Editor’s Note: Now that the elections are over and our leaders are back in Washington, their first order of business is to address the looming Fiscal Cliff that’s just about six weeks away.
Below is a timely message our Freedom & Prosperity Letter Editor Charles Goyette sent to his subscribers earlier this week. It can help you to see just how much is at stake, how we can expect to see it handled and what that really means for you.
How do you get a president re-elected with an unemployment rate hovering around 8%?
Simple. You arrange for the other party to do three things:
1) When the people are resentful of bailouts for Wall Street and crony capitalism, you get the other party to nominate a representative of the crony classes.
2) When the people are sick and tired of elective foreign wars and the bankrupting cost of the military empire, you get the other party to nominate a candidate who surrounds himself with wild-eyed neocon warmongers — the very crew that sold the nation on the last bogus war rationale. (It helps if he also promises to grow the bloated defense budget.)
3) And you get the other party’s nominee to alienate the energized, grassroots supporters of one of his primary opponents. There is a lot of talk from the usual suspects about the Republican’s aging demographics, but they did it to themselves — slamming the door on a tidal wave of young Ron Paul supporters.
Now, did the Democrats arrange for the Republicans do all three of those things?
No, the Democrats were not smart enough to get the Republicans to do all that. The Republicans did it all by themselves.
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Now, for the Next Order of Business …
So what can we expect in the months ahead? Do the two parties march the nation headlong over the Fiscal Cliff?
A cynic might come up with a game-theory argument that, if nobody does anything, nobody gets blamed for anything.
Accordingly, the tax cuts would expire and the sequestration spending cuts, on automatic pilot without any action to stop them, would just kick in.
Nobody’s fingerprints would be on the taxes or the cuts. Nobody would be to blame.
A naïve optimist might say that the severity of the crisis and the clear defeat the Republicans suffered on Tuesday means that a window of cooperation will prevail in which elected officials of goodwill work together to solve the problem responsibly before the end of the year.
Perhaps a scattering of them will try that approach.
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When He Felt the Heat, He Saw the Light
I prefer another assessment, neither cynical nor optimistic, but realistic and based on experience. Ronald Reagan gave voice to this realism once when he signed a bill he had opposed. “When I feel the heat, I see the light,” he said.
One congressman I know voted for the Bush bailout bill in 2008, despite knowing that it was a boondoggle and bad economics. Although he later apologized for his vote, he voted for it nonetheless.
He told a mutual friend why: “It’s hard to say no when you have every CEO in your district calling for you to support something.”
For a congressman dependent on campaign contributions, there is heat involved in telling the money interests no.
Right now many of America’s business leaders are aggressively pushing for a solution to the Fiscal Cliff. They unanimously decry the financial uncertainty. It’s impossible to make plans and commit capital.
It’s bad for jobs. It’s bad for business.
“Fix the Debt” is an organization founded by former Clinton White House chief of staff Erskine Bowles and former Republican Senator Alan Simpson. They were co-chairmen of President Obama’s bipartisan debt panel, the commission that bears their names: Simpson-Bowles.
“Fix the Debt” has assembled a council of 80 corporate CEOs from Microsoft, Aetna, Goldman Sachs, Time Warner, Motorola, Cisco, UPS, Bank of America, Merck, GE, Dow, JPMorgan Chase, Boeing and many other leading companies.
They want a grand bargain on the Fiscal Cliff, and they have raised $30 million to turn up the volume on their message.
They will apply heat to members of Congress to get their way. But be sure to note that many of these companies are crony capitalists — dependent themselves on fat government spending, defense contracts, bailouts and subsidies.
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Some agreement will be hammered out. Something designed to remove uncertainty today, to span the Fiscal Cliff — for now.
It may promise fiscal responsibility down the road, in 10 or 20 years. In Washington, 10 or 20 years down the road is meaningless. It’s all pie-in-the-sky.
It’s the same as Wimpy economics: “I’ll gladly pay you Tuesday for a hamburger today.”
Any solution that comes out of Washington will increase government spending. Here’s how you’ll know: It will include a great, big increase in the debt ceiling.
Remember, the level of taxation is equal to the level of government spending. If the debt ceiling is raised and government spending increases, someone will have to pay for it.
I’m looking at you.
For your Freedom and Prosperity,
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