The Fiscal Cliff – The real reason the G.O.P. have adopted obstruction as a tactic


Postscript.  Call it the Fiscal Cliff today, Voter Suppression yesterday, too much gas in the tank last week…….The G.O.P. simply refuse to accept they lost the national election.  This is the same culture of people who still want to fight the Civil War but the real reason is they have been conditioned to question anything and everything from this President because they never dreamed American voters would give him the majority two straight years.

[Washington, D.C.] reprinted with permission

john boehner cryingThe Sunday Morning political talk shows featured politicians from both dominant parties justifying why their side was correct regarding the current debt crisis negotiation

“House Speaker, John Boehner (R-OH) proclaimed the Democrats offer was a non-serious proposal.

Today, apparently he had a change of heart as he along with other party leaders issued a compromise in the form of a letter to President Barack Obama. The proposal was rejected

earlier today by the Obama administration but in the gamesmanship of politics, it’s a positive sign as some communication is better than none at all.

Politicians created a self-imposed timeline on behalf of taxpayers and people of the United States to reach an agreement to resolve debts owed by our government by the end of the year. The fiscal imposition or failure to reach a resolution has been metaphorically called “Failing off the Fiscal Cliff.”

Debt has always been part of how our government operates. Interestingly, it has reached political theatrics and near fever-pitch media attention during the tenure of President Barack Obama. Years prior, resolving the debt ceiling was a very mundane administrative function that all parties of our government agreed on.

Spending versus Revenue

The Democrats main premise is to allow the Bush tax cutsto continue, except for the top 2% of individuals classified as wealthy. The assumption is wealthy people have benefited economically during the past several decades and allowing their tax cuts to expire would generate needed revenue to attack the budget.

Republicans, argue wealthy individual’s tax breaks should continue because they have the financial muscle to stimulate the economy. Further, in addition to their tax cut argument, Republican’s primary solution to the debt crisis is to reduce spending, particularly programs defined as entitlements (i.e., home mortgage deduction, medicare, social security, unemployment and other social programs). Their ideology is cuts to the budget are sufficient in balancing the budget and under no circumstances should taxes be increased as a solution to the deficit.
..

Sequestration

Should we fall off the “Fiscal Cliff” and not reach a resolution, sequestration would occur. Sequestration is a budget term and was agreed to during the debt crisis resolution which occurred this past August. The result would be immediate spending cuts without further negotiation. The aim is to create a penalty against the government budget, negatively affected both parties. While sequestration is the agreed upon outcome it would be devastating to our budget and create a negative environment and possible rescission-like atmosphere.

The National Election

President Obama has been echoing the results of the recent November election as justification the public wants both sides to reach an agreement. Further, it has been stressed most tax payers support not allowing the tax cuts for top 2% income earners to continue. Statistics and other data have been bantered around. The facts or voice of the people support this sentiment. Tax payers have been unanimous in supporting a balanced approach, or some spending cuts along with some revenue generation.

Even though the election is just one example of the “people’s voice,” those in opposition think otherwise, which leads to the protracted debate currently going on. Many will remember immediately following the 2010 mid-term election, then Senate minority leader, Mitch McConnellproclaimed, as a republication leader, “it was his objective to do whatever was in his power to make President Obama a one term president!” That included any opposition to the President’s agenda or desires to improve government on behalf of the citizens. McConnell’s strategy is mentioned as a key in exacerbating many political decisions during the Obama administration, certainly including the current debt-ceiling debate.

The debt ceiling is a serious matter. Some have indicated the Republicans are using it and other issues as a political red-herring or excuse against the real reason. That is, their core ideology is not to support anything the Obama administration supports, even if it offers obvious benefits to the American people.

In March 2012, political activist, Jesse Jackson, Sr. summed up what many felt about Republication opposition. “They would rather sink the ship just to destroy the captain.”

Don’t tax the Job Creators

Representative Karen Bass (D-CA) office released a statement indicating the core bump in the road is removing the tax break for the 2%. Her statement stressed voters made their voice loud and clear, however she is optimistic a solution will be reached before the deadline.

If elections mean anything and if politicians are truly servants to the citizens, the Republicans core reason for not reaching a compromise unless the top 2% are protected is not a legitimate response.

