"Fiscal Cliff" Kabuki Theater

Thanksgiving is over and Congress is back to rehearsing Kabuki Theater. As a warm-up, the Washington Post ran this highly stylized overly dramatic article today: "‘Fiscal cliff’ could slow recovery, White House says". Essentially, the article is a "plant", to promote Obama's game of  "diversions, distractions, and distortions".

1.  The "fiscal cliff" problem is actually a Frankenstein creation of the Obama administration. So here we have the Washington Post loudly broadcasting that something must be done or the economy tanks. The underlying purpose of the "fiscal cliff" article to spread Fear, Uncertainty, and Doubt (FUD). Well, if the Obama administration had done their job last year in preparing a budget, we would not be in this fix. The Post neglects to reflect on this failure. Furthermore, Glenn Kessler of the Washington Post wrote:  "Obama’s fanciful claim that Congress ‘proposed’ the sequester" in response to Obama attempting to weasel out of acknowledging his complicity in promoting the "fiscal cliff".
2. In reading the article you will note that the emphasis of this article is on the populist message of "tax breaks" to promote economic growth. On the surface that seems very positive, who doesn't want to keep more of their money; but if you think about it, it is highly misleading. What is not said can be just as important as what is said. If one reads between the lines, Obama is simply proposing continued deficit spending with continued increases in the National debt. Obama "buying" temporary prosperity by running up the Nations credit card debt. Sure Obama periodically tosses out the appropriate words "deficit reduction", "tackling the debt", and "examining every program" with a "balanced approach", but these words turn out to be just empty sound bytes without commitment. Each year, for the past four years the deficit has topped one trillion dollars and the debt is expected to grow from $16 trillion to $20 trillion over the next four years. Rhetoric does not match reality. The "silence" of this article concerning the issue of spending reductions demonstrates that Obama has no intention to reduce spending.
3. The article never deals into the fact that taxes are necessary to fund government operations. The article simply speaks of taxes in terms of the economy. Obviously for the purpose of distracting the electorate from the fact that Obama has no plan to actually reduce deficit spending even though Obama at various time speaks eloquently of deficit reduction and tackling the debt. But here you can see that those oratorical prostrations are empty rhetoric, the conversation has been twisted into the populist message of cutting taxes. Furthermore, there is a future economic impact to think about. How is the ever growing debt to be paid back? That will stifle economic growth in the future. I guess the Post reporters can't think that far into the future. As they say, you pay now or you pay later.
4. The Post also ran several articles attacking Grover Norquist's "no tax increase pledge". The "no tax increase" pledge has been waived about by the Democrats as documenting Republican "obstructionism". Guess what, the Democrats are just as "obstructionistic". The Post article writes: "Democrats, led by Sen. Patty Murray (D-Wash.), say they are willing to go over the fiscal cliff if Republicans don’t play ball. "(emphasis added) So, it would seem according to the "left" that if the Democrats stand on principle, that is good; but if the Republicans to the same, it is bad. Hypocritical. What is needed is compromise, by both sides.

Obama's Stunning "Victory"

Obama won a stunning victory, no doubt about it. The Obama campaign team appeared better organized and used technology very effectively.  See the two Washington Post articles below.

Obama’s ‘Moneyball’ campaign

Democrats push to redeploy Obama’s voter database 

So Obama provided superb leadership and innovation to brilliantly win a victory. If he could do that; why has he not been able (for four years) to provide the leadership and organization skills necessary to work with Congress? For four years now we have had an endless parade of  kicking-the-can non-decisions. The existence of the "fiscal cliff" exemplifies the inability of Obama to lead this country and make the necessary decisions. The answer is easy, Obama really has no interest in effectively running the country.

Obama's "Gifts"

O'Reilly talking points memo of November 19, 2012. The significance of Bill O'Reilly's Fox video memo is that he clearly articulates that Obama won the votes of those who would financially benefit through this reelection. Romney was consequently vilified by both the "left" and "right" for remarking that Obama's "gifts"cost Romney the election, which it did. It is unfortunate that words (in an election) can be manipulated and totally blown out or proportion to incite a mob mentality that destroys a candidate. No wonder candidates seek "vanilla" language that obscures what they truly mean.

The link to that Fox News video embed in the title: Liberals and conservatives ganging up on Mitt Romney (November 19, 2012).  Seems that embedding the Fox video is not working. Found a YouTube video which is embed  below. Not as good quality though.

Also see this Washington Post article: "Ever-increasing tax breaks for U.S. families eclipse benefits for special interests"

"The number of tax breaks has nearly doubled since the last major tax overhaul 25 years ago, with lawmakers adding new benefits for children, college tuition, retirement savings and investment. At the same time, some long-standing breaks have exploded in value, such as the deduction for mortgage interest and the tax-free treatment of health-insurance premiums paid by employers. All told, federal taxpayers last year received $1.08 trillion in credits, deductions and other perks while paying $1.09 trillion in income taxes, according to government estimates."

