Today the president gave an interview to Bloomberg T.V. where he makes it clear that without a tax rate hike there will be no deal. Before this, Speaker Boehner and Minority leader Harry Reid, along with Dick Durbin and the gang had a war of words that signaled there was trouble brewing. That put my antennas up but today's interview along with recent Grover Norquist appearances on Bloomberg pushes me to believe that we will be going over the cliff after all.
Grover Norquist reminds me of that scene in the Godfather after Sunny was killed. Don Corleone and Tom Hagen are in the car coming from the big meeting that ended the war. Tom asks the Don if he should insist that all the drug middle men have clean records. The Don answers:"Mention it, don't insist, Barzini is a man who'll know that without being told." Tom says: "You mean Tattaglia." The Don says: "Tattaglia's a pimp, he never could have out fought Santino. What I didn't know, until this day, was that it was Barzini all along."
What I didn't know until this day was that it was Grover Norquist all along.
The Republicans for some reason listen to Norquist; a man that has zero constituents to worry about.
Oh, and I can't forget Paul Krugman; the guy who's running around writing blog posts for the New York Times saying the president should go over the fiscal cliff. He says there will be better negotiating leverage on the other side of the cliff for Democrats. Why, I don't know. Because taxes will go up on everyone on the other side of the cliff. The president won the popular vote, which means more people voted for him and more of his voters will be in pain. The rich will feel it, but it won't be as painful.
I think The President is listening to this guy which is a mistake. Also, the polls that say more people will blame the republicans if we go over the cliff is bullshit. If it is true those people are the same people that voted for President Obama, and I bet that "more" is the same margin he won the popular vote by.
Going over the fiscal cliff can be construed as a good thing in so many ways that even if everyone blames the GOP it won't be all bad if they spin it right. That should be easy as getting our house in order now is a good first step in rebuilding our economy.
Paul Krugman would say if it ain't broke don't fix it. He'd point to our borrowing costs and say we don't need to worry about our house just yet. But you don't call the insurance company to ask about flood insurance in the middle of a flood. Why wait for our borrowing costs to rise to do something about our over borrowing? And if we kept it real, how can we use interest rates to judge the market's appetite for our debt with the Fed so heavily in the market? I don't read much of what Krugman writes but in what I have read I've never seen him write anything about paying our debts back. I wonder why?
Right now when our debt comes due we borrow to pay it back. Whether we borrow from the Fed, pensions, social security, or China, we have to pay it back. Nobody wants to be repaid with printed money because it's purchasing power is instantly diminished. Contrary to what most seem to think, money comes from working for it, or trading something of value for it, not a printing press. It always has and always will. To think somehow we can break all the rules with impunity is stupid and reckless and irresponsible.
It is true that we have time before the shit hits the fan but that time needs to be used super wisely. We should be debating an overhaul of the education system not the tax system. The tax system was supposed to be done 3 years ago. For a country that depends so heavily on it's young to support it's old through the so called "social security" system we sure don't do much to ensure that it's possible. We're getting into the habit of depending too much on our government for economic growth. That's a recipe for disaster if there ever was one. Maybe it's time the living standard adjustment our economic reality dictates is truly felt. Maybe then it will become more popular in this country to become an engineer than a rapper.
At any rate it will take some time before we can expect the real economy to be able to muster up sustainable growth, so how long can we go on borrowed time and borrowed money? You should either borrow time or borrow money. When you find yourself borrowing both you know you have big problems.
The fiscal cliff is just the tip of the iceberg. Truth be told, we only have two choices. Either we deal with our problems and take the pain that comes along with it, or we let the market take care of our problems and we take the pain that comes along with that. Either way we have pain ahead.
That pain can be the good pain, like the kind you feel after a good workout, or bad pain, like the kind you feel breaking a rib or two. They both hurt but one makes you stronger and the other makes you weaker. Our problems call for decisive action. What we get is dysfunction. We have to set up suicide sequestrations to get anything done. If something doesn't change we can forget a new American century; I would be surprised if we got a new American decade..