Rocketing Towards the True Fiscal Cliff

You mad, bro?

Now that the “fiscal cliff” deal is law, we move on to the next acts in this kabuki theater we call Congress. The fiscal cliff deal locked in most of the Bush-era tax rates permanently, raised taxes on the highest earners, allowed the payroll tax to increase on all earners (a shock to many Democrats, who thought the re-coronation of the Obamessiah exempted them from more taxes). It once again kicked the can of spending excess, specifically entitlement spending, down the road. It supposedly reduces the huge annual deficits, yet will bring in only $620 billion over ten years (enough revenue in a decade to pay HALF of THIS year’s deficit). Since entitlement spending drives our growth in debt, the fiscal cliff deal did not avert a fiscal crisis; it simply delayed it and insured that it will be much worse when it hits.

The irony is that Obama’s fiscal cliff deal theoretically demands higher taxes for “fairness,” to get the rich to carry more of the burden. However, a recent Huffington Post article quotes Professor Emmanuel Saez of UC-Berkeley, who reveals that income inequality is actually higher under Obama than it was under Bush. Or, as the writer explains, “That means the rising tide has lifted fewer boats during the Obama years — and the ones it’s lifted have been mostly yachts.” In other words, his uber-rich friends hit the jackpot even as the poor and middle class he supposedly protects suffer more.

Despite hand-wringing and breathless proclamations of impending doom, Congress and Obama showed they were completely unserious about fixing the problem, voting on the “fiscal cliff” bill without having a clue what was in it. According to Congressman Ron Paul, the bill was voted on in the House just 22-hours after the text was made available, and the Senate voted on the 154-page bill just three minutes after it was presented.

The “fiscal cliff” bill, hilariously titled the “American Taxpayer Relief Act of 2012” was no such thing. Among the goodies stuffed into the bill were tax benefits or write-offs for NASCAR ($100 million), Hollywood ($430 million), Puerto Rican and Virgin Island rum producers ($222 million), electric motorcycles ($7 million), producers of algae-based fuels ($59 million), biodiesel producers ($2.2 billion), tax breaks for Native American businesses ($660 million), manufacturers of energy efficient homes/appliances ($800 million), and money for “green energy” electricity production facilities ($12.2 billion). Maybe most galling, in light of Obama’s class warfare tactics against Mitt Romney and his success in building up a private equity firm, is the bill’s inclusion of huge tax breaks for private equity and hedge fund managers…like Warren Buffett. In addition, Goldman Sachs (recipient of tens of billions of dollars in taxpayer bailout funds) will receive $1.6 billion in tax-free financing for its palatial new headquarters in Manhattan.

Politicians of both parties play us for absolute fools. They create a problem (expensive health care, massive debt, financial market collapse, sequestration, etc.), manufacture a crisis point, and then pass massive, complex laws to deal with the problems that they created, which just happen to require we citizens give up greater portions of our earnings and freedoms. Then, having manufactured the crisis, they do nothing to truly fix it, and still get re-elected more than 90% of the time, whipping their loyal supporters into frenzy against “the enemy”, portraying themselves as the last line of defense against impending doom, even as their selfish, power-hungry policies guarantee that true disaster will strike.

With the “fiscal cliff” crisis in the rearview mirror, the crises of the sequestration, the Continuing Resolutions (stop-gap measures which keep government funded in short spurts in light of the fact that the Democrat-controlled Senate has not passed a budget in nearly four years), the Hurricane Sandy relief bill, and the debt ceiling fight are looming.

Like Brer Rabbit, Obama agreed to a sequestration deal in which, upon failure to reach a compromise, taxes rise and spending gets cut, but with the bulk of spending coming from defense, which he wants to cut anyway. In essence, Republicans put a gun to their head and threatened to pull the trigger if Obama didn’t take whatever he wanted. Likewise, Republicans will likely pass the CR’s with token opposition, fearful of taking the blame if government shuts down.

The Hurricane Sandy relief bill will also pass largely unmolested due to weak Republican leadership terrified of bad media. Fearful of standing on principle and showing true fiscal responsibility, it will pass despite the fact that, like the fiscal cliff bill, it is largely a special interest slush fund, with billions for fisheries in Alaska, free money for the HHS Secretary, and a new roof for the Smithsonian, etc. Even a 5th-grader could realize something was amiss if told the $60 billion “relief” bill was three times more than the $20 billion in estimated damages.

The big fight is likely to be with the debt ceiling, but Democrats have already stated they will not entertain any cuts to entitlement spending, even though Obama called for a “balanced approach” to debt reduction, and now has all the tax increases he wanted. Obama recently went so far as to tell Speaker Boehner that America does not have a spending problem.

In response, I’d simply quote then-senator Obama from March 2006, when he opposed a debt ceiling increase, saying “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failureIt is a sign that we now depend on…foreign countries to finance our Government’s reckless fiscal policies…Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt and a failure of leadership.” Yet, under Obama, the debt ceiling has been raised from $11.315 trillion to $16.394 trillion (a $5.079 TRILLION increase in just four years), and now he demands it be raised yet again, with no opposition from Republicans.

Yet Obama and Democrats still refuse to address entitlements, which takes us to a July 11, 2011 quote from President Obama, who said “…The vast majority of Democrats on Capitol Hill would prefer not to have to do anything on entitlements, would prefer, frankly, not to have to do anything on some of these debt and deficit problems…if you look at the numbers, then Medicare, in particular, will run out of money, and we will not be able to sustain that program, no matter how much taxes go up. I mean, it’s not an option for us to just sit by and do nothing.” But nothing is exactly what they are doing.

How bad has the economic recklessness by the political class become? So bad that the most sound economic advice we hear these days is coming from the president…Russian President Vladimir Putin. Having lived under the very type of government-controlled economy Democrats are shoving us towards, Putin recently declared, “We are reducing taxes on production. We are optimizing state expenses. We must avoid excessive interference into the economic life of the country and the absolute faith into the all-mightiness of the state. Unreasonable expansion of the budget deficit and accumulation of the national debt are as destructive as an adventurous stock market game. During the time of the Soviet Union the role of the state in economy was made absolute, which eventually lead to the total non-competitiveness of the economy. That lesson cost us very dearly. I am sure no one would want history to repeat itself. We must seek support in the moral values that have ensured the progress of our civilization. Honesty and hard work, responsibility and faith in our strength are bound to bring us success.”

Tellingly, Xavier Lerma, writer for the Soviet Communist Party newspaper Pravda, criticizes Putin because he “sounded like Ronald Reagan.” Lerma then laments, “Who could ever [have] imagined anyone so willing to destroy [capitalism] like Obama, much less seeing millions vote for someone like Obama. They read history in America don’t they? Alas, the schools in the U.S. were conquered by the Communists long ago and history was revised thus paving the way for their Communist president.”

And yet here we are, governed by unserious incompetents, rocketing over the cliff of economic collapse. Is your parachute packed?

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