Home > B1 > The Fiscal Cliff Has Many Peaks

The Fiscal Cliff Has Many Peaks

When I think of the recent Fiscal Cliff issue, I picture a sharp jagged mountainous peak that falls away several thousand feet into the flat horizon, like an ocean or desert.  This imagery could not be farther from the truth. Why would our National Leaders attempt to comprehensively solve a problem like the Fiscal Cliff so that the American people, businesses, states and cities could softly land on that ocean or desert and begin to plan for the future?  I have come to find out the Fiscal Cliff represents a much more involved problem. While a portion of the Fiscal Cliff was averted on January 2, 2013, the next peak on the horizon involved a series of mandatory spending cuts known as the Sequester.

images

Source: smscs.com

The Sequester was part of the Budget Control Act of 2011.  This Act resulted from a negotiation between Democrats and Republicans related to raising the country’s debt ceiling.  The Republicans in the House of Representatives refused to raise the debt ceiling unless the President put a plan in place to reduce spending.  The thought of the President at that time, was to put in place about $1.2 trillion in spending cuts over a 9 year period that were extremely harsh and would have a negative effect on our military and economy.  The cuts were scheduled to take effect on January 1, 2013 but were delayed until March 1, 2013 as part of the Fiscal Cliff negotiation.  At the time of the passing of the Budget Act, a bi-partisan “Super Committee” was formed to make recommendations to better allocate the spending cuts so as to not have such a negative effect on the military and economy.  The Super Committee failed to agree on a re-distribution of cuts and thus another peak in the Fiscal Cliff mountain range was formed (Bipartisan policy).

It has been difficult to watch the news or read the newspaper over the past few weeks without being inundated with reports about the Sequester.  As of March 1, 2013, if the Sequester is not reconciled, the mandatory spending cuts will go into effect.  What is troubling about the news is the partisan political spin is at such an unhealthy level, it is difficult to believe anyone at this point.  The President blames the Republicans for wanting the Sequester to take effect while the Republicans blame the President for coming up with the idea of the Sequester in the first place.  The President is using the Sequester as an opportunity to call for additional tax increases on top wage earners and has distanced himself from any connection to developing the Sequester back in 2011.  The President’s Cabinet members are blaming Republicans for potentially allowing cuts to the military, airport security, Air Traffic Controllers, school children, police officers, prison guards, meat inspectors, teachers, disabled children….and the list goes on and on.

Rather than getting caught up in the politics, I thought I would view the Sequester from a more objective standpoint.  Given that our country has over a $16 trillion debt, the Sequester, as horrible as it has been portrayed, must at least change the direction of our country and put us on a path to debit reduction. However, this is not the case.

BCA2

Source: Bipartisan Policy Center

The facts show that if the sequester cuts were to take effect, our National Debt would still equal our country’s gross domestic product only a few years later than if the Sequester had not taken effect at all.  This fact is very troubling because one would think that if our Politicians in Washington spent as much time and energy working on putting in place a positive plan for the long term future of our country as they do blaming and spinning, we would have “The Grand Bargain” that every Politician aspires to be a part of (Nelson).  Furthermore, the Sequester only accounts for slightly over a 2% cut to our Federal Budget.

sequestration_cuts_in_perspective

Source: National Review Online

 

It would seem to me that reasonable adults, sworn to represent the people, uphold the Constitution and protect our country would find a way to at least cut 2 cents of every dollar we spend.  This exercise is routinely practiced in most American households and a regular basis.

I have learned in our Government and Economics class that the American Constitution and our election process are designed to work in synchronization to enable a country that is full of opportunity and designed to allow generations of Americans to prosper.  I would like to see this belief carried out in our present day politics and believe our Congress and the President have the ability to work on this “Grand Bargain” to promote fiscal stability in our country and to allow for generations of prosperity.  Solving the problem of the Fiscal Cliff was a missed opportunity.  The Sequestration will pass but, until our Leaders solve problems for the long term, we will have no soft desert or body of water to land on from the next cliff.

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