No Fiscal Cliff Decision: When No News Could Be Good News

Bah Humbug. There’s nothing like financial uncertainty during the holiday season — and that’s what this nation is facing. Political leaders are on vacation but holidays in the nation’s capital don’t feel different from any other time of year ; not much of anything gets accomplished.  Our dysfunctional system is one in which the only time gridlock ever ceases is when there’s no activity at all.

Political pundits have been questioning whether congressional representatives and President Obama should have stayed in D.C. during the holidays to work towards finalising a ‘fiscal cliff’ deal. They say that falling over means triggering another global recession. I don’t think they needed to stay in town; what would be the point when negotiations weren’t likely to progress?

Good or bad, where do we stand as we head towards 2013?

  • The Republican Party isn’t functioning as a cohesive unit; those GOPres who are more conservative than Speaker of the House John Boehner have proven that protecting middle class taxpayers is not their primary concern. Taxpayers who are not in the 1% must fend for themselves. Boehner’s ‘Plan B’, which would have raised taxes on income above $1 million a year, was handily rejected by the Party of No. Now they say “NO!” to each other’s proposals, and not solely to those presented by Democrats. The good thing is at least they’re being even-handed; they don’t like any proposal.
  • President Obama’s most recent proposal which ties Social Security benefits to the ‘chained CPI‘ has landed with a thud on many progressives. The belief is that this suggestion goes against his campaign promise to not place Social Security on the negotiating table. Social Security has been in GOP cross hairs since its inception even though, by law, it cannot contribute to the federal deficit. But given the state of politics in Washington wasn’t it unrealistic or overly hopeful to expect that the left would not have to place anything on the table despite the perception that the president has a mandate because he won by a majority vote?
  • Some economists say the chained CPI is a more realistic measure of inflation but arguments over whether it represents a cut in Social Security or just a reduction in the rate of growth have yet to be resolved. House Minority Leader Nancy Pelosi believes it’s a measure to strengthen Social Security for the long-term…but the measure appears regressive in nature as it shifts the measure of inflation from ‘must have’ purchases to ‘substitute’ purchases — which doesn’t bode well for those who are already purchasing at bare minimum levels.

We don’t yet know everything the president has planned… and that’s key. President Obama and Nancy Pelosi have said that the proposals will hold harmless economically disadvantaged seniors, and it will provide increased benefits for people over 85 years of age. This has fueled speculation that it has always been the president’s goal to go over the cliff.

Image: Imgur Gallery

Personally, I’d love to say screw it just go over the cliff so that both sides of the aisle are forced to make a deal —  I’d like to hear “all bets are off, everything will be on the table” if it is the only way that previously untouchable items, the largest of which is the military budget, will face serious scrutiny. To date, no serious discussion has taken place about tackling subsidies to oil companies, big pharma and big agriculture. Equally good is that those “job creators” will be forced to kick in and contribute to the nation’s economy to make up for the breaks that they’ve enjoyed since the Bush years that didn’t result in the millions of jobs their breaks were supposed to create.

But I’m torn.

Why? Because in the mess that is known as the nation’s budget, stronger and better-financed voices usually prevail in the battle for control. We may get short-term benefits but long-term damage would occur as food and education programs, and social supports that include the loss of unemployment benefit for 2.1 million Americans.

Perhaps we’ll get a better deal if we go over the cliff; lawmakers can undo the damage very soon after the first of the year when stock market fears take hold, global economic reality sinks in and their performance approval ratings tank even lower. But, for now, it’s unlikely we’ll get any news.

And so, again, we wait.

Bah Humbug.


  1. I hope the US political parties will reach an agreement as soon as possible because when the US economy cools down the consequences will be felt in all economic sectors in other countries as well and the positive predictions will not come true. As a Canadian investor working in real estate I’ve been analyzing the possible risks in this particular sector and the outlook for 2013 is quite optimistic as far as the real estate market in Canada is concerned. However, there are certain threats that could put a halt to that positive development, one of them being inflation pressures out of the US. The mutual interconnection between the two countries is very strong so I hope the US government will do its utmost to prevent the worst from happening.

    • Brooklyn Dame says


      Unfortunately our political leaders often do not consider the impact of their policies on US citizens so it’s rather unlikely that they will give even remote consideration to the impact of people living outside of our borders. If you follow US politics regularly then you may recall the standoff and hostage situation that came from the effort to preserve unemployment benefits for millions of people but it came at a high price. In the process the nation lost its AAA credit rating which has exacerbated our debt problem… And now with the fiscal cliff negotiations the debt limit is once again being held hostage even though the debt limit is meant to take care of existing bills and not incur new debt. Our middle class has been eviscerated over the past 30 years, and inflationary pressure are not given much thought unless the Federal Reserve mentions what the impact is to Wall Street. The bottom line? We’re hoping for a reasonable agreement as well… But we’re not holding our breath. 🙁