Home > Bernanke, Economics, Fiscal Cliff, Fiscal Policy, Politico, Uncategorized, US Budget > Fiscal Cliff?? Slogan, Warning, or What?

Fiscal Cliff?? Slogan, Warning, or What?

Thank you Occupy Philly for the satire on the Fiscal Cliff.

When listening to the pundits constantly echoing of the phrase “fiscal cliff” with the added implication of dread in their voice; I could not resist my wonk urge to get a clear definition of what the fiscal cliff is and its implications in a sterile (non-partisan) fiscal way. right, as if that is possible!

After much exhausting research on the “Google” I have come to understand that it means as much as Alan Greenspan’s “irrational exuberance” and that’s not saying much. Irrational exuberance was a phrase coined by Greenspan to warn us that investors were over-weighing the market without actually saying that they were over-weighing the market (some say that Greenspan was warning of an impending fiscal bubble  but I am not sure he was that astute). It is an illusive way to warn about a possible fiscal disaster without warning about a possible fiscal disaster, but leaving yourself cover to be able to say “I WARNED YOU”. You know, “having your cake and eating it too” or as a  friend of mine often said “It’s my SAVE ASS move!”.

The name “fiscal cliff” is a classic political misnomer seeing that there’s no major impact on the economy with its onset; anyone would infer different from its title, fiscal cliff. Any use of the word “cliff” typically means immediate and life-ending descent from a high distance which does not apply in this case. Ever since Bernanke used the phrase “fiscal cliff” at a hearing of the House Financial Services Committee in February of this year, the term has been used for a multiplicity of partisan needs. Well let’s get an understanding of what Ben Bernanke meant when he said it, so let’s go to the way-back machine to get the jest of it. To quote Bernanke “I hope that Congress will look at [the spending cuts and revenue increases] and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date,”.

Now the official name of the so-called fiscal cliff is the Budget Control Act of 2011. I contend that Bernanke was referring to the possible repercussions on the fragile economy if we were to employ austerity measures, such as the automatic spending cuts coupled with the expiration of the “Bush/Obama” tax cuts. With this understanding, the answer to the fiscal cliff appears to be simple to resolve. If we were to cancel or slowly integrate the automatic spending cuts, Sequestration, and only allow an extension of the Bush/Obama tax cuts for those making under $250, the economy should be not only able to handle impact of the cuts, but may actually be stronger for it.

In summation, Gaston’s answer to the “fiscal cliff” would be to end the big deficit reductions that were intentionally foisted on America by out beloved Republican Party (note the intended sarcasm) in order to raise the debt ceiling. Amercian politics need to return to the time when raising the debt ceiling was not a partisan event. As some may remember from another one of my blogs, the national debt is not an true emergency until the interest payments reach more than 12% of GDP (Gross Domestic Product) which are scheduled to be renewed at the start of next year. An additional measure to avert the gradual slope (aka fiscal cliff) is to extend the Bush/Obama tax cuts for a 100% of all American’s first $250,000 of income. Extending the tax cuts on the first $250,000 of income will only continue to strengthen a weak, but recovering economy.

Again Republicon fiscal policies are the absolutely wrong fiscal policy for our economy’s short-term and long-term health much like the ridiculous 75 year pension funding (The Postal Accountability and Enhancement Act) requirement that the Republicons placed on the Post Office back in the bush administration (lower case was intentional); see HERE.

Can you say “Poison-pill”! Can you say “balanced approach”! Sure you can!

  1. December 17, 2012 at 7:54 am

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