Wednesday, December 5, 2012
Fiscal Cliff or Debt Ceiling - Confusion of Terms
It seems like everyone is talking about the country going over the Fiscal Cliff; and most of them like to use the same "Thelma and Louise" movie reference for this December 31st event that I've often used for the entire process of how the government deals with borrowing and spending money. Of course I would have thought that going over a cliff was a bad thing (since both Thelma and Louise attained room temperature as a result of this last drive), but maybe I'm just a little confused. Silly me. It appears that both sides preaching their share of doom and gloom only do so they could steal my Hollywood reference to describe what would happen if the country were forced to plummet into the depths of the horrible, the evil ... "Sequester". (The Bastards! I mean geez, it's not like I get a lot of original ideas, and the one I do get they steal.)
Now Sequester, for those of you who have buried your heads in the sand for the last couple of years and don't understand it (which is apparently quite a lot of you), is the agreement to automatic tax increases and budget cuts that Democrats and Republicans consented to when they discovered that they didn't have the testicular fortitude to come up with another piece of duct tape to hold on the budget band aid that holds on the actual band aid that holds in place the government budgeting process. Sequester was meant to be the Armageddon which no one wanted, but which would be required of the nation if the D's and R's once again could not agree on how much money the nation should take in and how much it should spend. This horror would involve the end of previously agreed to tax cuts (you know, passing a tax increase without actually voting on one) and across the board spending cuts (which can be overruled by new legislation passed as soon as possible after the Sequester occurs). This way, legislators of both parties can tell you that Sequester is bad (in spite of the fact the they created it as an alternative in the first place), that higher taxes are bad (in spite of the process letting tax cuts expire), and that spending cuts are bad (in spite of the making them automatically part of the Sequester).
By the way, can anyone tell me why tax cuts are always temporary, but tax increases are permanent? It almost seems that legislators are saying that increasing taxes is good, hence their permanence; and tax cuts are bad and should only be allowed to exist temporarily and when no other alternative exists. Of course, we all know that this can't be the case. After all, they've told us so.
Not surprisingly, much of the current budget jury-rigging came about not because of the Fiscal Cliff negotiations currently stalled; but because of the fact that the annual budget process and the Debt Ceiling have failed to reach any effective conclusion for the last couple of years. The Debt Ceiling, lest we forget, is the credit limit on the ability of the government to borrow. The Annual Budget of course, is the money that the government spends each year. Since we continue to spend more each year than we take in through tax revenues, the need arises regularly to raise the limit of the amount of money that the government is allowed to borrow in order for it to write the checks on money that it doesn't have.
Interestingly enough, the only things that the two parties of experienced legislators (perhaps too experienced, if you know what I mean) were able to agree on during previous Budget and Debt Ceiling debates was to go ahead continue to spend more than we were taking in for a while longer (called 'Kicking the Can'), and to let the country borrow more money than it ever had in the past. (Though curiously these days, most of that debt is not purchased by the Chinese as politicians on talk shows would like to have you to believe; but by the Federal Reserve, which simply goes out and prints more money in inflationary spiral that makes that debt worth less in a process which it also ignores.) After years of intransigence. obstinancy, and belligerence, these same legislators decided to threaten themselves with the formidable prospect of Sequester in the future in order to convince us that their continue lack of serious action in the present was a plan and not simply a failure failure of leadership.
The result of this lack of fiscal responsibility going into the 2010 election was that Republicans took back control of the House; I suppose in the hope that such Armageddon could be avoided (and scrubbing the Bruce Willis / Ben Affleck shuttle mission). Since then, the House has regularly passed budgets bills that at least attempt to address the reining in of the expansion and out-of-control spending of government, mostly to no effect since the Senate refuses to vote on the House proposals. Of course their efforts at responsibility are performed in so timid a fashion as to be unrecognizable as such, but they should get credit for at least trying. Instead however, its members are pilloried for sending the Senate weak-kneed spending reforms that are demonized by the majority party in the Senate as 'draconian cuts' and attempts to throw mom off a cliff.
Meanwhile, in what is supposed to be the more deliberative Senate, no actual deliberation takes place, mostly because the Senate Majority Leader Reid won't allow it to. (The Senate in fact has failed to pass an annual budget for almost four years, in spite of requirements that it do so.) Out-of-hand rejecting the ideas of the House (too far to the right) and the President (too far to the left), the Majority Leader is apparently incapable of coming up with anything of his own that might be 'just right'. He instead appears content to sit quietly with his gavel and mumble to himself "My Precious" while not Rome, but the entire nation burns around him. (My personal belief is that Senator Reid's stubbornness may be part of an advertising contract in which he receives a fee for using his manner and appearance to draw attention to the upcoming release of "The Hobbit: An Unexpected Adventure", which opens in theaters on December 14th. Unfortunately, this may be a long running contract, as the movie is expected to have two sequels.) Some say in Harry's defense that budgets coming from the House Republicans couldn't be voted on because the R's have thus far refused to compromise by replacing their own ideas with those of the D's; but that seems a rather lame excuse when a bi-partisan effort in the Senate rejected the last proposal of the leader his own Democratic party by a vote of 99 to 0.
So if all of this appears confusing, don't feel bad ... it actually is. You're not alone in having difficulty understanding this confusion of policies, described by terms that tells us that we are now going to go over a cliff in part because we are unable to agree on a budget that keeps us from hitting a ceiling. You're likewise far from alone in confusion over the fact the end of the year will see us being forced into mandatory tax increases and spending cuts by two political parties who will tell you that both of these concepts, singularly or together, are an anathema not to be tolerated and the last thing that they want to see done in this country (except of course, for reaching agreement on any sort of alternative).