For all of the angst and hyperbole over the so-called “fiscal cliff,” one must admit that the specter of impending financial doom it would supposedly create does serve a purpose — the very purpose for which it was designed.
Sadly, Congress is in such partisan standoff that the only hope it has of resolving the most serious issues is to put a virtual gun to members’ heads and force them to act. So, given that Congress could not bear during 2012 to make the very difficult decisions necessary to improve the country’s financial standing, it did the next best thing — it set a deadline for resolution with a very hefty penalty attached.
If agreement is not reached, the Bush tax cuts will expire, along with the payroll tax cut, there will be a new Medicare tax on the wealthy and some $220-$260 billion in automatic spending cuts will occur — a toxic combination widely viewed as likely to push the United States back into a recession. Those actions had to be extremely repulsive to Democrats and Republicans alike in order to force Congress to finally do something, which apparently, it has.
Members of Congress do not like hard choices. On the rare occasions that Congress attempts fiscal restraint, it back-loads the costs to avoid the pain. Both the payroll tax reductions and the Bush tax cuts were supposedly “temporary,” but the Congress that found it easy to cut them in the name of economic stimulation lacks the intestinal fortitude to let them expire for the sake of fiscal sanity.
Congress has painted itself into a corner. It is now forced to take action, and while it is presumptuous to assume Republicans and Democrats will achieve a resolution that lets everyone claim victory AND helps reduce the deficit, at least members of the two parties find they have no choice but to negotiate with each other.
It should not take a pending disaster to force Congress to do its job, but that’s the situation we’re in. America may plummet over that “fiscal cliff” yet, but the fact that such an event is on the calendar has brought the two parties into negotiations. That’s a start, at least.
We’ll find out if the strategy worked by Jan. 1 at the latest. Even if it does work this time, waiting until we’re on the brink of catastrophe before taking corrective action is not a rational strategy that should be repeated, because the risk is far too great. Sooner or later, we’d end up going over that cliff and no amount of finger-pointing and partisan rhetoric will undo the damage.
We can always hope that this episode will sober up Congress enough to put it back to work, but don’t expect favorable odds on that happening just yet.
