The Hopeless Fiscal Cliff Negotiations


The otherworldly nature of the current discussions and proposals in Washington over addressing the “fiscal cliff” can be seen in a brief look at where the country stands financially.

Through the first two months of the 2013 fiscal year, which will end on September 30, 2013, the federal government has already run up a $292 billion deficit. Our overlords of Washington are clearly on track to run up a fifth consecutive full-year shortfall of over $1 trillion. Before fiscal 2008, the highest annual deficit ever recorded was $455 billion.

Federal outlays during October and November of $638 billion were 16 percent higher than during the same two months in 2011 and a breathtaking 52 percent greater than October and November of 2007. Collections in this lukewarm recovery, if you can even call it that, were up by less than 10 percent.

As of Monday, December 17, the national debt was $16.35 trillion, up by over $5.7 trillion in the 35 months since Barack Obama took office. The portion of the national debt known as “debt held by the public,” which is really debt held by any entity which is not part of the U.S. government but includes foreign countries and other foreign holders, made up $5.25 trillion of that amount.

A significant portion of that $5.25 billion is held by Ben Bernanke’s Federal Reserve, which many don’t realize really isn’t a part of the government. Instead, the Fed is a collection of 12 district banks, each of which is “a legally separate corporation that is owned by the commercial banks in its district.” Because they produce no goods or services, the district banks, and the Fed itself, have no inherent ability to repay the Treasury and other securities they have bought from our beyond-profligate government.

Within this dangerous framework, House Speaker John Boehner and President Obama are obsessing over whether taxes should be raised on those with annual incomes of over $1,000,000 — or $400,000 or $250,000, or whatever. Besides the obvious danger that any tax increase on our most productive citizens will slow down an already sluggish, low-growth, under-employing economy, the amounts raised will be a pittance, garnering less than 10 percent of the amount needed to close projected fiscal gaps (I would say “budget gaps,” but the government hasn’t passed a budget in nearly four years).

Where are the spending cuts? Or, more properly framed, where are the reductions in projected future spending? A Wednesday morning Associated Press dispatch on the President’s plans to veto Boehner’s so-called “Plan B” framework reported that the President would veto such a plan if it ever reached his desk — something that in the real world probably wouldn’t happen because Senate Majority Leader Harry Reid wouldn’t let any House bill Obama opposes get that far — because “the deficit reduction that would result from the `Plan B’ approach is minimal and offers no spending cuts.”

You read that right. The people who have brought us trillion-dollar deficits as far as the eye can see are positioning themselves to the right of the hopelessly timid Republican House.

Is Obama’s claim correct? Well, Erick Erickson at RedState writes: “The most significant thing John Boehner’s plan does is absolutely nothing on spending.” A Wednesday morning Wall Street Journal editorial identifies what can only be described as nibbling around the edges of the problem by changing how increases in entitlement spending and taxes are indexed, and tells us that it’s all about continuing with business as usual: “Tax and spending increases now, in return for the promise of spending cuts and tax and entitlement reform later.”

We’re long past the time where business as usual will work. The federal government’s financial condition today is the functional equivalent of a family taking home $27,000 per year, spending $38,000, and carrying over $160,000 in nonmortgage debt. The major difference between the family and our government is that while the family involved would almost certainly be paying 10 percent or more interest on its outstanding debts, Uncle Sam is getting away with paying less than 2 percent. Oh, and Uncle Sam can keep on borrowing, while the family’s lenders would surely have ended any access to additional credit.

Even if the example family just described were paying only 2% interest on its debts, its finances would still be considered almost beyond repair without major changes. Boehner’s Plan B is the equivalent of the family telling its lenders, who wish to force them into bankruptcy, that it will “solve” their problem by immediately having one of its members get a one day per month job paying $100 and by cancelling their premium cable channels and lawn service — starting a year from now. Maybe. If they feel like it.

Such a proposal would send lenders straight to bankruptcy court, as it would be obvious that this family isn’t at all serious about taking meaningful action. Boehner’s Plan B isn’t any better, and promises to send the credit rating agencies scrambling to see who can lower the federal government’s credit rating first.

Don’t get me wrong, what Obama and his party want — don’t touch Social Security, don’t touch Medicare, and don’t touch any other entitlements — isn’t serious either. But the fact that he can credibly claim that his “solutions” do more that Boehner’s Plan B shows how badly the Speaker has failed.

No wonder genuine conservatives are in open revolt. They should be.

