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December 19, 2014

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Sun Editorial:

Avoid the fiscal cliff

Lawmakers can’t allow the nation to slide into recession again

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Congress returns to Washington this week for its lame-duck session, and what lawmakers do will have a significant effect on the country. Congressional leaders are trying to find a way to avoid the so-called fiscal cliff, a series of budget cuts and tax increases that are scheduled to take effect next year.

The Congressional Budget Office reported this month that the nation likely will fall into another economic recession and higher unemployment if the fiscal cliff’s prescribed outcomes are triggered. The middle class would be hit particularly hard.

That should be enough to force congressional action, but there is plenty of reason to be pessimistic. Since Republicans took control of the House of Representatives in the 2010 election, Congress hasn’t had a very good record of accomplishment.

Thinking the 2010 election was their mandate, the Republicans have demanded that the country bow to their anti-government ideology. The result has been gridlock. Republicans say that their obstructionism has saved the country from economic calamity. That’s ironic considering they mocked the Obama administration’s correct statement that the stimulus measures helped save the country from further economic suffering, including higher unemployment and a possible depression.

The Republicans’ action has harmed the country by stalling recovery. For evidence, look no further than the downgrading of the U.S. credit rating in 2011.

It bears noting that the nation shouldn’t even be in this situation. Nobody wanted the fiscal cliff in the first place. It was essentially put into a bill last year as a poison pill that would kick in only if lawmakers couldn’t make a budget deal. The fiscal cliff, which included significant cuts to the military, was thought to be so serious that no one in Congress would allow it to happen.

But because of the wide divide between the parties, it did, and here we are, facing a recession. It is imperative that lawmakers act to avoid that for the good of the country, particularly the middle class.

Of course, the Republicans haven’t been concerned about finding pragmatic solutions. Their strategy, in the words of Senate Minority Leader Mitch McConnell, was to make Barack Obama a one-term president.

Now that the election is done and they’ve failed in their quest, perhaps Republicans will look at the bigger issues and find a way to work with the president. Not that anyone expects that to be easy. Beyond the politics, there are some serious issues to iron out, particularly the deficit.

If there were no fiscal cliff, the federal deficit likely would increase by $503 billion next year, and it would add an additional $682 billion in 2014, according to the CBO. At the same point, the economy would be expected to grow, whereas it would contract if the fiscal cliff’s measures take effect.

Getting the economy growing is crucial, but any deficit increase may be unpalatable to the Republicans who have made slashing government their top priority. They may see the fiscal cliff as a good thing because it would cause a cut to the deficit. The results, though, would be disastrous. The nation can’t afford another recession.

The deficit must be addressed, but the nation didn’t get into this situation overnight, nor will it get out of it overnight. Congress should take a balanced, long-term approach in dealing with the budget, the deficit and the economy. It needs to first avoid the fiscal cliff and then lay out a plan to put the federal budget on sound financial footing.

Both parties will have to make compromises, but after the past two years, a deal is incumbent upon Republicans. They need to show they’re willing to put the country’s best interests ahead of their ideology.

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  1. The automatic sequestrations that take effect on January 1, 2013 were voted on and approved by Congress and the President. It is the law of the land and should be allowed to be enacted as agreed.

    If the newly elected Congress and President Obama disagree with the sequestrations then it is up to them to work out an alternative and implement. It is not the job of the current lame duck Congress and President, who already have.

    CarmineD

  2. It is a certified fact that the Former President George W. Bush Jr. Tax Cuts For The Rich And The Filthy Rich will be a thing of the past as of January 1, 2013. Say anything you want, but it is gone, baby, gone.

    That policy has unequivocally proven to be dragging the American economy downwards. And trying to continue it would only continue this trend. No matter what people say to the contrary. You simply cannot continue a course of action and hope for the opposite to happen.

    Speaker Boehner is a poor leader in the House of Representatives. He shows he can't point out the obvious to the wild howling mob of politicians he supposedly leads.

    FACT: Speaker Boehner doesn't do something, the credit rating of America will be downgraded if he doesn't show some leadership and do something to prevent going off the fiscal cliff.

    ANOTHER FACT: Speaker Boehner needs his caucus to understand that compromise is not a bad thing.

    YET ANOTHER FACT: Speaker Boehner, along with his entire stupid political party, took us to the brink one time before (debt ceiling), now here we are going down this same path again...a path that policies set forth by him, along with intransigence before, continued all of America down this path....they painted the floor...now why are they surprised they have painted themselves into a corner now....with everything eventually leading to this point....and known to get there...but nothing done to stop it?

    Speaker Boehner has direct responsibility for everything that is happening right now.

    And all indications show he STILL don't get it.

    Here it is...past Thanksgiving....and still we have got no earthly clue what Speaker Boehner and his useless Tea/Republicans in the House of Representatives intend to do. Nothing but vague nonsense like linking it to the Affordable Care Act, Social Security, Medicare and Medicaid. And there is absolutely no linkage.

