Going Over the Cliff

Matthew Vadum is an award-winning investigative reporter and the author of the book, "Subversion Inc.: How Obama’s ACORN Red Shirts Are Still Terrorizing and Ripping Off American Taxpayers."


Unless a political miracle happens, America is going over the so-called fiscal cliff next week, possibly plunging the nation into a fresh economic recession.

With the abrupt withdrawal from consideration last week of House Speaker John Boehner’s “Plan B” alternative fiscal plan, there is no reason to believe a political deal preserving current income tax rates and averting significant spending cuts will be reached before January 1.

There simply isn’t enough time left before current tax rates expire and the political will to act appears to be absent among the major players.

The Republican-controlled House, Democratic-controlled Senate, and President Obama apparently aren’t even talking about ways to avert the metaphorical cliff at the moment. President Obama has humored Republicans’ demands to reform the nation’s out-of-control entitlement programs but has made no concrete proposals about how to do it. The funds that would be generated by Obama’s proposal to soak high earners would not even be used to pay down the national debt.

The national debt now stands at $16.35 trillion, up from $10.6 trillion on Inauguration Day 2009. But that $16.35 trillion figure is misleading. Government accounting tricks keep another $86.8 trillion in unfunded liabilities related to Social Security, Medicare, and federal employees’ future retirement benefits off the books and out of the public eye. Add the two figures together and you arrive at the more accurate, unimaginably large sum of $103.1 trillion.

In Washington, D.C., Congress has left town for the Christmas holidays. The Senate is scheduled to meet Thursday but no House session is scheduled. House members have been told they could be recalled to Washington on 48 hours notice. President Obama is off in Hawaii for Christmas vacation.

Lawmakers are busy pointing fingers at each other. A spokesman for Senate Minority Leader Mitch McConnell (R-Ky.) told Reuters it was now Senate Majority Leader Harry Reid’s (D-Nev.) move. “We don’t yet know what Senator Reid will bring to the floor. He is not negotiating with us and the president is out of town,” the aide said. “So I just don’t know what they’re going to do over there.”

On Twitter, Reid warned, “There will be very serious consequences for millions of families if Congress fails to act” regarding the fiscal cliff.

A few days ago Speaker Boehner pulled a vote on his measure that would have raised taxes on those earning more than $1 million a year after it became clear that members of the House GOP conference were not on board with the plan. Many conservative Republican lawmakers opposed the proposal because they believe Republicans shouldn’t go along with President Obama’s class warfare-driven “soak the rich” policies. They reason that if taxes are to go up, Republican fingerprints should not be all over the increase because it would damage the Republicans’ brand and infuriate the party’s political base.

The fiscal cliff refers to huge across-the-board individual income tax increases and $1.2 trillion in scheduled spending cuts that fall heavily on the Pentagon that take effect at the end of this year.

Despite the current stalemate in the nation’s capital, it’s still possible that both sides will be able to hammer out some kind of compromise early in the new year. “We may go off the cliff on January 1, but we would correct that very quickly thereafter,” Congressman John Yarmuth (D-Ky.) told a TV network.

When higher tax rates and budget cuts kick in on January 1, markets will be disrupted. Workers who hadn’t been paying attention to the fiscal cliff debate will get a rude shock when a greater portion of their paychecks is suddenly withheld. Public pressure could force lawmakers to make some kind of a deal, perhaps retroactively extending current tax rates from December 31.

Lawmakers could also vote to maintain the status quo and kick the can down the road for another few months or more.

If taxes are allowed to rise January 1 but then Congress votes after the fact to cut them, the tax tables the IRS uses to calculate withholding taxes could be changed, temporarily inconveniencing workers and employers.

But it’s not so clear if defense spending cuts could be as easily reversed. If the Department of Defense (DoD) isn’t authorized to spend the funds that are scheduled to be cut in a few days, it has to take immediate steps to reduce spending, canceling programs and laying off employees.

Relaunching suspended programs and rehiring laid off DoD employees would almost certainly generate major headaches at the Pentagon.

And who knows what harm it could cause to the nation’s defenses.

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  • Phillip Ley

    Let Thelma drive the car….off the cliff. No matter what happens, the media will help Obama vilify the GOP. The GOP has become the bastion of spinelessness and stupidity.

    • David

      It's necessary to make it look like there is an opposition party. There isn't. In practical definition, both parties still SAY different things, but generally DO the same thing. The nation's economy is being systematically ruined, and the Golden Days of America are well in the past.

  • pierce

    I personally think for President Obama should not have gone to Hawaii for Xmas. For him and his family to go some where I consider to be a very special place, while others of us stay nearer to home, sort of says "In your face everyone". "I am the president and I am different from all of you, so go to h_ll. I don't need to live frugally".
    He should be setting an example, in stead of ridiculing John Boehner and the Republicans. The President is, in my opinion, a hypocrite.

    • Carol F.