Unfortunately the reason for the initial Bush Tax Cuts of 2001 in dealing with the wealthy was they are considered job-creators. For the past several years the sound bite “job creators” was part of endless speeches and comments spoken by Republican politicians. They spoke with great pride and paralleled the high unemployment and overall economic condition why it was essential not to tamper with anything which might jeopardize “job creators” to do what they were defined as doing; creating jobs!

Dow Jones

Lately several in Republican leadership have admitted raising taxes on the 2% is not a bad compromise. They have pointed to the recent election as justification in doing what the people desire and to reach an agreement before the year-end deadline.

The data does not support those in favor of allowing the 2% to maintain the tax cut. Primarily, top economists have indicated the debt ceiling is one issue, but if we are serious about moving our nation forward we would admit we cannot achieve balance simply buy cutting or reducing our expenditures. It is better offset by increasing revenues, such as allowing the 2% taxes to revert back to what they were doing the Clinton administration. Even then, most agree our economy was in much better shape.

Coincidently, two specific criteria weaken the Republications core reasons for advocating maintaining the rate for the top 2% – Business growth and job creation.

  1. Business growth. During the Clinton years, the DOW Jones Average peaked to approximately 10,800. When the Bush tax cuts were implemented they were 10,700. Just prior to the financial collapse of 2007, while President Bush was still in office, they peaked to a tad over 13,000. During the Obama administration, the DOW fell to a low of 8,000 but has shown steady growth since May 2009 and currently sits at 12,000. Based on this data, businesses who were around during the Clinton term and who have survived the meltdown of 2007 have seen their businesses achieve better financial health. Further, even though businesses appear to be in good shape, basic employees of businesses have seen their pay level off, if not reduced during the past ten years. On the other hand, business owners or those in the 2% category have seen their wealth increase to unimaginable numbers. Therefore, they are the core recipients of the tax breaks but there is no documentation to support workers received any direct benefit or shared improvement, other than maintaining a job.
  2. Job Creation. For the past several years as well as a steady drumbeat up to the 2010 midterm elections was the Republican parties proclamation asking, “Where are the jobs?” Once they achieved majority in the House of Representatives the chorus died down to a whisper. Again, it is the data which strikes against their core support of the job creators. During the start of the Clinton administration the unemployment rate was 7.5%. When he left office it shot down to 4.0%. During the Bush administration, even as the tax breaks were implemented, unemployment increased and as he left office the unemployment rate was at 6%. No doubt, as the Obama administration took over just when the financial meltdown was occurring and jobs were being lost to the tune of 800,000 per month, it has settled back down to 7.9%. While that number is nowhere defined as ultimate success, the trend bodes for a more favorable environment, than an unfavorable environment. Again, based on the data, there is not an argument that the job creators used their tax breaks to create more businesse which resulted in job growth. What is documented is tremendous cash-flow and improvement for business owners. Even though this has translated into more wealth, unfortunately it has not trickled down to rank and file workers.

The current budget deficit was not created by one president but has been built up over years of our economic day to day operations. All parties agree spending must be curtailed and brought in line with current taxation or revenue. At the same time, it appears that Republication leadership has approximately four weeks, if not sooner to accept the top 2% is not worth allowing the other 98% to be held hostage just for the principled reason they would be harmed by not including them as part of the proposed tax cuts.

Everyone agrees politics is theater and gamesmanship but another Republican Senate leader, Lindsey Graham (R-SC) candidly told Bob Schieffer on CBS’s “Face the Nation,” “I think we’re going over the cliff.”

Coming off the national election just one month ago, you would think those continuing to remain in campaign mode, instead of reaching an agreement are doing it at their own peril.

Is this another political red-herring? Perhaps, as the very party who helped increase the deficit and raised virtually no opposition while two wars never received approval for funding. Further, there was the prescription drug bill that also was not approved for funding. These three important issues resulted in trillions of dollars being spent. Yet, all of a sudden this same party is locked in a battle demanding the Obama administration receive approval for the most mundane expenditure, least of obtaining authorization to increase the national debt.

Based on the previous four years, it’s the debt ceiling today and tomorrow it probably will be something else, as the core motivation is to challenge and to question anything the Obama administration attempts to do. The problem with such a strategy is based on the recent election; the people are demanding compromise instead of unfettered opposition.

By the way, increasing the debt-ceiling merely pays for bills Congress has already authorized. It is not an arbritary amount the President spends at his whim.

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