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  • κατεργάζομαι

    Our serious deficit is a dearth of GOP leadership.
    To quote Mark Levin, John Boehner is a 'climber' not a leader"

    Mark, I posit that John Boehner (in GW Bush's words) is a "Real Clymer."
    Original quote, ""There's Adam Clymer, major-league @sshole from The New York Times."

    The "fiscal cliff" negotiations are all about rejiggering the deal struck in 2011.
    And the next Congress can only affect the deficits of 2013 through 2015.

    That's because no Congress can bind another Congress. And here we have the Kabuki dance before smoke and mirrors. Boehner wants to raise taxes now, and like GHW Bush, he is reading their lips and trusting a bunch of congenital LIARS with the GOP jewels.

    I say toss Boehner and get a real man for leadership in 2013.

  • κατεργάζομαι

    Ah, Mr. Speaker, – there is no, “Trust us, changes are coming” clause in the Constitution.

  • ApolloSpeaks

    DESPERATE BOEHNER STEALS OBAMA'S IDEA

    The audacity of Boehner stealing Obama's idea of raising taxes on millionaires and billionaires. Only Obama can do that. End Boehner's House speakership now! And impeach sorry butt out of Congress.

    • ApolloSpeaks

      impeach his sorry butt…..

      • http://www.youtube.com/watch?v=nLNn2YflwNs Roger

        He has no shame, so we know he won't resign for the good of the country.

  • pierce

    Back down Mr Speaker. I command you Mr. Speaker, back down. You are challenging me, the President. I am all knowing. And as for the Republican Party challenging me," I am The President, no one can challenge me, absolutely no one". "Eat dirt Mr Speaker, I command thee Eat Dirt". Mr Speaker you have the audacity to challenge me, I am the President.
    I say Mr. Speaker, our President needs to be challenged, especially when it comes to his spending habits.
    Force him to live within his budget, the one he does not have, and does not want.
    So make him "Eat Dirt". Millions of Americans would like our arrogant President to "Eat Dirt'.

    • WilliamJamesWard

      You are what you eat, it is said…………..William

  • http://twitter.com/USnavy1967 @USnavy1967

    You have hit the proverbial nail on the head, the Republicans are in a corner cowering with fear of the Liberals. We have nothing, we have not leadership, the death of the Republican party is at hand and that is exactly what Obama wanted.

  • http://www.youtube.com/watch?v=nLNn2YflwNs Roger

    On one side of the negotiations is a marxist who hates this country.
    On the other side is a spineless coward determined to find a way to give him anything he wants.

    How many ways can this end badly?

  • WilliamJamesWard

    Does anyone really think that these are real negotiations, political theatre is all it is and
    the boys in the back room are having a good laugh while Bernie Madoff is thinking of
    suing them for invading his intellectual property rights. If I were the judge I think I would
    order them to share equally in Bernie's future, habitation and all. American government
    has failed in it's financial responsibilities and the voters have been unable to oust the
    liars and cheats as they reflect the majority thinking………………….William

  • Snorbak

    As much as it pains me to say this, the USA is now living in its twilight years & the nursing home awaits.
    Years of irresponsible Gov't spending, bad forign policy & poor management have just about destroyed a great nation.
    Obama & those that support him, both within & outside of Gov't are the final nail that will bring the US to her knees.

    • WilliamJamesWard

      Sometimes I think someone with backbone will stand up and lead us out of the political
      mess we are in but it is the very people elected to office that create and maintain the mess.
      Obama and his gang are the end of the line for any future. If four years from now
      absenting WW111 taking the World out I would like to see what happens out of
      a desire to see a turnaround, the people must clean out the schools of anti-American
      elements first and go from there. Hope springs eternal…………………William

  • Allyn

    up to I looked at the bank draft which said $4469, I didnt believe that…my… brothers friend woz like realy bringing in money in their spare time from there pretty old laptop.. there aunt haz done this 4 only about eleven months and just now paid for the morgage on their house and got themselves a Cadillac. read more at, ……. BIT40.ℂOℳ

  • Len_Powder

    John Boehner is the last thing the Republican Party or the nation needed. I don't know why this wasn't clear after the 2010 elections since he had a record that could have been scrutinized and evaluated. Why did it take two years for conservatives and the Tea Party to realize that Boehner was a feckless and cowardly Speaker who should be removed ASAP? Americans need to get more involved and informed about politics because Obama has demonstrated that a country, even the USA, can be debilitated in less than 4 years and destroyed in less than 8 years. We don't have the luxury of remaining indifferent between elections, because between elections the nation can go from being a republic to being a despotism.