With this “fiscal cliff” garbage, it’s nice to finally have a crisis that’s mostly a shitty joke, that we don’t actually have to worry about.
First, a word about the whole “bankrupting America,” budget hawk crowd: they are full of shit. As Investors Business Daily points out, the deficit is actually declining at the fastest rate since the demobilization following World War II. This is because much of the deficit was caused by the financial crisis of 2008 and the hangover of the Great Recession when tax revenues fell and social safety net programs necessarily had to catch more people, as well as the highly successful Recovery Act. Now that both are, for the most part, in our rearview mirror and House Republicans got their pound of flesh in the 2011 budget negotiations (that led us to the current fiscal cliff), the deficit is shrinking rapidly.
Furthermore, as Matt Yglesias of Slate points out, we don’t have a deficit problem as much as a political problem. Current U.S. law would actually more or less wipe out deficits, beginning with the expiration of the totally pointless Bush tax cuts, one of the stupidest pieces of economic policy conceived in the last decade (other than two deficit-funded wars, of course). Then you have the Medicare “doc fixes” which is where Congress just continually votes to keep doctor reimbursement rates high, and you have continuous patches for the AMT. This is why the Congressional Budget Office keeps two sets of projections: the first one shows deficits rising because our political leaders refuse to deal with these issues (and go to the mat for the Bush tax cuts). The second shows what would happen if Congress just stuck to the law, in which case deficits will plummet rapidly. Again, it’s a political problem, not one of “too much government” or some equally inane prognosis.
As for the rising costs of Medicare, this is a problem, but it has more sensible solutions than raising the retirement age from 65 to 67. While the average person is living longer, it’s the upper-class lawyer who is doing that longer living and the new retirement age will not affect him. It’s the working class construction worker, whose average lifespan has not increased who will bear the brunt of that age hike. Also, because most of Medicare’s costs come from the older, more dying-y people, raising the retirement age won’t even save that much money. It’s a pretty stupid solution when you could just allow the government to use Medicare to bargain for lower prescription drug prices—as President Obama has proposed—and save much more ($156 billion versus $113 for raising the retirement age). Of course this will cut into the profits of the pharmaceutical industry, and they have a lot of bodies on Capitol Hill, whereas 66 year-old construction workers do not. In this regard, the "fiscal cliff" panic, along with deficit panic, is basically about getting Americans to somehow swallow cuts to social programs while maintaining a historically low tax burden for the rich.
Obviously, Republicans are right that our government sure does a lot of wasteful spending, but most of it is in the form of subsidies and tax breaks handed out to favored constituencies like oil companies and agricultural giants that grow corn for expensive, environmentally unhelpful fuel. Mitt Romney still gets a mortgage interest rate deduction for his second and third homes. The wealthy who make most of their income from capital gains face lower tax rates than the construction worker. You’ll not notice any congressional Republicans throwing themselves at these issues, but when it comes to home heating oil subsidies that help keep lower-income families from, you know, freezing to death or whatever, it’s all, “The deficit is immoral! We can’t pass this down to our children.”
Like I said, we don’t have a deficit problem, we have a political problem, and most of that political problem resides in the GOP, which is doing its best to prove it does not have a tangible grasp on reality. That’s why they can’t put forth a real “fiscal cliff bargain” proposal with any actual details because they don’t want to be the ones to propose draconian cuts to the major driver of the deficit, Medicare.
Furthermore, they don’t understand the can of worms they’ve opened with the debt-ceiling hostage precedent they created in 2011 that got us here in the first place. By playing chicken with the full faith and credit of the U.S., (not to mention stalling out the recovery with their backwards austerity program), they’ve made it impossible for future combative congresses to not play chicken with the debt ceiling. Imagine if back in 2006 when the Democrats were swept to power in the House and Senate, they had refused to raise the debt ceiling until President Bush began to draw down troops from Iraq?
Even as a fierce opponent of that war, I can understand that this would have been a disastrous bit of hostage taking, yet now the House Republicans have turned it into a card that can be played by a relatively small political faction every time the opportunity arises.
This is why the only real problem in this whole story is one of politics, and the only truly acceptable outcome is an end to the current debt-ceiling charade. One political party has behaved like a three-year-old with a hand grenade and opened up the possibility that all future presidents and congresses spend their time creating and haggling over false crises.