Sunday, November 11, 2012

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. 

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