      I agree with you 100%–and his supporters all say "well all the other presidents went on expensive vacations" Well I thought this man ran on a platform which said I'm a different kind of man and will be a different kind of President–well I guess he fooled us—Also I remember from his memoir having this disdain for his mother when she came to the states and stayed with "people with money"–indicating he thought she was selling out on her principles—Well what happended to YOU Barack???? You don't seem to have any problem now sucking up to the RICH and living the life of the rich and famous–YOU are the phony Sell OUT!!

    • Dennis X

      Can you really be that stupid? The President went HOME for xmas vacation as did many others.

  • steve b

    ALL WE HEAR ABOUT THE FUISCAL CLIFF IS HOW MUCH IN TAX INCREASES THE REPUBLICANS WON'T AGREE TO WHEN THE TOP THREE PROBLEMS ARE SPENDING, SPENDING AND SPENDING. LET OBAMA STAY IN HAWAII FOREVER AND ROT THERE. HE'S THE PROBLEM AND WE DON'T EVER NEED HIM BACK. MAYBE HE CAN MOVE TO VENEZUELA AND FILL IN WHEN THE CANCER KILLS CHAVEZ.

  • zaynab

    The fiscal cliff is just a small drop compared to the real fiscal cliff when hyperinflation sets in. If we don't cut then the economy will.

  • davarino

    The only explanation I have is that the repubs have been compromised and that is why they are so weak against obama. The dems must have dirt on the repubs and thats why they are so silent. We need to have term limits for congressmen. They become very dirty if they stay in to long.

    • David

      We have term limits for Representatives every two years, and every six for Senators.

    • tagalog

      Term limitations are probably the single biggest reason why Republicans and Democrats can't make a deal. I used to like term limitations. No longer.

    • NAHALKIDES

      No, that's not it. Yes, there are all too many Establishment/RINO Republicans who are as corrupt as the Democrats (RINOs) or who simply go to Washington to enjoy the perks of office and don't care about the country (Establishment). But the biggest problem is the unwillingness to challenge the foundations of the welfare state, without which the necessary spending cuts cannot take place.

  • SHmuelHaLevi

    I tend to refrain from entering into internal US conditions since we live overseas. But as an US Citizen and retired Senior-Fellow Engineer US DoD Military Avionics Programs I feel at this point that it is my obligation to say this. From the distance it looks as if the US is determined to look like the Titanic going down on afterburners. The cliff is already fading in the distance up there and what it being done is attempting to backpedal as J Coyote would do on his way down.
    I wish I was younger and healthier and I would go back into the fry and kick some b…
    We need some real b… my friends. The spectacle is terrible.

    • tagalog

      In Alistair McLean's novel, H.M.S. Ulysses, a novel about the WWII exploits of a British corvette, the ship is on convoy patrol in the North Atlantic when it's hit by a German torpedo, which explodes in the engine room of the ship. H.M.S. Ulysses sinks with its engines raging at top speed, out of control, not only sinking, but DRIVING itself to the bottom. That's the U.S. economy today.

    • Dawn Street

      I agree with you. I think we went over the "fiscal cliff" long ago at the first bailout. Now we just wonder if we are falling into a black hole or if there is a bottom and a trampoline there to allow us to bounce back eventually.

  • richard ahern

    Washington Establishment has caused the problem-If we do not cut spendind and waste-Fraud and mismanagement the free market will act accordienly. Recession or Depression will set in taxes will go up job growth will get worse. Its time to take back are Republic
    http://www.judgenap.com http://www.wastewatchersinc.org

  • pierce

    You know, it is funny, more Americans are waking up to this simple fact. Obama just plain doesn't care about the average joes who live in the good ole USA. He only cares about living the good life, and flaunting his ways. He really is supposed to care, but he does not, otherwise we would not be in this predicament. And by the way, it has been this way for at least 2 years. He and his friend George (Soros) want to ruin what the USA stands for.

  • NV_Rancher

    Looks like the fiscal cliff has nothing on the entitlement tsunami…
    Obama and the communists care about neither…

  • tagalog

    The Republicans are pig-headed and the Democrats are crazy. Pig-headed because it's fairly obvious that a tax increase (for ALL Americans, I might add) seems necessary, and crazy because they won't stop spending at a time when cutting spending is absolutely necessary and 40 years past due. The Democrats are doing the same thing -spending- and expecting a different result -solvency.

    Sadly, the Republicans will receive ALL of the blame for our going over the fiscal cliff when they only deserve 1/2 of it. The Democrats will come out of this smelling, if not like a rose, not like the way they SHOULD be smelling.

    I can't believe we're actually paying these clowns. They should be run out of D.C. on a rail. I also can't believe that they painted this fiscal cliff business as a great crisis right before they went on Christmas vacation. And the Prez was so tone-deaf that he took a high-dollar vacation in Hawaii at the taxpayers' expense. And they said Reagan was the Teflon President. Hah! Reagan was a piker next to Obama.

    • EarlyBird

      Amen, Brother Ben!

  • Loyal Achates

    Since when are entitlements the problem? By far the biggest social programs are Social Security and Medicare – both of which are fully funded through 2024 at the earliest. Our biggest problems are the decline of manufacturing (accelerated by the smashing of unions) and lack of revenue, brought about by decades of Republican attempts to 'starve the beast' – the beast being America.

