We hear a great deal these days about the “fiscal cliff” over which we are about to plummet at midnight on Dec. 31, 2012, when (1) the Bush tax cuts expire, (2) the payroll tax holiday ends, and (3) the across-the-board budget cuts agreed to by Congress last year go into effect.
Of course, the only people not talking about the pending abyss are our two presidential nominees, fearful of alerting the public to the bad news ahead, but what else is new? If I were moderating a presidential debate, I would hammer both candidates with fiscal cliff questions and persist until they responded with specifics, an unheard-of rarity in this largely unedifying campaign.
The pundits and economists tell us that terrible things will happen if Congress and the President allow this to happen. Moody’s rating service threatens that it will cut the U.S. credit rating from its current AAA if we enter 2013 without taking action. The conventional wisdom is that everyone — even millionaires and billionaires — will find their tax bills going way up despite the tough economic times. Workers will suddenly find themselves with less take-home pay. IRAs and 401Ks will reprise the early days of the Great Recession because the stock market will collapse. Our national defense will be jeopardized by the draconian cuts the Defense Department will suffer. It will be a national calamity of historic proportions.
Here is why they are most likely wrong.
First, when Standard & Poor’s lowered the U.S. credit rating from AAA to AA in summer 2011 as a result of the congressional gridlock over raising the debt ceiling, it had no adverse effect whatsoever. Despite the ominous warnings from the chattering class, more money unexpectedly flooded into the U.S., likely because we were then and still are now the safest haven in the world. Bond interest rates actually declined. There is literally nowhere else in the world other than the U.S. for capital to go to be safe.
Second, the sorry, inept, dysfunctional, lame Congress is highly likely to reach a last-minute agreement to do what they always do — postpone Armageddon by kicking the much abused can down the increasingly potholed road; postponing dealing with these unpleasantries once again.
Sure, these all sound like terrible things. But here is why the consequences of the fall may not be so dreadful. Letting the lemmings plunge off the fiscal cliff is probably the only way we will ever get Congress to set aside its polarizing politics, unlock the grid, finally act responsibly, and address the fundamental debt and deficit problems that will swamp us all if they are not resolved now.
We hear a great deal these days about the “fiscal cliff” over which we are about to plummet at midnight on Dec. 31, 2012, when (1) the Bush tax cuts expire, (2) the payroll tax holiday ends, and (3) the across-the-board budget cuts agreed to by Congress last year go into effect.
Of course, the only people not talking about the pending abyss are our two presidential nominees, fearful of alerting the public to the bad news ahead, but what else is new? If I were moderating a presidential debate, I would hammer both candidates with fiscal cliff questions and persist until they responded with specifics, an unheard-of rarity in this largely unedifying campaign.
The pundits and economists tell us that terrible things will happen if Congress and the President allow this to happen. Moody’s rating service threatens that it will cut the U.S. credit rating from its current AAA if we enter 2013 without taking action. The conventional wisdom is that everyone — even millionaires and billionaires — will find their tax bills going way up despite the tough economic times. Workers will suddenly find themselves with less take-home pay. IRAs and 401Ks will reprise the early days of the Great Recession because the stock market will collapse. Our national defense will be jeopardized by the draconian cuts the Defense Department will suffer. It will be a national calamity of historic proportions.
Here is why they are most likely wrong.
First, when Standard & Poor’s lowered the U.S. credit rating from AAA to AA in summer 2011 as a result of the congressional gridlock over raising the debt ceiling, it had no adverse effect whatsoever. Despite the ominous warnings from the chattering class, more money unexpectedly flooded into the U.S., likely because we were then and still are now the safest haven in the world. Bond interest rates actually declined. There is literally nowhere else in the world other than the U.S. for capital to go to be safe.
Second, the sorry, inept, dysfunctional, lame Congress is highly likely to reach a last-minute agreement to do what they always do — postpone Armageddon by kicking the much abused can down the increasingly potholed road; postponing dealing with these unpleasantries once again.
Sure, these all sound like terrible things. But here is why the consequences of the fall may not be so dreadful. Letting the lemmings plunge off the fiscal cliff is probably the only way we will ever get Congress to set aside its polarizing politics, unlock the grid, finally act responsibly, and address the fundamental debt and deficit problems that will swamp us all if they are not resolved now.
If we all go over the cliff, Congress will have no choice but to do something constructive. They will be backed into the proverbial corner and dithering inaction will no longer be an option.
Without a loaded and cocked gun pointed to their collective heads, buried so long and so deeply in the sand, we will continue to go down the road to perdition at an accelerating rate. Then, when we do inevitably collapse, it will cost us far more and take much longer to pull ourselves out of the mess these so-called national leaders have put us in by their constant desperation to avoid responsibility at all costs.
So, if we plunge into the abyss, my prediction is that we won’t stay down very long and the salutary effects of the tumble might well be worth the fall.
“Rants” is a series of political and social observations written by part-time Canandaigua resident and Canandaigua Academy graduate Richard Hermann.
