The Fiscal Cliff as an Act of True Statesmanship

I mentioned this in another post but thought it might deserve its own thread. What I wish to propose is that the fiscal cliff was never meant to be a fate so terrible that politicians would do anything to avoid it. The fiscal cliff was, in fact, the compromise reached between the parties. The show will continue for the time being to appease their backers, but the deal is done. What is left is the politics of addressing the short term pain early next year.

This is both very promising and very sad. Both parties knew very well that they faced severe backlash were they to willing agree to the fiscal cliff legislation so instead they crafted a plan to pass legislation that they could both publicly oppose. While it is sad that the public is such that politicians must take such devious measures to get meaningful legislation passed, it is promising in that our politicians, seeing the trouble we were in, acted divisively to stem the damage.

Time will tell whether this is just another flaky conspiracy, but at this point I will hold on to whatever hope I can that America will always do what's right... after we've tried everything else.

It's an interesting notion, and in a sense -- I agree.

Going further, I believe democracy is a dead horse. Frankly, human beings are too stupid to be allowed a vote on anything important, me included. Let me give you an example: We postulate a modest 3% growth as a baseline for economic development in the first world, annually. But 3% growth over the next 75 years or so means a 60 fold increase in our productivity and consumption. Now -- look at the resources we have available, and ask yourself how we will get a 60 fold increase out of a closed loop environment?

Another example: plastic waste in the pacific ocean is already so concentrated that it is almost impossible to find a wild fish in the sea that does not contain plastic in its digestive system. If plastic is in there, so are a lot of other things. The cost to clean up the ocean's trash is estimated to be beyond the entire GDP of the planet earth. But if we don't clean it up somehow, the entire food chain is imperiled.

Meanwhile, Americans like me and my friends have spent the last 30 years arguing over which team has bigger tata's; the red or the blue. We literally cannot agree whether more taxes will help or impede economic growth, and we have decades of evidence for both claims.

Ergo: the only way to get anything done in time to preserve our civilization is to ignore democracy. We simply don't have the intellect / lack the knowledge and / or have become too specialized.

I wouldn't be shocked at all if you are right.

reply to post by hezro


I am reading your op and wondering what in the world you are talking about? What is it you think the politicians have done to lessen the damage? The only thing they have done is lots more of what caused the damage and prolonging the inevitable making it exponentially worse..... I am all ears enlighten me...

reply to post by hawkiye


All bush tax cuts have been rolled back. Democratic incumbents would have suffered were they to fold on middle class tax breaks. Many Republican incumbents would have suffered if they caved on allowing any income tax hikes.

Cuts to medicare and unemployment insurance to which democrats would have been unlikely to attach their name.

$55 Billion in discretionary defense spending in 2013 republican supporters would not like.

$55 Billion in discretionary non-defense spending in 2013 democratic supporters would not like.

Cap on some itemized deductions for high income earners. I'm guessing incumbents from both sides take heat on this one.

Estate tax exemption falls to $1 million from $5 million and the rate rises to 55%. I imagine supporters of both sides will be furious about this, though republicans would probably take more heat.

Dividend tax rate for upper income earners will jump from 15% to almost 40% and capital gains taxes will increase from 15% to 20%, something both sides would have taken significant flack for. Republicans more from their base, but both from their backers.

Many popular progressive tax policies will be dropping or hitting lower income earners harder such as child tax credit, alternative minimum tax, payroll tax holiday, earned income tax credit, etc. Obviously this would not sit well with the democratic base.

These kind of freezes, cuts, and tax increases could have never passed were it put to a vote. They knew very well many would lose their seats because of it.

That being said, I don't mean to imply that these are good policy. However, what they do accomplish is the removal of impediments that allow them to vote "for" policies of which their base approves without appearing to sacrifice on principle.

It's like spotting a beautiful piece of land where you would like to build your city but finding it already inhabited by a poorly planned and inefficiently structured town. Unfortunately for you, those living their refuse to allow you to rebuild their town. To fix this, you hire some stranger to come and level the whole thing. Once the people see what's happened you show up again and offer to help them rebuild.

Please don't stretch the example too far as I do not mean to imply either the fiscal cliff or the eventual fixes will be any kind of shining city, just some necessary actions to allow them to implement needed changes without losing their jobs. Clever pragmatism, not utopia.

reply to post by hezro

I had a similar theory in that I figured both sides wanted us to go off the cliff but with the intention of being able to hang the other side. Of the two yours makes more sense then mine. A very interesting and logical concept.

Originally posted by 0zzymand0s
It's an interesting notion, and in a sense -- I agree.

Going further, I believe democracy is a dead horse. Frankly, human beings are too stupid to be allowed a vote on anything important, me included.

