StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

The Cliff: Coming Soon To A Political Theater Near You

08 May 2012
Posted by Stan Collender

As I explain in my column from today's Roll Call, if you're not yet angry about The Cliff, you soon will be and what's taking you so long?

Coming to a Political Theater Near You: The Cliff

I only realized how angry I was about the cliff several days ago when I started to outline this week’s Fiscal Fitness. By the time I sat down to write it several days later, I was fit to be tied and needed to avoid anything that included caffeine.

You know what I mean by the “Fiscal Cliff” — Federal Reserve Chairman Ben Bernanke’s ultimate Fed-speak for the budget apocalypse that could occur between Dec. 31 and Jan. 2. That’s when a series of existing federal-budget-related policies will expire and others will be triggered that could result in an economic calamity.

Actually, “could occur” masks the real situation. The truth is that the cliff is already scheduled to happen. It may be a crisis, but it won’t be unexpected: We know what’s ahead, the precise moment when it will occur and how it will happen.

The cliff includes substantial tax increases on most Americans and significant military and domestic spending cuts that will affect most individuals and almost every business. It also includes another debt ceiling cliffhanger that, if nothing else, could further convince lenders and rating agencies that, for political reasons, the United States is not as good a credit risk today as it has been in the past.

All of this will be happening during the most unstable political environment that could possibly exist — a lame-duck session of Congress — when the work of Representatives and Senators not returning to Washington, D.C., the following year typically is, to be charitable, less reliable. And that’s if they and their staffs, who all have to find new jobs, move or otherwise deal with their soon-to-be-dramatically-changed lives, show up at all.

The cliff has the potential to create some of the most incredible political theater this country has ever seen. It will include drama, Shakespearian-like tragedy, suspense and farce. If it happens, it will involve the murder of enough jobs that it will look like a whole season of “Dexter.” It also will rival HBO’s “Game of Thrones” for twists and turns about who is on top and who is aligned with whom. You’ll laugh, you’ll cry, and the suspense will be intense.

But no matter how great the political theater might be, the cliff really needs to be called what it actually is: pathetic policymaking.

Actually, calling it policymaking gives it way too much credit.

The cliff is the result of a steady series of policy breakdowns over the past few years, especially the multiple failed direct negotiations between the most senior executives in the government including the president, vice president, Speaker, and House and Senate Majority and Minority Leaders. It came after the Senate was unable to get enough votes to create its own budget commission and the presidential commission created in response didn’t get adequate support for a plan to move the process forward. Add in the acknowledged failure of the anything-but-super committee and the inability of the Senate’s “gang of six” to generate enough interest in what it wanted to do, and it becomes obvious that policies have been avoided rather than made.

I get it: The decisions on everything having to do with the federal budget are difficult and, if you’re running for re-election, best left until after Election Day. I also understand that, if you’re a Member of Congress, there’s a politically strategic value to wait until you know which party will be in charge of the House and Senate and the size of the majority before making a decision on how to proceed on the various revenue, spending, deficit and debt questions that have been left hanging. After all, you might get more of what you want after the election than before.

But I also understand more than ever before about how angry many outside the Beltway seem to be about the elections somehow being more important than the economy. Over the past two weeks I have spoken to five different groups that cut across the income and political spectrums, and all have expressed not just dissatisfaction but something close to total disdain about this situation. More than six months before it begins, the cliff is causing a great deal of heartburn.

My anger may be even greater than theirs because I don’t see there being enough time, votes, consensus or willingness to compromise for cliff-related agreements to be reached, translated into legislation, debated and enacted.
In addition, everything that has to be determined during the cliff is related in some way to almost everything else that has to be considered. For example, a decision on the sequester or providing 2012 alternative minimum tax relief, let alone on extending the tax cuts, will change the projected deficit and, therefore, the amount the debt ceiling has to be raised. That means that it really won’t be possible for anything to be decided until everything is decided.

It also means that the most likely outcome of the cliff will be “The Cliff 2: The Budget Strikes Back” coming to a theater near you at some point next year. The hype, complete with full-page ads, online commercials and previews in theaters, will begin to appear this fall.

