Fiscal Cliff showdown all about posturing
Members of Congress seem unable to compromise in order to avoid the looming Fiscal Cliff that threatens to wreak havoc on our economy. Though both sides are not without fault, President Obama and Senator Harry Reid (D-NV) appear steadfast in their agenda to force a heavy tax burden on Americans who are already strapped and having to take beans off the kitchen table.
Congress is in the middle of a legislative showdown, much to their own making, and our economy is on the brink of a bubble that is about to burst…again!
Budget Control Act of 2011
The Budget Control Act of 2011 was signed into law by President Obama on August 2, 2011. With the debt-ceiling continuing to rise, the bi-partisan bill was enacted as a series of proposed compromises in an attempt to reduce the deficit and prevent the United States from going into default.
The bill passed the house on August 1, 2011 by a 269-161 vote. 174 Republicans and 95 Democrats voted for it; 66 Republicans and 95 Democrats voted against it. On August 2, 2011, it passed the Senate by a vote of 74-26; with 19 Republicans and 6 Democrats voting against it.
Rep. Paul Ryan (R-WI) believed the Budget Control Act would ensure the House Republicans would uphold their promise to cut spending more than increasing the debt. According to Ryan, “Congressional Budget Office (CBO) numbers confirm that the updated legislation adheres to this pledge.” He continued, “…no new taxes; no blank check for the President; spending cuts greater than the size of the debt limit increase.”
With the Budget Control Act signed into law, it appeared that republicans won a small battle. Though not seen as politically expedient, they managed to change the argument from how much government can spend, to how much government can cut. They seemingly put themselves on the right side of history, and the burden on the Obama led democrats. The 2013 Fiscal Cliff wasn’t even an afterthought at the time.
Without a deal struck by the end of 2012, federal spending cuts will automatically go into full effect in January, the result of a problem of Congress’s own making by going nearly four years without an approved budget. Unless a bipartisan deal is struck in these waning days of 2012, there will be a series of automatic cuts, not necessarily good ones, come January 2013.
Sequestration, in government language, refers to an automatic cut in spending at a given date; in this case, January 2, 2013. According to a report released by the White house, if activated, these cuts would spark an immediate 9.4 percent reduction in defense programs and 8.4 percent reduction in money allocated for domestic programs. The defense cuts could be very damaging to our National Defense. Though military compensation should not be affected, support initiatives would. New equipment procurement based on new technology and advanced threats to the US would be limited. Repairs to existing equipment would meet untimely delays and military family readiness would be compromised.
Domestically, reductions in our federal law enforcement agents would commence. There would be less traffic controllers, longer lines and wait times for Veterans Benefits and Services, and tax return delays. The disruption to government logistics would be of great magnitude. Border protection would decrease while equipment procurement delays for the military would increase.
Sequestration is not as problematic for democrat lawmakers, however, as there are certain exemptions. Democrats ensured that entitlement programs such as food stamps, unemployment and Medicaid programs will not be affected by the sequestration cuts. Federal pay scales are exempt from the spending cuts as well.
At the beginning of 2013, the terms of the Budget Control Act of 2011 will go into effect. This enigma that the U.S. government will face, known as the “Fiscal Cliff,” is due in large part by the struggle of power between both political parties. The Fiscal Cliff results from the expiration of the Bush Tax cuts, and Sequestration under the Budget Control Act of 2011.
According to the CBO, anticipated sudden economic results of the Fiscal Cliff will more likely than not lead to a recession in early 2013. Leading causes of concern include an end to the temporary payroll tax cuts, certain tax breaks for businesses and tax cuts from 2001-2003. In addition, taxes related to Obamacare and budget cuts to National Defense and Medicare will go into effect. To make matters worse, federal taxes will increase by more than $500 billion next year alone.
2013 and Beyond
Failure to compromise and prevent the United States from going over the Fiscal Cliff rest exclusively with the democrats. They just won the presidential election and maintain control of the Senate. They currently have the upper hand. But there are no more excuses; they now own the economy for better or worse. Taxes will increase and the National Defense budget will decrease. Welfare, food stamp and Medicaid spending will continue to rise. Layoff’s will continue add to unemployment lines as business, in particular small businesses, have to find ways to cover the extra cost of living the American Dream.
As for Republicans, their backs are against the wall. They have no leverage, no bargaining power and their political capital is all but spent. The day of reckoning has come as the separation between mice and men will be revealed. True conservatives will stand on principle and continue to fight to the bitter end. Moderates will cave and compromise with their liberal colleagues in order to rebuild their political capital for future endeavors.
The writing is on the wall, democrats will win this battle. Republicans have cut their own political throats by not adhering to conservative principles. Obama’s re-election is proof of that.
Right now, the battle is all about posturing.