and pretend. Extend the tax cut for a short period. Kick the can down the road on spending cuts. Roll out all the old accounting gimmicks we’ve seen before to put off reality as long as possible when the debt ceiling is breached. Patch together temporary extensions in the debt ceiling as the debates and standstills continue.
It’s Washington’s dysfunctional way. And of course, it’s entirely predictable that it should be this way when the government doesn’t stay within the confines of the Constitution. There are all kinds of people with all kinds of interests that want all kinds of things from the government. Those wants consist of all kinds of conflicting and mutually exclusive policies. The game of government becomes the game of getting your man to get you the goodies you want, and preventing the other guy from making you pay for his goodies.
It was bound to become a war of all against all.
It is true that the so-called “Fiscal Cliff †is the convergence of a lot of things at the same time. But don’t for a minute think that Washington can do anything to keep us from going over the economic cliff and plunging in the abyss below.
Because we have already gone over the cliff. And I’ll leave you with one metric to make the point clear.
A couple of days ago the government released the gross domestic product numbers for the second quarter of 2012. The part of the story that didn’t make the evening news is this: The Federal government added $2.33 in debt for every $1 increase in GDP.
Try that at home and see how long it takes you to go bankrupt.
And to go over the cliff.
I’m Charles Goyette for your Freedom and Prosperity.
