But first: The Problem.
The problem is the country can't afford it's current living standards.
What does that mean? That means that from the richest person in America to the poorest person in America is living above their means.
For the richest person, Warren Buffett, his money should probably be cut in half by now. If not for the Fed, congress, and two Presidents of the United States of America bailing the country out; Mr. Buffett's fortune would have gone down the drain with everything else's.
For the poorest person, he is living on Government assistance. It can only be afforded because the government barrows or prints money to pay for it.
Imagine your brother or sister, or nephew, anybody you may love.
Imagine they made $600 a week, but their bills come up to $750 a week. Would you lend him or her the $150? If so, for how long?
That's the same predicament the country is in. How long do we expect the world to lend us money without knowing how we're going to pay them back?
If the only job your cousin wanted or planned to get would only pay $600 a week you would tell them to either get a higher paying job, or cut back their spending. Right?
If the country is the cousin, the fiscal cliff is the cousin looking for a higher paying job, and cutting his phone off to save money.
And anybody that says the deficit and debt is not a big deal is either delusional or misinformed. It's our biggest vulnerability. If China dumped the trillion in U.S. debt they own, our economy would collapse. I'm not trying to scare you. None of this is for effect.(except the fact that theses letters are little bigger.) It's true though.
The U.S Gov. doesn't sell a trillion in debt in one day for a reason.
It's not easy. As of right now, there is nothing about the U.S. Gov. that says they'll have the continuity to adequately deal with the huge problems the country faces.
That's the problem, now: The Solution
This is the tricky part. Nobody wants to give up what they have to get what they want. But holding on to what you have can't help if you owe out more than your arms can hold.
Living on borrowed money you need that money to reap the highest returns. The returns can be better educated citizens. A society as a whole benefits from educating it's citizens. Unfortunately, education isn't one of the things that we the people are holding onto.
People are holding onto entitlements. The social contract. The notion that if I can't take care of myself, the government will, and by extension, my fellow man.
This is a necessary notion for a society to have. Without it you won't have the kind of innovations you see in the best societies. If your worried about your next meal you won't be inventing anything but some food if you can.
The problem is too many people need it. If everybody needs a helping hand who in the hell will have one to spare?
America's secret sauce has been it's ability to keep the numbers between the needy and the charitable, or how much the charitable have, pretty sustainable. Thing is, as the price of paying for the social contract rises you need more and more people with jobs in order to tax to pay for this.
If your not securing future jobs for your citizens, your not securing a future for your citizens.
You can call it social security but that doesn't make it secure. You can call it welfare, but it's anything but that. No one on welfare would say he or she is living the American Dream. Yet this is what we are preparing our children for.
I don't have to put a snappy chart up, or source some profound data to know this. I live in America, I know a LOT of Americans. Our kids are not ready.
Then, after they're pushed through high school, we rag on them that "they're not putting forth enough effort." or just scream "get a job!"
I've been seeing these articles around the internet saying all we need is more jobs to solve the deficit issues. They never say how we are supposed to make these jobs. Saying all we need is jobs is like telling a blind person they're fine, all they need is a little light.
We should be spending at least 25% of GDP on educating our children. From the poor black kid to honey boo boo should have the school of the future.
Kids coming into the head-start program this year should be in for the best education in the world over the next 15 years. Teachers shouldn't need a union, they should get paid so much that a union just looks like an unnecessary middleman between you and your money.
Union dues come out of your money also. That's less money we are spending educating our kids. The stimulus should come from rebuilding and building schools; equipping them with state of the art everything, and research into the best ways to educate all the kids.
We can't just tax more people for this, taxes are important , but in a different way than many think; more on that later. We have to re-allocate spending first, and then cut spending.
To push for too steep of a cut to spending too fast is asking for trouble. It'll cost more to fight the recession that comes from going over the cliff than it will to avoid the cliff. Time is of the essence because this whole time we're vulnerable. We mask it well but it's not hard to see if you know where to look.
All you hear when mass media talk about the cliff is how many people need government assistance to survive. White, Black, Yellow, and Red people alike. This can't go on. Governments don't have money, they take money from their citizens in the form of taxes.
Governments don't make jobs, people make jobs. People start businesses and if successful, they hire people. This process should be our second biggest expenditure. This is where taxes come in.
You tax what you want less of, and tax less what you want more of. Meaning, if you tax soda higher than everything else you want less people drinking soda as it costs more than other things it is equal to.
We make charitable donations exempt from tax so that we'll get more of it. We're living in a time where all our energy needs to be focused on a few priorities. With that in mind there should be a greater deduction for creating more and more jobs. You shouldn't get taxed more for every job you create. We can raise the tax rate and do things with the tax system that creates jobs at the same time.
The tax system should be simpler. But more than that, it needs to promote the right behaviors. We need a cultural change. The tax system can expedite that cultural change. This is taxes' greatest attribute. We buy more than we sell. As it is, if more people got jobs we will probably just buy more than we sell at higher levels.
The kids have to come up with something else because we can't add the type of jobs we need that will get us to sell more than we buy. This is why education is so important.
I don't have all the answers. I have read a lot of history though, and I've seen this movie before. Japan made the mistake of just giving people jobs for the sake of giving people jobs; building bridges to nowhere.
We actually have bridges to somewhere that need fixing, let's do that also. It's lower down the priority list so it should garner less money, but still. A cliff deal should push back spending cuts and let the Bush tax cuts expire for the higher earners, and ensure further talks next year.
There are a lot of things that can be done to save America; I could go on and on, but they take grit, nerve, and a highly functional Government. We need a Treasury Secretary that will get on his knees and beg for a good cliff deal like Paulson did for the Wall Street Bailout. Not policy makers acting like school children in front of the world. Like, "you go first, no, you go first, no, you go first. What are you gonna give? What are you gonna give? You go first, no, you go first."
Our policy makers have to get it together. They have to do a lot better job of managing expectations. They have to stop playing policy makers on T.V. and actually be policy makers in real life and make policy! If not, we're not gonna like what awaits us at the bottom of the cliff.