The Cliff That Isn’t

Washington is abuzz about the Fiscal Cliff, a combination of tax increases and modest cuts in spending growth. Since the Old Media and most of Washington always favor tax increases, the fear must be over spending. But even with the cuts, Washington will remain overfunded. So, what is not to like about the Fiscal Cliff?

The Cliff allows for tax rates to return to those Pres. Clinton approved in the early 1990’s. Most taxpayers will see their rates increase and some people who now pay no income tax will have to begin paying. In a 2007 primary debate, Pres. Obama said it was the country’s moral obligation to repeal all of the Bush tax cuts, and the OM continues to churn the notion that the Clinton tax increases caused the prosperity of the 1990’s. Now that the Democrats are in charge, most of the Clinton tax rates are unacceptable. If, as Obama now claims, the Bush tax cuts are appropriate for 98% of Americans (a fatuous figure since nearly half of Americans pay no income tax at all), does that mean Bush was 98% right in his tax policy? Does that mean Clinton was 98% wrong in his tax policy? The Cliff’s tax rates are a tool by which Obama is dividing the US along phony class lines. If everyone’s tax rates go up, Obama’s us-vs.-them, punish-our-enemies rhetoric becomes powerless.

The argument against the Bush tax cuts has always been that it lead to the budget deficit crisis. However, even Obama admits that his tax increase for 2% of Americans will not significantly reduce the deficit. Instead, the tax increase he seeks is a matter of justice, or as Warren Buffett claims, tax increases would “raise the morale of the middle class.” Obama and Buffett seem to be admitting that overall, the Bush tax cuts are not the problem they and the OM portrayed them to be, but rather the Bush tax rates only need some window dressing for “fairness” and “morale.”

The Cliff also purports to cut spending. In reality, the sequester somewhat reduces the rate of increase in spending. By any measure, all spending will remain uncut. The real-dollar per-capita budgets of all major departments will be higher than under Clinton, including Defense and HHS. In every sense the government will be better funded than under Clinton. Was Clinton an evil plutocrat who hated the poor and minorities? Further, the sequester does not address entitlements such as Medicare and Social Security. Those are the budgets whose out of control growth will destroy the US. Washington’s big spenders know they were elected to increase spending each year, and any slowdown would be against the interests of their donors.

Let the Cliff happen. Why not test the notion that Clinton’s tax rates caused prosperity? Why not see what would happen if the rate of growth in Washington’s spending was cut slightly? Why not make Obama take some responsibility for his spending habits? Why not call the OM’s bluff that the Cliff would be the end of all things? The Cliff and the negotiations surrounding it are a fabrication. The Cliff’s tax rates are Democrat tax rates, voted for by Democrats signed by a Democrat, and more recently endorsed by the Democrat Obama. The Cliff’s spending cuts are a Democrat fabrication as well. By pretending a slightly slower rate of increase in spending is a cut, Democrats built a firewall against real reform. To balance the Federal budget, spending must be cut not by $800bln over ten years, but by $10 trillion. Let the Cliff happen to deprive the Democrats of the lies they and the OM use to protect corruption, waste, and unsustainable entitlement scams.

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