The Fiscal Cliff

In my last post entitled "We Interrupt this Debate for Some Timely Comments.” I commended to the reader an article entitled “President Obama: The Democrats' Ronald Reagan” but introduced my subject with: “As the impending fiscal cliff moves ever closer, some timely observations appear to be in order and they will follow soon.” and that will be the main subject of this commentary.

In the meantime, however, the tragedy in Newtown, Connecticut cannot be ignored or as Ernst Hauser of the Bronx and Manhattan, NY said:

Yesterday’s events have interrupted the interruption - since the Supreme Court has chosen to break the SECOND AMENDMENT into 2 pieces, separating the "well regulated militia" and the "right to bear arms" the time has come to REPEAL it and replace it with a clearer worded one, that neither the CJ nor Scalia could twist. In the meantime Congress could repass the Brady bill, without an expiration date or time.

So much has been said on this subject that I have not much to add, except to observe that the tragedy in Newport, Connecticut is dwarfed by the carnage that goes on every day throughout the US without much publicity. The Brady Center to Prevent Gun Violence reports that more than 30,000 people are killed by guns in this nation each year. Yet this daily tragedy, neither commands the attention of the media, nor the attention of the nation.

Is this because multiple deaths occurring at the same time and place make for better headlines than smaller numbers occurring simultaneously, but in different places?

Or is it because such a large percentage of the victims of gun violence are black?

The first possibility is bad. The second is outrageous. 

The Office of Juvenile Justice and Delinquency Prevention of the Department of Justice reports: “Young African-American males have the most elevated homicide victimization rate of any race or gender group. Homicides involving firearms have been the leading cause of death for African-American males ages 15 to 19 since 1969.”

Whatever the reason, the lack of attention to this ongoing carnage by the media is a disgrace.

Now to the Fiscal Cliff!

I find myself disturbed here not only by the distortions on the Right, but by the blasé attitude toward the Cliff on the part of the Left. Thus I have started to get e-mails from an organization styling itself as AmericasDemocrats.org, which refers to that looming calamity as “the so-called fiscal cliff -- and why going over it might not be so bad.” Some suggest that it would take a long time for its effects to be felt. And the rest of the Left blogosphere, while not going quite this far, proclaims the slogan: “No Deal is better than a Bad deal.” While I have no difficulty agreeing with this in principle, I find that these self-styled “Liberals” define a “Bad Deal” as anything that makes the slightest change in the Entitlement programs.

Yes, it might be necessary for the President to allow the country to go over the Cliff rather than to give in to the constant blackmail by those who have decided that they can get their way by taking the Nation hostage, but the failure on the part of the Left to recognize the seriousness of this step, or to downplay it, is deeply disturbing, to say the least.

Let us understand what it means!

I quote from pages one and two of a 10 page paper released by the Congressional Budget Office (CBO), the highly respected non-partisan arm of Congress, entitled: “Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013.” 

“Under current law, the federal budget deficit will fall dramatically between 2012 and 2013 owing to scheduled increases in taxes and, to a lesser extent, scheduled reductions in spending—a development that some observers have referred to as a ‘fiscal cliff.’ … The resulting weakening of the economy will lower taxable incomes and raise unemployment…” (Emphasis added) 

“If measured for calendar years 2012 and 2013, the amount of fiscal restraint is even larger. Most of the policy changes that reduce the deficit are scheduled to take effect at the beginning of calendar year 2013, so budget figures for fiscal year 2013—which begins in October 2012—reflect only about three-quarters of the effects of those policies on an annual basis. 

“CBO expects—with the economy projected to contract at an annual rate of 1.3 percent in the first half of the year and expand at an annual rate of 2.3 percent in the second half. Given the pattern of past recessions as identified by the National Bureau of Economic Research, such a contraction in output in the first half of 2013 would probably be judged to be a recession.“ (Emphasis added)

Furthermore, Christine Lagarde has urged US leaders to reach a deal to avoid the "fiscal cliff,” warning that the uncertainty was damaging the global economy. The head of the International Monetary Fund told the BBC's Katty Kay that the US had a duty "to try to remove uncertainty and doubt as quickly as possible.” 

Even as early as December 12, 2012 Reuters reported that Dupont was already curtailing spending due to the imminence of the fiscal cliff. 

Furthermore, failure to reach agreement and falling over the cliff means that unemployment insurance checks stop being paid as of Dec. 29 resulting in “about 2.1 million Americans loos(ing) their extended jobless benefits … (and) An additional 930,000 people will run out of unemployment insurance in early 2013. 

Anyone reading this analysis can see the consequences are real and they are serious. Going over the cliff cannot be approached lightly, and from a political standpoint, if it must be endured, it must be clear to the American people that there was no real choice.

This is the President’s dilemma. He cannot stonewall, as the Left would have him do! He cannot cave to their laments, “No changes to Social Security, to Medicare, to Medicaid.” He must be, and he must appear to be, reasonable. It must be crystal clear that if this calamity were to happen that it was Republican intransigence that was to blame.

The Left keeps screaming: “We need more jobs” and it ignores that falling off the cliff will increase unemployment and increase the hardship of the unemployed.

Furthermore these strident voices ignore that more is at stake than entitlements.

Eduardo Porter writing in the New York Times of December 19, 2012, points out that “loath to raise taxes on the middle class yet unwilling to cut deeply into the budgets for Social Security or Medicare, the president and his advisers proposed cutting the discretionary part of the budget devoted to everything except defense and other security agencies to 1.7 percent of economic output by 2022, down from 3.1 percent last year” but there is not a word about such cuts from the Left. For the Left it appears that nothing matters other than entitlements.

But there is much at stake here!! Possibly more than even entitlements. To quote from the article: “It pays subsidies for higher education and housing assistance for the poor. It finances the National Institutes of Health and the Food and Drug Administration. It pays for the Federal Emergency Management Agency and training programs for unemployed workers.” But even Porter leaves out much of what is in that part of the budget. How about National Parks? How about the budget for the SEC and our other regulatory agencies? How about the budget of the IRS, where for every cut in its enforcement budget, we lose a multiple in tax revenues. I could go on and on. What about spending on infrastructure? See here. But I don’t hear any concern from the Left.

I know that we live in an age of slogans, and the pretense of simple solutions, in an age of short columns and short attention spans, but unless we focus on what is truly at stake and how difficult the choices are, we undermine the very things we value. Entitlements are very important, but they are not the be all and the end all.

And then comes the final straw from this new messenger from the Left. This AmericasDemocrats.org gives the impression that it is connected to the Democratic Party. Not only is this not true, but it gives us this bit of revisionist history. It tells us:

Did you know that Democratic “bosses” made FDR accept Harry Truman as vice president?

Did you know that Truman was “very anti-Semitic and racist”?

Did you know that Japan did not surrender primarily because of the atom bomb?

The first is not true. No one could make Roosevelt do anything he did not want to do and he demonstrated this four years before when he wanted Henry Wallace on his ticket, by being prepared to threaten not to run if Wallace was not his running mate.

As for the second, it was Truman who signed an executive order integrating the military at a time when most still thought of African-Americans as inferior, and it was Truman who against the strong opposition of his Secretary of State, George Marshall, recognized the State of Israel.

The website sets forth a view of the Cold War that can only be described as being out of playbook of the then communist party, blaming the cold war on Truman and American Imperialism. For more on Wallace, see here and particularly the sections on “The 1948 Presidential election” and “Later career”.

Next time I will return to the discussions with my readers, which I left off on December 4, 2012 with The President’s Re-election (More Discussion III)