I am doing a lengthy print article for The New American magazine on what congress ought to do to save the government from bankruptcy. I also wrote that the congress can’t kick the can down the road any farther – we’ve run out of road.
Schiff thinks they can. First he explains what the fiscal cliff is all about:
Stripped of its rhetorically charged language the fiscal cliff is simply a legal trigger that will trim the deficit in 2013 by automatically implementing spending cuts and tax increases. In other words, the government will spend less, and more of what it does spend will be paid for with taxes rather than debt…
The fiscal cliff means that the federal budget deficit will be immediately cut in half, shrinking to approximately $641 billion in 2013 from the approximately $1.1 trillion in 2012.
That of course assumes that congress does nothing. But congress will do something, even if it’s wrong, according to Schiff:
Congress will dismantle the structure it created just 16 months ago. There can be little doubt that they will as economists are assuring politicians that driving over the fiscal cliff will immediately bring on a recession. The expiration of the Bush-era tax cuts for all taxpayers will cost Americans an estimated $423 billion in 2013 alone. Hundreds of billions of across the board spending cuts, including the military, have been delineated.
No politician would allow that to happen.
He expresses amazement at his own conclusion:
It is amazing that members of Congress can keep a straight face as they claim to want to address our long-term deficit problem while simultaneously working to avoid any substantive action. No doubt an agreement will be reached that will replace the looming fiscal cliff with another one farther down the road (which they can easily dismantle before we actually reach the precipice).
Here’s a truth: “Congress is a national body that tries everything else before finally giving up and doing the sensible thing.” I hope that happens in time. Schiff is less hopeful.