"These tax breaks weave an invisible web of government benefits that now costs nearly as much as the Pentagon and all other federal agencies combined. "

The Coming "Fiscal Cliff" II

Last week marked the kick-off for achieving a solution to the "fiscal cliff". In recognition, the Washington Post wrote this summary article: "Both sides appear upbeat on opening round of ‘fiscal cliff’ talks". Since these are "early" talks, it is too soon to say how things will progress. Hopefully compromise really is on the table.

In my prior post on this topic, I highlighted several concerns that still remain relevant. These concerns were updated in the list below. So when reading or listening to the news concerning the "fiscal cliff" readers are encouraged to consider the points below.

1. Will any additional revenue collected through tax increases and/or the elimination of tax breaks be used for real reductions to deficit spending  OR will these additional revenues be used to justify increased spending thereby negating any reductions in deficit spending? 
2. The article alludes to the fact that the participants recognize that deficit reduction will involve slowing the rate of program grow for certain programs and that some other programs may actually need to have their funding reduced.  Will the "grand bargain", if it is achieved, actually make definitive proposals and not kick-the-decision-can to a later date?
3. Though not mentioned in this article, one misleading and fancifully concept that keeps popping up are future savings 10 years from now. Should any "grand bargain" be achieved, the supposed "savings" must be specified as occurring between now and 2016.  Supposed "savings" after 2016 are meaningless. They would be equivalent to once again kicking-the-fiscal-decision-can down the road. A new administration will take over in 2016 and they will have little interest in carrying forward the budget proposal of a prior administration. Look at what Blame Bush did to Clinton's budget.
4. Obama, when campaigning, promised to make the "tough" decisions, to be "transparent", and to be "above partisan politics".  Time for Obama to stop-up-to-the-plate. 

Why the list above? Obama sells a populist message. So it is critical to carefully parse Obama's words for what was actually said and what was not said. As Romney noted Obama's populist message is one of "diversions, distractions, and distortions". The Economist, even-though they endorsed Obama, wrote the following: "Above all, Mr Obama has shown no readiness to tackle the main domestic issue confronting the next president: America cannot continue to tax like a small government but spend like a big one. Mr Obama came into office promising to end “our chronic avoidance of tough decisions” on reforming its finances—and then retreated fast, as he did on climate change and on immigration. Disgracefully, he ignored the suggestions of the bipartisan Bowles-Simpson deficit commission that he himself set up. More tellingly, he has failed to lay out a credible plan for what he will do in the next four years. Virtually his entire campaign has been spent attacking Mr Romney, usually for his wealth and success in business."

Obama is a populist demagogue who chooses an easy target, such as the rich, and vilifies them so that he can get favorable tax legislation passed under the mantra that it is "only fair" to have the rich pay more in taxes. Not mentioned by Obama is that the fact that the "tax the rich" fiscal policy will have little impact on reducing deficit spending assuming that the tax revenue raised is actually applied to reducing deficit spending. The Wall Street Journal (August 15, 2011) wrote: "But one thing is certain: While raising taxes on millionaires might be emotionally and politically satisfying for some, it would only begin to fill the nation’s budget hole."

So far Obama's disingenuous "tax the rich" policy has had its intended effect of distracting the electorate. Many are jumping onto the tax the "evil" rich bandwagon since it is "fair". Michael ( April 21st, 2011) wrote: "Class warfare in the United States is heating up again.  As the overall economic pie shrinks, the poor are being taught to go after the rich and the rich are being taught that the poor are a threat.  Lately, the calls to “tax the rich” have grown louder than ever.  As thousands more American families fall into poverty every single day, and as U.S. government debt continues to soar, many are touting higher taxes on the wealthy as the solution to all of our problems."

Attacking the the rich, has generated much discussion, but this discussion unfortunately neglects the critical issue that taxing the rich would not resolve the issue of deficit spending, only hide it. At this point, I need to step-in and explicitly state that everyone has to pay more in taxes and that spending has to be reduced so that revenues and expenses are more in-line with getting a balanced budget.  I am NOT defending the rich, they need to pay more too. PolicyMic wrote: "The president’s strategy to focus so extensively on tax increases for the affluent to rectify the debt crisis is not a fair and balanced approach for his next four years. ... Every American should contribute something to reduce the deficit and/or to improve the country." We need Obama to be the leader  he was elected to be and to negotiate a true solution to deficit spending which will require tax increases for everyone and real reductions to programs.

The Coming "Fiscal Cliff"

The US Presidential Election is now over. Obama unfortunately won re-election. Now, all the deferred fiscal decisions that have been kicked-down-the-road are coming back. Once again it is decision time. The Washington Post, to get ahead of the story has written several editorials, The first editorial: "Getting past partisan gridlock — finally?"  Followed by "The hunt for a grand bargain" and "Limiting tax deductions".  The Post is to be commend for bringing these issues back to the attention of the electorate.

The editorials, however, fail to delve deeply into potential solutions to the "Fiscal Cliff". Proposed solutions superficially recognize that it will involve both increased taxation and program reductions. Nevertheless, the public discussion seems to be limited to the populist slogan of taxing the rich. The three editorials cited above are shortsighted since they simply discuss revenue increase to be derived by taxing the rich and/or eliminating certain tax deductions. There is no reference to spending reductions.