    Speaker Boehner has nothing left to work with. But still he's acting like he does.

    Unbelievable. We all suffer because of his incompetence.

  3. RefNV - By my count nearly 300 Republican Senators and Representatives are holding up extending the Bush tax rates for 98% of us. Is that an example of class warfare? Seems to me it is.

    If you ever advocated for extending the Bush tax cuts for those making under $250,000 without including the top 2%, I missed it.

  4. The entire world is sliding into recession. If they go we go. We only represent a fraction the the worlds economic activity. US companies with large overseas exposure are having a terrible time. The "fiscal cliff" is a pimple given the storm clouds over Europe and Asia.
    We typically have a recession every few years. There have been 47. A recession next year is all but inevitable. Both from a technical and fundamental perspective.

  5. The fiscal cliff was created by this administration. O. asked for and got payroll tax cuts for the time period he wanted. O. asked for and signed the income tax cut extension. O. signed the "budget" compromise of sequestration. This fiscal cliff is MANUFACTURED to do a SALES JOB on the American public--so you will all bow down at O.'s wisdom when he explains how we all get to pay more for fewer benefits and O. can keep giving away our GDP to Egypt, Hamas, Iranian defense.....

  6. The only thing that can get close to solving our fiscal problems is a national sales tax and containment of medical inflation. The bulk of liabilities, whether in state government or federal government, exist in the medical space. Medical has gone from 6% of GDP to an anticipated 40% of GDP in a couple of decades. That translates to something in the neighborhood of $200 trillion in medical spending over the next 40 years with governments getting stuck with at least 50% of the cost. No amount of taxation can pay for such nonsense. Plus a dollar spent at Walgreen's is a dollar you can't spend someplace else. Continued medical inflation will create opportunities in medicine and cause endless business failures elsewhere.

    The records for highest prices paid for free standing commercial buildings all belong to drug stores. The Walgreen's on the strip sold for $40 million plus. An all time record.

    If you don't include medical inflation in a fiscal discussion you are missing the whole point.

  7. http://www.thestreet.com/stock-market-ne...
    The Republicans and Democrats haven't harmed the country. The thousands of medical lobbyists have. Biggest con ever! Look at the red line. It is all about medical inflation.

  8. I laugh at you all who argue these points ad nauseatum. We've been arguing these same points since I was a kid back in the 50s. Nothing ever changes for the betterment of the nation because the dopey voters have allowed the federal government to get so big and powerful, that a few hundred people rule 300 million of us. They collect bribes from lobbyists, and money from speaking engagements. They get all sorts of freebies and have staffs to do their bidding. Why on Earth would any of these politicians want to change that? Left and right, they are mostly lying, thieving filthy scum who care nothing for the population of this once great nation. They've successfully divided us into hundreds of special interest groups and have conquered us at last. American voters are far too ignorant to actually research history and see how badly every huge central government has done for their nations. Keep it up and eventually they will be just like the gang in Orwell's "1984". I don't really care, cause I'll be dead.

  9. those that think the fiscal problems in the US started in 2009 need to go back to 1st grade and repeat their education and actually learn US history as it has happened in REALITY.

    the supply-side tax cuts of Reagan and GWB created the majority of the deficit as has been stated by every report by the CRS, CBO and US Treasury. Some of you might actually try reading them.

    with 70% of the US economy based on consumption and the amount of consumption is determined by the income and wealth of a person and/or family. well 40% of US home wealth was lost as the result of the manufactured housing boom and corresponding asset bubble crash.

    according to SSA Wage data collected in 2010 70% of the US workforce is earning between $40K-$25K a year or an inflation adjusted $20K-$13K in 1990
    s dollars. almost 50% of US workers have ZERO WEALTH.

    doesn't take Einstein to figure out what's wrong with a consumption based economy where the majority of the workforce can not consume with out going into debt.

  10. td: No argument but "Those that think" don't need to go back. It sounds strange but think it through: (In order to save, have a future....) each worker should live on less than s/he makes. I've counseled clerical employees who kept crying for pay raises but their work was not worth it. They'd whimper asking for my salary. Some would want me to "loan" them two weeks pay so they didn't have to get a payday loan.... The way to get ahead is to LIVE ON PART of your income. If all you do is worth minimum wage, learn to live on less than that. It can be done. Sure, not fun; but it can be done. Look around at work, who (and why) just got a raise? Don't envy those related to the boss. Just do something that helps the bottom line AND something that makes working life easier for your boss, your boss's boss. We know the economy is still sour and is likely to stay that way for at least 4 more years, so deal with it on a micro level. Do what you can. Maybe share housing. Learn to say "no" to friends, partners, parents, kids. Learn to cook or at least to nuke/microwave din din.