I would partly agree as I do not believe it is functional (or even attempted) in large societies, though I do feel it's effective locally where people's interests and cultures are aligned and you have some familiarity with those sharing the same governance. The type of decision making required as populations and societies grow requires training, education, and subtlety. Obviously our founders agreed to some extend. Whether we have that in any meaningful degree at the moment is hard to say as we see everything through the fog of politics.

Originally posted by 0zzymand0s
Meanwhile, Americans like me and my friends have spent the last 30 years arguing over which team has bigger tata's; the red or the blue. We literally cannot agree whether more taxes will help or impede economic growth, and we have decades of evidence for both claims.

Information overload indeed. Some honest disagreement about statistics and interpretation, some intentional manipulation to create doubt and confusion.

Originally posted by 0zzymand0s
Ergo: the only way to get anything done in time to preserve our civilization is to ignore democracy. We simply don't have the intellect / lack the knowledge and / or have become too specialized.

I think we have dealt with these types of ordeals many times and what we usually end up doing is suspending democracy in the short term and returning it (or at least the perception) once the ordeal has passed.

The idea that we have become too specialized is certainly an interesting concept. I'd be curious to find out if anyone has researched this in any depth.

Originally posted by 0zzymand0s
I wouldn't be shocked at all if you are right.

Shocked no, surprised yes. It would certainly redefine my view of our government going forward. If it does work, I would look for it to be used again in the future.

The so called fiscal cliff is a joke.

If everything set to automatically happen, happened it only makes at most a 500 billion dollar difference to the budget. That is not even 50% of the deficit.

They all act like it is this horrible fate that has to be avoided, but in truth it is not even half of what needs to happen - and what the market is going to force to happen. There is a borrowing limit, the FED is buying 75% of the debt we are currently issuing. That means there is no market for it at the rates it is selling for, but the fed has to keep the rates low, because we can't afford the interest on our 16 trill and counting at the rate the market would pay.

A 5% interest rate, which is the historical norm means our interest expense would go up to 800 billion a year - the same amount we spend on defense or social security. Of course our credit rating is the worst its ever been so the rate really should be higher than the norm.

They are trying to rig the market with printed money. This does not work, can't work, and is only making every citizens future worse with each passing day they are allowed to continue.

What makes me angry is these fools at the fed continue to pretend like they can make the excess debt go away by taking out more debt. The fact anyone is talking about these negotiations like they are super important or will solve anything shows the alarming ignorance of the population.

The bottom line is the debt hole is to deep, we can't run any deficit, and we can never pay this debt off, it is going to be defaulted. A depression is coming, it is not optional, they are just arranging the deck chairs on the titanic at this point.

reply to post by hezro


Everything you mentioned is totally meaningless and will not change thing. They continue to increase the debt ceiling so they can continue to increase the debt in the trillions. Raised tax rates and supposed cuts to deductions are a drop in the ocean and anytime they do that they actually take in less revenues as companies cut the fat so they make less hide more so they have to pay less and part of that is laying off tax payers too etc.

Also so called budget cuts are not cuts at all they are increases. Their idea of a cut is to cut some of the proposed increases IWO they will increase the budget no matter what just less then they wanted to hence why they have to increase the debt ceiling quarterly now just to keep things going. They can do nothing else or it all crashes they have painted themselves into a corner. All they are doing it prolonging the crash a little but making it that much worse when it does happen.

The way they do business is total fiscal insanity. They only pay interest on the debt because they can't make the payments and they can't even make the interest payments so they borrow more money just to make the interest payments. However this only increases the debt so whats the point? The fist thing you need to do when your stuck in a hole is to stop digging. They refuse to stop digging.

You can't borrow your way out of debt. A ten year old can understand that concept if explained to him yet here we are allowing these traitorous scumbags to borrow more money to pay interest payments on debt they cannot afford thereby increasing the debt exponentially till it crashes soon and then act like they are trying to help us and even treat them with some sort of respect because they lied to the people during election years... Sigh! They are idiots but we are even bigger idiots for allowing this utter insanity.

I fail to see any acts of statesmanship but I see acts of treason! Maybe it is just so utterly insane that people just cannot believe it no one is that stupid right? Apparently we are...

reply to post by proximo


The bottom line is there is no debt,

Let that sink in a bit.

We could wave a magic wand and make 4/5 of every debt on earth vanish, without changing anything substantial with regard to ownership or control over actual things in the real world.

Suddenly it would be "ok" to "spend" again.

Our monetary system is irrational. It's only purpose is to turn everyone alive into a 9-Volt battery for the banker elite.

reply to post by hezro

I agree. I think the exact same thing. They worked this out to give themselves political coverage after the election to put in some version of the Simpson-Bowles plan. It is not a flakey consprcay at all. In fact I am willing to say it is 40% for, 60% against that this actually happened (most likely that it is just the result of deadlock, delay politics).

