The so-called “fiscal cliff” which received little attention during the presidential campaign is receiving major media attention now.
Both Democrats and Republicans deliberately ducked debate on the issue until after the election.
The fiscal cliff refers to huge tax increases and across the board spending cuts scheduled to take effect after Jan. 1.
Both parties intentionally created the “fiscal cliff” last year. The idea was Republicans would so greatly fear the military cuts, and Democrats the domestic spending cuts, that they would negotiate a deficit-reduction alternative by the Jan. 1 deadline.
For fiscal year 2013 alone there would be more than $500 billion in tax increases unless President Barack Obama and the Republicans reach an alternative deficit-reduction deal.
If no deal is reached taxes would rise for nearly every taxpayer and many businesses. Financing for most federal programs would be cut. Many economists predict that the nation would slip into a recession if a deal is not reached.
So it is critical that a deal is reached. The question is what kind of a deal.
The deficit-reduction deal must be both fair and balanced.
Voters have expressed in exit polls and through their re-election of Obama that they want a balanced approach in which the burden of reducing the deficit is not placed on the poor and middle class. President Obama ran on a platform of spending cuts and increasing revenue through increased taxes on the wealthy. Voters clearly rejected the GOP approach to the crisis on Nov 6.
Obama must be careful not to agree to a deal which will hurt the nation’s fragile economy. Drastic cuts too soon could plunge the nation back into a recession. Many economists warn that a path of austerity means more layoffs which would lead to less consumer spending and weaken the economy.
Many economists say that in the short term, what is needed is more government spending on rebuilding the nation’s infrastructure to stimulate the economy. They argue that after the economy is strong would be the time to reduce government spending.
Journalist and author Bob Woodward was given a leaked copy of the Obama administration’s offer in the failed proposed budget of 2011 which offered cuts to Social Security and increasing the age for eligibility for Medicare. Fortunately the deal fell. The deal fell because House Speaker John Boehner was unable to deliver Republicans to support any revenue increases.
If the Democrats cease to be the party that defends and protects Social Security, Medicare and Medicaid, millions of Americans will be hurt.
While addressing the self-imposed “fiscal cliff” is important Democrats must also remember what voters repeatedly and clearly said was their top priority—the economy and jobs. With an unemployment rate of 7.9 percent, the highest priority for the nation’s elected officials should be developing policies that lead to the creation of jobs and a return to full economic recovery.
(Reprinted from the Philadelphia Tribune)