Fiscal Cliff Saga: Game of Chicken
For those of you not familiar with the game of Chicken, it is a very dangerous game where drivers in two different cars drive straight at each other, and the one who swerves off the road first, loses. Sometimes two very brave but stupid young people die, thanks to both refusing to give in and swerve off the road to destruction.
Tragedy happens when two forces go bearing down on each other. This seems what we have going on with our government to some extent. Though both sides knows that every day that the fiscal cliff hangs in limbo, and our economy hurts because of it. We need cooperation and we need it now.
When the news we get from Washington is that both sides are far apart on the Fiscal Cliff, it drags us all down. Our elected leaders in Washington are there to serve the People and this is when they need to serve. We all well remember what transpired when our government could not agree on raising the Debt Ceiling; our credit rating fell, which means we now pay more on our debt in interest. The very same congress who allowed us to lose a notch in our credit rating is now playing chicken with the Fiscal Cliff.
So far, the Obama White House has offered a plan to the Republicans. The plan of course is very much in President Obama and the Democrats favor, but that is how negotiations start, as Obama did win the election. The President’s proposal is asking for $1.6 Trillion in new revenue from a tax hike on millionaires and $400 billion in Medicare/Medicaid savings.
Republican response was negative as expected. House Speaker, Republican John Boehner said that the president’s plan would deal the economy a “crippling blow” and leave the nation’s debt problems unresolved. House Republican Conference Vice-Chairwoman Cathy McMorris Rodgers (R-WA.) said Obama’s proposal would put America on “a road map to Greece”.
Now Speaker Boehner has made an offer for Republicans in the House. A supposed $2.2 trillion in savings, which include $800 billion in tax reform, $600 billion in Medicare reform and $600 billion from other savings, is what the Republicans have put on the table. There are no specifics on how they plans to reach the $800 billion in tax reform without raising taxes. Where is the other $600 billion in savings is coming from, Medicaid and Social Security?
What Republicans are saying is that the wealthy should continue getting the Bush tax cuts and most of the deficit cutting should come from social programs. They seem to have forgotten that President Obama won a second term on the promise that taxes for the wealthiest of Americans would go up, as one of his main platforms. Why does Republicans in the House not seem to understand that a clear majority of Americans want taxes to go up on the rich — 58 percent of them? Even many of the rich themselves believe their taxes should go up.
What I speculate is that Republican lawmakers are dancing to the tune played by a few certain wealthy special interests, especially the interest of a few billionaires who will do anything to protect their wealth and their ability to get wealthier. We must remember that the House GOP has the same Tea Party candidates, who in my opinion gained the Republican Party its new brand name, “The Party of ‘No’”. Fortunately, some of them will be going home after this current congress ends.
Many Democrats have been toying with the idea of going over the cliff and then start fresh with new tax cuts for the middle-class but I think that could backfire, possibly hurting our credit rating. Still, Republicans will need to bend a lot further than they are. Possibly this is all posturing for power at the bargaining table from both sides, but it’s time to get serious.
In the end, perhaps they will cut a deal, probably just before going home for the Holidays. However, let them not forget that the longer they wait the more harm they do to our economy. Then let us all hope that the next congress’ elected body will include more grownups.