  11. Zippy is right again. Instead of the government handing out more money for EVERYONE's every paper cut, we should be curtailing medical spending. Consumer-driven health care helps. Make it worth your financial interest to stay healthy and to seek medical care only when you NEED it. Find a way to CUT MEDICAID. Too many dependent people have the mindset that it is up to the government to find them medical care, nurture them, and seek them out for every ache or pain they can imagine. Otherwise, of course, they cannot work, cannot support themselves, cannot use contraception, cannot care for their kids, cannot do much of anything.

  12. Tarik...I completely agree with most of the above. The Reagan and Bush tax cuts added to the deficit and the lousy wealth distribution metrics, but its medical spending that has gone from millions to trillions in a few decades that has caused most of the deficit itself.
    You could eliminate the entire 2.5 million federal workforce and save $270 billion. You could then eliminate the entire military including veterans benefits and off book appropriations and save about $900 billion. We would still be in the hole in a short period of time do to the trillions we spend each year on medical.

  13. I have said that I think the housing bubble burst was a good thing overall since it brought home prices back into line with incomes for the most part. I think we might want to consider if going off the "cliff" might not be a good thing as well if it results in a "reset" and allows us to go forward afterward on a more equitable footing.

  14. Colin: It's a fact that President Obama and Majority Leader Reid haven't passed a working budget, a primary responsibility of our elected officials, in three years. Do you operate your household without a budget Colin?

    Colin it's a fact that at least 47% of Americans pay no income tax. Thus they have no skin in the game. How about in exchange for those tax cuts for the "filthy rich" we also institute a minimum federal income tax that cannot be waived. Let's say that amount is $500 and must be deducted out of any government benefits as of the first of each year.

    Is it fair that 2% of the population pays 70% of the tax burden?

  15. Spending $3 trillion a year on $2 trillion in revenue is the lunacy. Republicans don't have the courage to cut spending and Democrats don't have the intelligence (or scrupples) to do so. A tax increase on top earners won't cover 10% of that deficit. The spend more ALWAYS and never compromise on real budget cut crowd (this editorial board included) adhere's to a mentally corrupt ideology which needs to die.

  16. Contrary to the conclusion of this article, it is not the Republicans who need to cave on their position. They have outlined ways to achieve revenue gains by reforming deductions. If the fiscal cliff is reached it will be the Democrats and primarily the likes of Obama,Reid,Pelosi and Durbin, who will bear the blame. they have refused to move on entitlement reform,and are fixated on raising tax rates on those earning over $250k even though this will fund about only eight days of the government's operations. The Republicans should stand back and allow the fiscal cliff to arrive.let the Democrats offer a real plan for a balanced solution. Democratic arrogance is the real problem.

  17. As I look at the cliff, the danger appears to be to those who can't accept defeat!

  18. AS Commenter Bbtbrain put it, "Is it fair that 2% of the population pays 70% of the tax burden?" it rang a few bells in my mind. First of all, even Warren Buffet admits the current taxation system UNfairly places the burden on the lower income worker. Big corporations enjoy a multitude of tax breaks and exemptions that the little guy American simply does not. I don't begrudge those who worked hard, sacrificed, and earned their prosperity here in the USA. They took the risks and all the givens and brilliantly hit the motherlode.

    It is the question of greed and the imbalance of distribution of wealth: how many mansions, jets/planes, yachts/boats/ships, vehicles, businesses can one person possess and enjoy at one time? I can only ride one horse at a time, for example. The problem we have in our society, is the lope-sided way people are rewarded.

    We have an endangered middle class that may well be legislated(or lack thereof) into extinction. Many good, hard-working Americans are and have been living on less, as Commenter Roberta Anderson advocates, yet are faced with ever-growing food, fuel, rents, and healthcare costs, while their paychecks are stagnant, or worse, trimmed so that both employer and worker are still functioning. I currently fall into that category, as do my peers.

    Our country's future scares me to death. There is little to NO promise of a good future, and you notice the young people becoming less motivated, less sure, less certain, that their hopes and dreams will ever be realized in today's landscape. That is extremely troubling.

    Our country needs to have good-hearted public servants in control. Any seed of corruption, greed, power mongering, needs to become absent in Washington, D.C., for our country to heal and survive.

    Blessings and Peace,
    Star

  19. Nothing has changed in the Republican party since Rep.Mitch McConnell stated to all Republicans that we need to make sure Pres.Obama is a one term President.

    With his call McConnell has cost the Republicans the Pres. election this past Nov 6,2012.The call now is to let the Pres. go over the fiscal cliff. Which the Pres. is willing to do If the Republicans will not negotiate on a deal.If this continues the path to the midterm elections will just about wipe out the Republicans as a party.They can't keep blaming Pres.Obama for the countries ills,it's mostly their fault these past few years with gridlock.