Kicking the Can Over the Fiscal Cliff

November 12, 2012 - 8:19 AM

The election wasn't over for 48 hours before both sides started laying down their opening bids on dealing with what has become known as the "fiscal cliff."

At its core, the "fiscal cliff" (and I'm going to stop putting it within quotes from here on) is the result of the Congress and the President (to use another phrase I wish I could excise from the political lexicon) "kicking the can down the road."

Unwilling and/or unable to come to agreements on a number of issues, both sides have continued to offer really tough-sounding, but temporary solutions, which have more-or-less amounted to "We'll deal with that when we get there."

We're there.

The fiscal cliff exists because the road down which we have been kicking that can has come to an end. At the end of the road is the fiscal cliff.

Members of the House and Senate are paid a pretty decent salary to examine the issues, help design solutions, and cast votes to turn ideas into law.

They hate doing that.

So, with the White House as a full partner, they have designed automatic triggers that they can later say "We had no control over [INSERT DIFFICULT ISSUE HERE] because of a trigger they themselves had installed.

The best known example is the Congress insisting they have no say over which military bases will close because decades ago the Congress decided to hand that duty over to an independent commission rather than have to face their constituents and say "I voted to close our military base because it didn't make any sense to keep it open."

Instead, they voted to not have to vote on base closures so they could later claim they had no vote in the matter (other than an up-or-down vote on the entire package of closures and realignments).

Are you getting all this?

The Congress could change that tomorrow, but there's this can and this road and they have all these highly paid feet doing all that kicking.

Same with the National Commission on Fiscal Responsibility and Reform -- better known as the Simpson-Bowles Commission for it's co-chairs, Sen. Alan Simpson and Erskine Bowles.

Unlike the Base Closing Commissions, Simpson-Bowles was just a creature of the Executive Branch. Nevertheless, there was an informal agreement that if a super majority (14) of the 18 members voted to accept the package of tax increases and spending cuts then the Congress would adopt it, or at least take up the elements with a view toward adoption.

But, there was nothing that required either Chamber to even discuss the report that came out of the Commission, much less turn it into public law.

As it happened, the Simpson-Bowles report only got 11 votes, so the Congress could (and did) ignore it without looking like they were ignoring it.

Thus the deficit continues to grow as the can gets kicked closer and closer to the fiscal cliff.

The next bit of can-kicking came about after the 2010 mid-term elections which gave control of the U.S. House back to the GOP. Barack Obama and Speaker John Boehner agreed to continue the Bush-era tax cuts - which were scheduled to automatically expire because a previous Congress couldn't agree on a permanent level for tax rates - which the Republicans wanted in return for extending unemployment benefits that the President wanted.

Those tax cuts will now expire on December 31, 2012 because … well, you see the pattern here.

There is also an two percent reduction in what are known as payroll taxes - Social Security and Medicare - that will expire on the same date because the Congress and the President want to give everything to everybody while making nobody pay for it - financially or politically.

On the other side of the equal sign there is the "sequester." That is the automatic spending cuts that were agreed to by the Congress in 2011 if what was known as the Super Committee of House and Senate members couldn't come up with a revenue and spending package that would begin to reduce the growing debt.

Of course they couldn't, but the cuts wouldn't begin until 2013 (can/kick/road) so everyone pretended the problem was temporarily solved (where do they find all these cans), but as we are now only weeks away from 2013, that road is coming to an end as well.

That all had to do with the fact that we were bumping up against the debt ceiling that Republicans would only agree to raise if the President would agree to spending cuts.

Only in the Alice-in-Wonderland reality of Washington, DC can a ceiling lead directly to a cliff.

So, what will happen? Have you not been listening?

The leaders of the House and Senate will work together with the President to attach helium-filled legislation to the can allowing it to drift right over the fiscal cliff.

And land on a brand new, shovel-ready, road.

On the Secret Decoder Ring page today: Links to a really good explanation of the fiscal cliff from Forbes Magazine and the Wikipedia entry for the Simpson-Bowles Commission.
Also a very pretty Mullfoto taken by the Director of Standards & Practices.