Tuesday, December 11, 2012

Why No One Cares About the "Fiscal Cliff"

People don't seem to care about the "fiscal cliff" as they perceive it to be the political and media creation that it is.  Perhaps America is finally growing up?

The media is having a fit!  No one is paying attention to their "fiscal cliff" horror stories.  People are changing the channel.  No one is clicking on the articles!  It isn't fair!   They have a prime "crisis" story to tell - and no one wants to listen!

As I have noted before, the media is like a child with a toy trumpet, blaring it loudly and saying "Look at me!  Look at me!"  - and what makes them really have a temper tantrum is when no one pays attention to them.

The "Fiscal Cliff" is all in the news these days.  But the thing to remember is that the term itself, and its dire predictions, are in fact a product of the media, not the government.

America is bored with the "fiscal cliff" talk - perhaps because we are getting crises-weary.  Or more precisely, we are getting tired of everything being presented as a crises.   Or perhaps we are all just stoned out of our minds on medical marijuana and just don't give a shit anymore.

But I think not. I think people are finally becoming more perceptive, and realizing that every time the media cries "Wolf!" and says that Humpty Dumpty is about to have a great fall, we needn't drop everything we are doing, as nine times out of ten, it is a false alarm.

The "Fiscal Cliff", as I noted before, is not the end of the world, but just a return to tax rates we had during the Clinton years.  Remember those?  When we were all making lots of money?  We could afford those tax rates then, and we can afford them now.  A 3% rise isn't a big deal.

And getting rid of the payroll tax "holiday" - which was never intended to be permanent anyway - is a good idea to fully fund Social Security.   It is a far better idea than cutting benefits to Seniors.  So what is the big deal, there?

As for unemployment benefits, as harsh as this may sound, we need to make these reasonable in length.  99 weeks is nearly two years - and when people are paid not to work, not surprisingly, they don't work (just as with food stamps, if you pay people to eat, they get fat).

What about Capital Gains taxes?  The elderly and retired are being scared by the media that they will have to pay 46% tax rates on their capital gains.  This is highly unlikely, for most folks.  Older people get pensions, which are taxed at ordinary income rates, which are only going up 3%.   People with IRA and 401(k) plans are also taxed only at ordinary income rates.

So who does that leave, who will pay these enormous capital gains rates?   Millionaire investors with after-tax investment income, that's who.  The Mitt Romneys and Warren Buffets of the world, who pay only 15% in taxes - a rate far less than their secretaries pay!   Sorry if I do not weep for the Billionaires of the world.

And as for cuts in government spending - isn't this what all the teabaggers wanted anyway?  If this is such a horrible thing, why is it the centerpiece of nearly every candidate's campaign platform?  Cutting government spending by 10% is hardly crippling, eminently do-able, and a good idea.  Drive the car off the cliff!  We need it!

But of course, the fiscal cliff ain't likely to happen, anyway.   What the media posits is that the fiscal cliff will happen in January and then we will never be able to change it, ever, ever, ever, ever!  Again, the child with the toy trumpet.

It is like Obamacare.   We are told we have to "overturn it" or nothing.  We can't tweak it or fix it or improve it.  The two choices presented are revocation (which ain't gonna happen) or dire consequences of "socialized medicine".

The reality is, of course, that Obamacare will be tweaked and improved, and if it really doesn't work at all, tossed out.  But I suspect it will work after a fashion, and while no one party will really be happy with the outcome, it will chug along and with a few patches, be better than the horrific non-system we had before.

But of course, no one wants to hear that.  They want to hear Apocalyptic nonsense.

What will happen with the "Fiscal Cliff" is this:

1.  Both sides (Obama and Boehner) will keep playing games in the media with press conferences and staged events, each claiming the other side is "not being helpful".

2.  The cliff may or may not be reached by December 31st.   The "sequester" provisions may kick in, for a week or two, in January.

3.  A compromise will be reached, of course, which neither side will like.  This will either make the sequester provisions only effective for a week or two in January, or they will retroactively eliminate them back to January 1.

4.  Life will go on as before.

This "fiscal cliff" is not a natural disaster, like a tsunami, a hurricane, or a mega-volcano.  It is merely a game of brinksmanship that we are playing by choice.   It is not some unsolvable problem, but rather an entirely easily solved problem, simply by having both sides compromise.

And the American Public, with its lack of orchestrated "outrage" seems to understand this better than the pundits and the media lackeys.