How could Repubs vote 450Bil in defense cuts, for repeal of the Tax cuts, & the Dems cut 450Bil in non-discrecenary spending? No way .... this way the right will yell it was on Obama (true) and the left on the Republican House (also true) and when the time comes to vote both sides are stirred up and no one has a clear "issue".

I have to agree on the basic premise that cuts had to be made but no party could sign off on any of them without p!ssing off their supporters...so they made a "boogeyman"...the sequestration. "It's all their fault" they shout at the podium while pointing at the other party.

When in truth, both parties know something hard has to be done...just neither party wants to attach their name to it.

The Dems cannot attach their name to social and entitlement cuts without backlash. The Republicans cannot attach their name to tax increases or defense cuts without uproar from their constituents...so they both pretend "the other side did it".

And most of the sheep out there will look confused...roar their support for their party...cast curses at the opposition...and continue to graze...




This is a perfect example of a dog and pony show...erm...elephant and donkey show. Neither side has your back and if you think they do...

keep looking over your back...they ain't there...

ETA: Even the "boogeyman" is not fixing the problem. They are still deficit spending! This is NOT balancing the budget...that would require HUGE cuts and HUGE tax increases at the current levels of spending and these charlatans have too many criminal friends with their hand in the cookie jar to do that.

To all those who replied by stating that this is not a long term solution to the problems that plague us, I don't necessarily disagree. It may "work", but it won't be because it was the structural shift we needed to return us to a fair and productive economy, it will be because the other players happen to be weaker at this point in time. This will give our currency and treasuries (low interest) strength going forward and allow for continued deficit spending and corporate borrowing... for a while. The end game without radical change is still ugly, but I wouldn't expect it to occur soon.

What I mean to highlight with this thread of somewhat hyperbolic title is that while politicians continue to play games of absolute division publicly, behind the scenes they are attempting, in their way, to address serious issues. Not only that, they're doing it in a fairly clever manner. Though at the same time, I suspect it is a fairly small number of individuals who are truly aware of the game.

reply to post by 0zzymand0s


Lot of issues with your post.
1. Your math is wrong. A 3% growth rate for 75 years would grant the country with 9 times the productivity of today, not 60. Furthermore, GDP growth rate hasn't been tied to anything tangible like a finite resource since Dick Nixon fully eliminated the gold standard. GDP growth is far more a matter of the money supply and inflation than anything else. It basically pushes to keep up with a combination of population growth, inflation, and support of the wealth divide.

2. The US isn't a democracy. I appreciate people grasping at the royal carpet crappings of men like Barrack Obama and Harry Ried and believing that they are an example of failed democracy, but their presence in Washington is really far more an example of the Lords of the Republic selecting two turds, shining them to a high polish, and then instructing us peasants to choose between the two shiny turds. This is modern American Democracy, I suppose, but in a true democracy we'd actually get a chance to pick something that didn't originate from a manure pile.

3. The US deficit and economic fiasco are a great comparison to the Pacific Trash Gyro, but in a much different manner than you're suggesting. Both are beyond repair. The time has come to learn how to live with it. For the trash gyro, that may involve putting Darwin's theory to the test and see what marine life can adapt to living in a spiral of garbage. In regards to the US economy, the same is true. The time has come to shut the pipeline of tax dollars off to the federal government entirely and allow survival of the fittest to take over. Whatever politicians, agencies, and policies survive a complete lack of forced funding perish while those who adapt and determine less draconian methods to enact their survival, come out alive.

reply to post by burdman30ott6


Thank you for correcting the math. I appreciate it!

As to the rest, you have given me much to think about. I don't disagree that some form of natural selection is going to take place with regard to the pacific ocean, or US politics, but I don't know how the country -- as we know it -- can survive the transition back to state-centered control and authority.

Frankly -- the world "works" (or doesn't) because of a relatively unbroken trend towards city life and collectivism (I know, what a god-awful word!) from rural life and tribalism.

We have 7 billion people on the planet today. We are not going back to a rural way of life without a mass culling of the species, and I don't know any rational people who are calling for that.

The rhetoric since the election has been about division, succession and so on, but I doubt two countries will be enough. In fact -- I doubt two worlds will be enough. We need to find ways to turn our "weakness" into strength, our trash into treasure (or energy).

As a child of the 70's, everything I love about this country is tied to innovation and upward technological progress. I am not sure that is compatible with starving the beast. In fact -- I am suspicious that the only thing which can move the human species forward now is the recognition that we need to plan beyond the short-term, and ultimately -- over the medium to long term -- "leave the nest." We can clean up almost anything once we have virtually unlimited resources. We just need to "get there."

IMO, obviously.

A "star" for your engagement in civil and interesting conversation.