Blaming ALL the right people

So, I live in the beltway. There, that is my disclaimer. That being said - I agree with about 90% of what you wrote here. However, you aren't blaming the people who are truly responsible: YOU. US. THEM. The electorate.

Politicians care more about the elections than the economy? True. Well, most voters care more about their own personal baggage than they do the health of the Nation. We have elected these people into office - these incompetent, yellow-backed, people. We justify it by saying - my representative is good, or, I didn't vote for him. But what we really mean is that he (or she) stands up for our social beliefs... most of the time.

WAKE UP NATION: Our Economy is going under, can we please leave this ridiculous debate about Women's Health till we get it under control? Thanks so much.

We need a leaner, smarter, faster system of government. I respect what the founders did - but the Founders had to wait months just to communicate with each other - today I can e-mail a business man in India instantaneously. The Founders didn't have science fiction that stretched this far, they would lose their minds.

We need to realize that a revamp is the only way we can survive the twists and turns of globalization. It's not the Big who eat the Small anymore, it's the Fast who eat the Slow. Every good business knows this, it's time America learned it.

- TR

This is how democracy died in

This is how democracy died in post-WWI and Depression-era Europe, as it easily could have done in the US as well. There is a lot of denial going on about the depth of the dysfunction in our political system and the dangers that presents.

The Cliff

Ahhhh...the frustration of it all!!!!! You have my empathy.

But this reflects the steady evolutionary decay of our political system itself over the past 50 years of declining fiscal virtue, public and private. It will take a systemic fix, to wit:


An Open Letter to Each Member of the Senate and the House of Representatives of the United States

I am an ordinary citizen in my 71st year, retired, with an engineering background and mindset. I reside in the hills above Anderson Valley near Philo in Mendocino County in California. I have formulated and developed an idea for an amendment to our Constitution which is a substitute for that which so recently failed, just as all other variants before it, i.e. HR1.
You will be astonished at its simplicity. This is due to its rich roots, which lie deep in the past, anchored in two sources. One is the greatest gift from this nation to the world, Thomas Jefferson’s elegant and timeless words in the second paragraph of our Declaration of Independence. They define the right and proper relationship between a People and their Government. The other is the brilliant thought of those accomplished and pragmatic men who gathered in Philadelphia in 1787 to constitute our system of government, our Republic, as expressed by our Constitution, and then clearly explained to the public why it was so and how it would work, thus leaving us a priceless legacy of how great men think.
As you read it, consider its merits….
It finesses almost all of the problems so superbly analyzed by Saturno and Lynch in the CRS report of July 2011 on the subject of a balanced budget amendment.
It does not limit the size of revenues or outlays or government itself.
It advantages no side in determining the role of government.
It offers no inroads to the judiciary. It does not alter the relationship between the executive and legislative functions. It does not intrude upon legislative procedure.
It safely but inexorably restores the fiscal virtue, fiscal discipline, to our republic.
It sets a guard rail between us and the edge of the cliff where confidence in our sovereign debt snaps; where we take the awful plunge.
It will restore our credit rating and assure our children of the lowest possible interest rates as they shoulder our burden.
It will become wonderfully constructive to our politics, enabling you to do the job you want to do and were elected to do; to reason your way to resolve our differences and address our big problems. This will restore our respect, now so absent, for you and our institutions.
It gives voice and control to the People.
Here it is….
Section 1. The National Debt is the sum of the outstanding balances of all financial debt instruments issued by the United States Government and backed by its full faith and credit. The Debt Ceiling is the amount which limits the size of the National Debt. Except as provided for in subsequent sections of this article, Congress shall make no law authorizing, and the Treasury shall not issue or sell, any such instruments while the Debt Ceiling is equal to or less than the National Debt.
Section 2. Coincident with regular elections of the House of Representatives, the following question will be placed on each ballot:
“Shall the Debt Ceiling be Increased (Yea) or Decreased (Nay)?”
A majority of votes cast shall set the direction in which the Debt Ceiling may then be changed and this will remain binding until the next regular elections of the House of Representatives.
Section 3. During the Calendar Year following regular elections of the House, Congress may, by a bill for that purpose which becomes law, determine the amount of increase or decrease, dependent on the result set by the section 2 vote, to be applied to the Debt Ceiling, provided that the resulting Debt Ceiling amount shall not be less than the National Debt.
Section 4. During the Calendar Year following regular elections of the House, Congress may, by a bill for that purpose passed by a majority which is proportionately larger than the majority in the Section 2 vote of the People, of the whole number of members of each House which becomes law, set the Debt Ceiling to any amount greater than the National Debt.
Section 5. While a Declaration of War against another Nation-State by Congress is in effect, Congress may, by a bill for that purpose which becomes law, set the Debt Ceiling to any amount greater than the National Debt.
Section 6. Congress may, by a bill for that purpose passed by three fifths of the whole number of members of each House which becomes law, set the Debt Ceiling to any amount greater than the National Debt.
Section 7. The repayment of principle when due shall have first priority on Government receipts.
Section 8. The initial amount of the Debt Ceiling shall be set at 150 percent of the National Debt of the last full calendar year US National Gross Domestic Product, on the occasion of the first session of the House of Representatives following the ratification of this amendment by the necessary number of the several States.

