Congratulations to those satisfied with Tuesday’s verdict, and my apologies to those upset.
To preface this week’s column, some words of wisdom from John F. Kennedy: “Let us not seek the Republican answer or the Democratic answer, but the right answer. Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future.”
Get your popcorn ready. The “fiscal cliff” that you’ve been hearing about for the last month is on it’s way, set to hit theaters — send us into another recession, namely — starting Jan. 1 if policy changes aren’t enacted by Dec. 31.
What’s this “fiscal cliff,” you ask?
It should be fairly obvious that our country has deficit issues. If that’s not obvious to you, take a look at the annual reminder. In the past 30 years, our government’s budget has been in the black just four times. This is a serious problem.
If politicians don’t act before Dec. 31, tax increases and automatic spending cuts will take place, quickly cutting our federal deficit through sudden austerity measures. This contractionary effect would pull back aggregate demand, casting us into another recession.
Government officials are worried — and they should be — but we can’t forget the reason why this cliff is ahead. Congress and the President put these measures into place in the summer of 2011, assuming the economy would be better off at this point.
The problem is, it’s not. And it’s also not the time to raise the debt ceiling, when the economy is just climbing itself out of a deep recession.
Allowing the government to drop off the fiscal cliff is rather enticing, especially given the fact that Bank of America estimates the U.S. government would save roughly $720 billion in 2013 alone, or 5.1 percent of GDP. These austerity measures aren’t just ethically honorable; they are unequivocally necessary.
The addition of tax increases and reduction in deficit spending can demonstrate long-term solvency to creditors, thus encouraging consumption spending and yielding overall economic expansion.
Let’s face it, being a “deficit hawk” isn’t necessarily an electable attribute, but continued awareness and attention towards the federal debt is vitally important to the future of our country in the long run.
Obama and Republicans must come to an agreement, especially when it comes to payroll tax cuts and employment benefits. Extending payroll tax cuts and avoiding spending cuts to benefits are crucial in aiding an economy that’s slowly on the up rise.
Bush tax cuts for upper-income Americans are not an effective way to boost economic growth in the short-term. Sorry Boehner, but you’re going to have to let that part expire.
Many Americans chiming in on the “fiscal cliff” debate cite “Clitonomics” in the 1990s, when the illustrious budget surplus wasn’t just myth. They say, accept the spending cuts of the bipartisan negotiated sequester and cut our annual deficit in half.
I’m a huge fan of this, but not in our current economic state. Fifteen years ago, we were in a much better place economically and it’s ludicrous to suggest a similar yield will occur if we progress in the same way now.
As the economy gains momentum, we must understand that we have to take the plunge sometime or another. I predict a strong bipartisan push for taking the “fiscal cliff” hit in the coming years, and it’s been a long time coming.