Raise your hand if you are sick of the “Fiscal Cliff”. Okay, let me count … 1 …. 2 … OK, there are a lot of you. I guess that I shouldn’t write about the Fiscal Cliff then. You’re back at work on 2 January like I am and we have a lot of stuff to do, right?
So, how about that House vote that … no, wait, I mean how about them Vikings, get to play the Packers at Lambeau! AP is just on fire, I’ll bet they have a chance. Anything to blur away the early hours of the first day back into the swing of things and avoid talking about Congress (the logical antonym of “progress”).
Sorry, folks. I have to. The House vote has not yet taken place as I write this, but the story is probably already written. We waited all day for this to com e to a vote because it could not be voted on until it was sure it would pass. Negotiations went on all day amounted to a lot of nothing in the end. Or did they? Something is up, I am sure. Let’s think this through.
The clock is ticking down on 2012 and the “Fiscal Cliff”. The event is something like the weather – everyone talks about it, but no one does anything about it. Out my front door in St Paul it is 18F on a moonless night, the stars drifting by as they would on any other night. Nothing is happening here, just as it is in Washington. But nothing means many different things at different times.
Could the nothing of Washington be any worse? We’ve only recently learned that the lack of a Farm Bill will likely double the price of milk, among other strange effects that will roll across the stillness of this Minnesota night like an approaching Alberta Clipper. If we learn one thing in the middle of a big continent it’s that it could always be worse. And yes, there is something horrible lurking in the silence of inaction – the death of the most effective anti-corruption watchdog Congress has ever had to deal with.
My friends ask me all the time about the Fiscal Cliff. The assumption is that, as a person who watches these things, I am supposed to know what is going on. I don’t, I admit it. The most reasonable thing I have heard on the negotiations came long ago from a source I can’t remember – that the staffers had more-or-less worked out a deal weeks ago, and it’s simply down to the final posturing by their bosses before something is finalized.
That’s probably over-stating it a bit, but certainly once the election was over the relative strength of the positions was known and there was little point in “negotiating” any more. Politicians in high office don’t get there by being stupid (usually). So before we head into the endgame of the year, we can look back on how the Republican position became weaker and weaker – and why they will probably wind up caving on all the most important things before this is over.
The economy added 118k jobs in November, if you go by the ADP report, or 146k jobs if you go by the noisier official number. Let’s call it 118k because we’ve consistently touted the value of the ADP report. By any measure, it was a lot more than was expected, given the landfall of hurricane Sandy at the end of October.
Now that the election is over, there is growing optimism that the economy is indeed … growing. It’s not a lot, but it’s there. And that’s where we stand as we move into the next phase of the political season – the part defined by getting down to work and making use of the mandate given by voters. That mandate is clearly defined by a divided Congress and a Democratic President who are at odds over how to either avoid the Fiscal Cliff or, perhaps, go over it.
Even if the election didn’t tell us much, the economy is. We’d be wise to listen to it.
What’s the worst that can happen? As the deadline approaches for the Fiscal Cliff later this month, a lot of people are asking this question. It’s becoming common on both the left and the right to question whether or not we should just “go over” the edge and see what happens.
No matter where it comes from, this is a dumb idea. Let’s examine why.
The election is over. The Sunday morning gab shows suddenly found a purpose, interviewing serious Senators and other concerned about the work that the new (and first old!) Congress will face – particularly the “Fiscal Cliff”. A tremendous amount of movement on the Republican side shows that tax increases, particularly coming as reform in the deductions allowable, is definitely on the table.
Grover Norquist now knows what it’s like to be in a position where you can’t deliver the votes. Must be a shocker.
The question remains, however, as to how much of the roughly $1.1 Trillion deficit will be tackled in year 2013, and how much will be spun out into the future. No one expects the gap to close overnight, but instead are looking for serious progress towards balance. More to the point, they want to assure markets that it won’t grow from here. How much can they raise get us down the path right away? Here is a short guide to some of the ways to look at it.
As the water from Hurricane Sandy receded, tens of thousands of homes remained without power for weeks. New York Governor Cuomo was livid – “The utility system we have was designed for a different time and for a different place,” Cuomo told a news conference. “It is a 1950s system.” The ConEd grid is, of course, managed entirely by private money, but it is a highly regulated utility. You can bet that the hammer will fall on them as they are forced to rebuild a completely new system in areas where the old one was more or less washed away.
Down the coast in Washington there is a different focus, one that highlights how a developed nation can have such a terrible problem with antiquated infrastructure. There, the talk is about how to avoid a “Fiscal Cliff”, a political problem focusing and complicating a very real problem with excessive deficits built not around long-term investment but merely keeping the government running.
The divide between the two is bigger than the 3 hours 25 minutes it takes the Amtrack Acela to cover the distance. It is the gap between the reality that infrastructure investment has an incredible immediate impact on the economy, pays for itself in the long term – but remains neglected as too expensive.