There is but one line of objection; that it is unnecessary, that it can be done without it, that all it takes is for our representatives to do it. All true, but we have a half century of solid evidence that our political system has evolved to make it incredible that they can or will. The time has come for a guarantee, the time has come to give you help.
With all the respect due you, here is what I want from you. I want you to hone the language of this amendment to proper legal form, then, together with your colleagues, pass it and send it on its way through the legislatures of the several States. Then, by enacting its elements into statutes, establish a temporary guard rail between us and the cliff edge while it is in the ratification process. Set the ceiling thus defined by statute to any value you like before this September. I recommend what I have already outlined within the amendment. Let the People render their judgment in November so the new Government shall have its benefit as they tackle anew the difficult choices we face, now knowing that they must in fact do just that.
It is no trivial thing to tinker with our Constitution. This is no trivial amendment. We the People are now no more than an authorizing presence in the preamble to the Constitution, our democratic power and voice diluted and diffused through its structure of function and representation. Our republic stands on three pillars, so carefully balanced, the strongest being yours, our legislature. This amendment sets in place a fourth, designed to strengthen the whole, to bear some of its weight, to be equally responsible for its survival. It will channel the common sense of the People to the whole of Government; it will restore to the People an essential control of Their Republic.
Our grandparents and parents were the Greatest Generations, the Eisenhowers who led the Kennedys of our nation through WWII. We will be remembered as more self-indulgent generations, which passed on their burdens to their successors, to their children. Let us at least pass on to them a Republic stronger than the one given us. Let us restore to it the fiscal virtue an earlier world could take for granted, something we clearly can no longer do.
Can anyone possibly doubt, would those great men from our past be now in your place, seeing and knowing our world as you do, that they would not pass this amendment forthwith?
Of course they would.

Respectfully……… An Anonymous Citizen of the United States Philo, CA

Bleh - knock it off with the pretend nonpartisanship

Handwave all you want, but the only honest assessment is that the "cliff" is a well-planned result of the GOP's ongoing strategery to either destroy the country or institute a permanent reactionary-conservative dystopia. They've been quite explicit that their ONLY goal for the last 4 years was to harm the president - and witness the statements of teahadi crackpots like Mourdock, who recently described "bipartisanship" as "Democrats doing what Republicans want".

No political system can withstand half of its participants deliberately sabotaging it from inside.

When there is no "win-win" solution

"Win-win" became a cliche rivaling "there is no free lunch". For some time it worked. Because the real losers did not know it. But no more. This time it will be a war with clear winners and losers. And I surely want my side to win. I will have none of this nonsense about compromise. That opportunity came and went, regardless who's side you are on. Now it is time for all out war. Because when the choice is between decay and destruction there can not be a "win-win" solution. Was there ever?

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