Posted by: coastcontact | November 27, 2012

35 Days to Fiscal Cliff Hell

Some of this posting is based upon an article titled, “Fiscal Cliff Could Cost America 277K Jobs in January” posted on this website.

While addressing the House Financial Services Committee in February of this year, Federal Reserve Chairman Ben Bernanke coined the term “fiscal cliff,” describing, “a massive fiscal cliff of large spending cuts and tax increases” scheduled to occur on January 1, 2013.

Just a few days ago President Barack Obama, House Speaker John Boehner, and Senate Majority Leader Harry Reid and minority leaders were all talking as if an agreement to avoid the fiscal cliff was a realistic possibility.

Today’s news reports are that little progress has been made.

Should Congress fail to act, allowing the tax cuts to expire and budget cuts to take effect, the results could be drastic, increasing the annual federal tax burden on the average family of four by about $2,200, according to the Congressional Budget Office.

The major components of the fiscal cliff are the expiration of the Bush Tax Cuts, federal unemployment benefits, and social security payroll tax cuts, on top of automatically triggered spending cuts associated with the Budget Control Act of 2011.

Cuts associated with the Budget Control Act could result in the loss of 277,000 federal jobs, according to a report from the George Mason  University Center for Regional Analysis. The report assesses the impact the Budget Control Act would have on all agencies subject to cutbacks including Agriculture, Commerce, Education, EPA, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, State, NASA, Transportation and Interior. While the cuts would only reduce federal spending from 22.9% of GDP to 22.4% of GDP, according to the CBO, they would cause significant job losses for federal health inspectors, Federal Aviation Administration workers, and FBI agents.

The president does not appear to be willing to write a piece of proposed legislation to avert going over the fiscal cliff.  This was my complaint about his management style throughout his first term.  It was no Barack Obama who wrote the Affordable Care Act.  It was members of the Democratic Party leadership in the houses of Congress.

If the sequestration occurs both political parties deserve blame.  The president should not be campaigning as he did during much of his first term.  He should be negotiating with congress.  His failure to bring this self inflicted event to a satisfactory conclusion will dog his next four year term.


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