Friday, December 28, 2012

Cliff Dwellers

Like most of us, David Horsey is transfixed by the very strange Kabuki dance playing out in Washington.  Will a Grand Bargain be struck?  Will only a temporary fix be agreed to?  Or will the country go right off that cliff and land in a recession?  It's hard to tell, but Horsey does point to several of the problems.

The hang-up seem to be the tax increases.  The GOP doesn't want those Bush tax cuts touched.  Obama and the Democrats want the tax cuts limited to those earning $250,000 or less.  What the GOP does want are cuts in spending (odd, that, since the huge deficits arrived as a result of the Bush years and the profligate spending on wars and defense contractors, mostly off budget).  They specifically want cuts to Social Security and Medicare/Medicaid, although they keep using the euphemism of "strengthening" the programs.

Complicating matters are the facts that the GOP controls the House and the Democrats control the Senate.  Well, sort of.  In any event, here's how David Horsey sees it.

Boehner now seems to have washed his hands of responsibility and says it is up to the president and Democrats in the Senate to save the country from the new year’s program cuts and tax increases that will come so fast and furiously that the economy could suffer. President Obama cut short his Hawaii vacation to return to the snow-covered capital hoping to concoct a last-minute deal, but he may have been better off staying with his wife and daughters on the sandy shores of Oahu.

Senate Majority Leader Harry Reed will shortly offer an option he hopes Republicans cannot refuse. It will propose to do several popular things: perpetuate George W. Bush-era tax cuts for everyone earning less than $250,000 a year; keep Medicare reimbursement levels from dropping; preserve long-term unemployment benefits; stop a tax bracket slide that would expose many more citizens to the alternative minimum tax; and make a few modest spending reductions. Even if it does next to nothing about long-term budget deficits, there is nothing in Reed’s plan that would upset most voters.

If such a crowd-pleasing scheme got to the House and Boehner allowed a vote on it (as he seems to have said he would), Democrats might be joined by just enough Republicans to get the thing passed. The harder trick could be getting it anywhere in the Senate. It takes just one Republican die-hard to block Reed’s bill. A filibuster would only have to last until the ball drops in Times Square and 2013 would begin with the wrenching sound of an economy tumbling down a hillside.

I think that a pretty fair assessment, although, as usual, I have a few nits to pick.

First of all, David, the Senate Majority Leader spells his name R-E-I-D.  Either you or your editor should have caught that, UNLESS, of course, that was an intentional mistake.  If so, I bow to your creative gibe.

More importantly, however, I am not so certain that our economy will go "tumbling down a hillside."  There will be a couple of weeks of discomfort for a lot of people (among them the long-term unemployed), but with a little spine stiffening on the part of the White House and the Democrats, that just might be quickly rectified.  I know, that's easy for me to say.  I'll still get my HUGE Social Security check each month.  But I think the dire predictions of an immediate recession are nothing but agit-prop from Our Owners who might now have to pay a few dollars more in taxes.

We still have a couple of days to go before any scenario plays out.  I haven't checked lately, and indeed a deal might have been struck.  If so, I'll update.

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Blogger Charles said...

Well, it seems likely that unemployment checks could be delayed or canceled if there's not an agreement. And if there's a default on the 1st of January as Tim Geithner suggests, there could be bigger effects, since the debt limit has to be addressed.

And then there's the little issue of the sequester.

1:15 PM  

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