Before the election, there was much talk about the coming fiscal cliff. Since President Obama was re-elected and the Republicans got a bit of a smack-down, the fiscal cliff has become the hot topic, the topic de jeur, the thing that shall not happen. It can’t. It won’t. It’s unimaginable. It simply cannot and will not happen. Why? Because nobody likes it. Which is the single, and only needed, reason that we must proceed over the cliff.
The best political deal is one that nobody likes.
Here’s what I understand the fiscal cliff to consist of:
1. The end of the Bush tax cuts and a return to the Clinton era tax rates. Call me a fan of this. Let’s see Clinton era … converted a budget deficit to a surplus, ushered in the biggest economic boom in decades. Interesting thing about this. I always thought those tax measures were the result of bipartisan efforts, that it was a part of the two parties coming together. Then I read this week’s Newsweek. Turns out that not one single Republican in either the House or the Senate has voted for a tax increase since 1990. Guess that whole balancing the budget wasn’t quite the bipartisan effort I thought it was. So, who needs the Republicans this year. Without any action, the Bush tax cuts will expire and we’ll return to the sanity of the Clinton era. Why is this good? It not only raises taxes on the wealthy, but on others as well. Broadening the tax base. count me as one person in the middle class who is willing to pay more in taxes to solve the country’s fiscal woes.
2. Massive cuts in defense spending. Check. I am totally fine with cutting the bloated monster of our defense budget. Talk about waste.
3. Cuts and reforms to entitlement programs. There has to be some shared pain, and it’s absolutely necessary to solve the problem.
Here’s what I believe. The problem is too huge to solve without major new revenues and major cuts. What I believe is that all need to share in the pain. And, if we all do, the boom will come, just like it did during the Clinton years. Why is that? It’s pretty simple. Investors, whether institutions and individuals in this country, or foreign institutions and other countries, are currently throwing more than $1 trillion a year at the federal deficit. Imagine what might happen if that money instead was invested in companies, technology and innovation like it was during the Clinton era.
I say we shouldn’t be tiptoeing up to the cliff and pondering what might happen were we to jump. Let’s not walk carefully to its precipice. No, my choice would be that we run as fast as we can towards it and leap out as far as we can into the great abyss of increased revenues, real cuts, and fiscal sanity.