Though the editorials above have not discussed spending reductions, other articles have referenced some Obama "offers".  For example, Obama suggested: "... offering to raise the eligibility age for Medicare from 65 to 67 and to apply a less-generous measure of inflation to Social Security benefits.. It is unknown to me, at this time, if this gratuitous "offer" is genuine or if it was simply put forth as a public relations "stunt" that will eventually be retracted because of  suddenly realized "concerns" to protect retirees.

Getting back to the Washington Post editorials. I encourage the Washington Post to critically examine any deal to resolve the the "Fiscal Cliff". Do not give Obama another "free pass". In 2008 Obama promised to explore deficit spending and to control the exploding national debt. Obama even appointed a deficit reduction commission that he dissed. Obama budget proposals have died without action. Despite this failed leadership, the media gave Obama a "free pass". As of now, Obama has had four years as the CEO of this nation to prepare what Obama referred to as "rational balanced approach to deficit reduction". Time to clearly point the finger of responsibility towards Obama.

I urge the Washington Post to critically examine any "Grand Bargain" based on the topics outlined below.

1. Will any additional revenue collected through tax increases and/or the elimination of tax breaks be used for real deficit reduction or will it be used to justify additional spending? 
2. The President has "offered" (so he says) to make some reductions to address deficit spending. Even the Post noted Obama's lack of disclosures: "There’s a reason neither President Obama nor Republican presidential nominee Mitt Romney leveled with voters during the campaign.". The election is now over. So when will Obama "level" with the electorate and disclose proposed reductions? 
3. Obama fancifully refers to savings 10 years from now. That is nothing more than flim-flam.  A new administration will take over in 2016 and they will have little interest in carrying forward the budget proposal of a prior administration. Look at what Blame Bush did to Clinton's budget. The Post most critically examine what Obama, if he ever gets around to it, is proposing between now and 2016.

Obama when referring to the "Grand Bargain" often states how he will consider anything. Will he really? Obama has had four years to implement his supposed "rationale approach" to deficit spending. The Post vilified Romney for being vague. I hope that the Post will encourage Obama to put forth, on paper, a program identifying the taxes that need to be raised and the programs that may need to be reduced. Obama speaks vague lofty populist slogans, but has yet to commit a plan to paper for all to inspect. 

Obama has successfully distracted the conversation so that we are arguing over the fairness of taxing the rich instead of highlighting Obama lack of performance in resolving the deficit/debt issue.  Time to put an end to this game of misdirection and focus on achieving a solution to the deficit/debt problems. 

Reflections on the 2012 Presidential Election

Obama won. The Republicans are cowering in their bunkers wondering how this could possibly have happened. The easy answer: demographics. The Republicans no longer projected a relevant message to the electorate. The Democrats are gleefully rubbing the loss in through derogatory proclamations that the corrupt racist white boy network is dying off of old age. (Not exactly a gracious action by the wining side. It would also seem to poison future consensus building.)

But it is not that simple. Demographics explain a lot, but both the Republican and Democratic parties have evolved over time too. Unfortunately in a negative direction. In a Washington Post opinion article: "The GOP has lost its way. Here’s how it can return to its roots" Mr. Shirley offers an unintended clue that goes beyond the obvious demographics.

Mr. Shirley mistakenly writes: "Since the time of the New Deal, the Democratic Party has been organized around the philosophy of justice. And since Reagan remade the GOP beginning in early 1981, the party had been organized around the concept of freedom."

Republicans, since Reagan have NOT been organized around "freedom".  Over the years the Republicans, like the Democrats, have eroded civil liberties.  The major difference is that the Republicans promoted deregulation, supply side economics, and unwarranted tax cuts which culminated in the economic crash of 2008.

The Democrats are NO longer about justice (depending on various convoluted interpretations). The original intent back in the 1960s was to guarantee equal rights supported through the rule of law. A laudable goal. Now, the Democrats no longer stand for equal rights, but for extra rights to those designated as somehow oppressed. The rule-of-law (justice) has been bastardized to the point that it is now almost meaningless not to mention that the application of the law, when done, can be arbitrary and capricious. For example the Washington Post wrote an editorial supporting race based admissions at college. The boils down to using racism to end racism??? Very Orwellian.  Truly ludicrous if we are to have lawful equal rights.

Moving on, Obama won, because he was able to successfully formulate a coalition of those who feel that they are entitled to those extra civil rights, plus other government supplied benefits. The significance of Obama's election and reelection is that the electorate is moving the US towards being a welfare state where the Nanny State (government) will take care of you.

The Democrats may be gleeful that those evil racist white boys are dying off. And based on the changing demographics each election may be easier for them. But be careful of what you ask for. The Democrats need to reflect on the negative implications of creating a "lawless" welfare state. Like the Republican Party, the Democratic Party of today is a pathetic reflection of the past.