Car off cliff sign

Car off cliff sign (Photo credit: Wikipedia)

In his blog at MarketWatch over the weekend, Robert Schroeder reviewed five possible outcomes to the challenge of the “fiscal cliff” and concluded that only one was truly catastrophic:

Simply letting the Bush-era cuts expire and allowing billions of dollars of spending cuts to kick in would actually be the easiest thing to do, inasmuch as that would amount to following the law.

Despite my cynicism about Congress always taking the path of least resistance, I agree with Schroeder that this isn’t going to happen. Too many conflicting interests are invested in that outcome. Such action would suck $600 billion (or more, depending on who does the calculating) out of the , about 4% of GDP. With the only growing at 2%, it’s easy to conclude that the would “go negative”, pushing us back into . And Congress can’t stand the heat if that happens. It also violates the pledge that many in the House and some in the have signed not to raise taxes. Letting the expire is a tax increase.

Schroeder’s second scenario: a six-month delay (a short-field punt, in other words):

One option here, if wins, is to simply punt the whole matter, suggests public-policy consultant Tom Block. “A Romney win likely means that he will ask [for], and get, a six-month delay as policy options are worked out,” said Block, a former head of government relations at J.P. Morgan Chase & Co., in a note to clients. President , if reelected, could also do the same, depending on the outcome of negotiations with congressional Republicans…

Compromise:

If Romney wins on Nov. 6, he may ask Congress to come up with new -reduction ideas. But if Obama prevails? “We believe the Republicans are likely to give in eventually on raising revenues from upper-income tax payers,” said the Barclays analysts in their Oct. 23 note.

Number four: a grand bargain:

In an Oct. 23 interview with the Des Moines Register, Obama predicted he and Republicans would come to the equivalent of the “grand bargain” he has been trying to work out with the GOP. That translates to $4 trillion of deficit reduction over 10 years…

Number five: a new deal:

In the event that lame-duck negotiations between Obama and Republicans blow up, they could fall back on something like a recently released framework from the Bipartisan Policy Center. The suggested legislation envisions turning off the , but would require a down payment of tax and spending changes that would be built on as part of a bigger debt reduction package in 2013.

This, of course, is a variation on the “punt” theme: let someone else, later, fix the problem.

There is a sixth option: take the high road and do what eventually will have to be done anyway: turn off the unsustainable welfare programs, cut back the to within the constraints of the Constitution, and simplify the tax code as a first step to eliminating the (now unnecessary) income tax altogether.

This is dreamland. But one can dream, can’t one?

Opt In Image
Soak Up More Light from the Right
with a free copy of Bob's most popular eBook!

Sign up to to receive Bob's explosive articles in your inbox every week, and as a thank you we'll send a copy of his most popular eBook - completely free of charge!

How can you help stop the Democrat's latest gun grab? How is the Federal Reserve deceiving America today? What is the latest Obama administration scandal coverup? Sign up for the Light from the Right email newsletter and help stop the progressives' takeover of America!