    • RedWhiteAndJew

      Maybe in Bizarro America. There is so much wrong in your post, it's obviously intended to occupy the membership's time with outraged counter-posts.

      Hopefully, you will not succeed in wasting people's time.

    • aspacia

      Entitlements in themselves are not a problem, albeit, they are when the U.S. government uses SS and MC as its personal piggy bank. That is, the government has raided SS numerous times, and various states are attempting to raid PERS (state employees retirement). Theives.

  • Ghostwriter

    Oh boy! This isn't going to be good.

  • EarlyBird

    This is not your father's GOP. It's not even your GOP. It's that of Norquist, Limbaugh, Hannity, Tea Party, Club for Growth, etc.

    The House Republicans rejected Boehner's Plan B, whereby only people making ABOVE $1 million dollars a year received a tax increase, all while cutting social spending AND protecting defense. Pretty good deal, right? But they were unwilling to support even THAT tax increase under THOSE circumstances.

    We are witnessing the death of the Republican Party. They have no interest in governance. They would rather throw the entire country into recession again rather than tax people making more than $1 million a year. Mind-blowing! And they are in a position to get comprehensive tax and entitlement reform done? What?

  • richard ahern

    Its time to het their house in order -www.wastewatchersinc.org

  • Kostoglotov

    The fiscal cliff is just a symptom of decades of political and financial mismanagement. This country has been broke for years. We've been able to continue avoiding reality only by massive borrowing, but this is no longer possible. Both sides of the political spectrum are to blame. Entitlements are out of control, but the Republican strategy of tax cuts coupled with huge military spending increases since Reagan is equally as irresponsible anything the Democrats have done. No one ever seems to bring up trade deficit, but trade deficits have consequences. We've been running giant trade deficits with our main trading partners for decades. The GOP , – the party of business – has stood by and done nothing, or even facilitated the process, while millions of middle-class jobs were sent overseas. Now we're broke. The party is over. We're going to have to suck it up and bite the bullet soon, and it will not be pretty.

    • RedWhiteAndJew

      Tax cuts are the only sensible action, when your on the right side of the peak of the Laffer Curve, which is where we have been since Reagan. The mistake the GOP has been making since Reagan, is believing the Democrats promise of spending cuts down the road, in exchange for tax increases now.

      The problem is, we still have the highest rate of corporate taxes in the world. Of course there will be exoduses of industry under such a circumstance.

      Military spending is dwarfed by the federal expenditure on entitlements, btw. There is much waste in military spending, to be sure, and that should be weeded out, but at least we see a return, in the form of a strong national defense. The return we get on an overgrown federal government, overseeing a looted entitlement system, is skyrocketing debt.

  • karen

    So, we go off the fiscal cliff, taxes go up on everyone. The Republicans look like the arseholes they are. Obama comes back, cuts taxes on everyone but the top 2% percent, gets the money and looks like the hero he is…all is well..

    • Hank

      You have to be kidding Karen. Democrats, liberals and people with your way of thinking in general are pretty much the reason this country is in the pinch it's in. Now I ask you, can we keep giving away the farm the way the democrats do or would it make much more sense for government to be responsible for a strong defense and economic stability ONLY. The rest is up to us. If we take chances and build businesses, get educated (on our own dime) think with our heads instead of relying on government to do that for us. If we follow those simple rules the country will be much better off AND be in the black as well.
      We should make ourselves assets to this country rather than the democrats way of take, take, take and spending more time whinning about what government program I qualify for. Work for what you want. If you can't afford it, too friggin bad you don't deserve it.
      I guess I'd rather be a contributor (republican) than live on the government tit (democrat) And as far as taxing only the top 2% more, do you think they got there by pooling their government handouts? Doubtful. The are made up mostly of proud, hard working, well educated (privately not publicly) republicans. Something we need more of in this country. You can take that to the bank lady.

      • slider 96

        Watch it happen Hank …..republicans did this to themselves for the sake of the rich ….and they're gonna pay this time around .

  • Adolf Hitler

    Obama is going to cut taxes?Really?He is causing all prices to rise on everything! Read karen read! please!

  • Adolf Hitler

    I was the head of the 'Nationalist socialist party'. Its now called the democratic party here in America. FYI. Americans are about to experience that for themselves. :(

    • slider 96

      you're an idiot .

  • David

    Please don't make the common mistake that Obama wants things to be like they were, or that he favors free market capitalism, or wants anything other than what he has set in motion.

    I used to say things like, "How can Congress be so stupid as to do ____". Well, one day it hit me. Hard. They are NOT stupid; they know exactly what they're doing, and they're doing a good job of shifting us from a strong, nationalistic, world leading nation to a run of the mill cog in the growing globalist wheel. For Global Governance (aka the New World Order, One World Government, etc.) to be implemented, every nation has to be reduced from prominence. Every nation. Even ours.

    • Adolf Hitler

      Its called 'agenda 21', and has been implemented by the U.N.