Three hours before the midnight deadline on January 1, the Senate agreed to a deal to avert the fiscal cliff. The Senate version passed two hours after the deadline, and the House of Representatives approved the deal 21 hours later. The government technically went “over the cliff,” since the final details weren’t hashed out until after the beginning of the New Year, but the changes incorporated in the deal will be backdated to January 1. Senators and Congressmen from both parties patted each other on the back and thumped their chests to say what a great job on such a grand bargain. Not surprisingly, the markets loved it, with the Dow soaring over 200 points the following day.
The grand bargain was one of the worst things congress could have done for the American people.
FreedomRedux Fact: This deal does nothing to reduce the deficit
I’m going to be honest and say this up front. If we had gone off the fiscal cliff, the tax increases would not have been fun, and may have caused a slowdown in the economy. However, coupled with the tax increases were the first major federal spending cuts in over twenty years. The CBO had estimated that the 2011 debt celing deal (the deal which put us on the path to the fiscal cliff) would reduce the federal debt by $2.1 trillion over a ten year period. I personally don’t think it would have been reduced by that amount, because they always overestimate increased revenue, but even if the debt reduction were half that amount, it would have been a good start to fixing our debt problem. (Currently, I am working on an article on easy ways to reduce our national debt, so watch for that article.)
The deal that was brokered contains no spending cuts. None. Nada. Oh, there is a promise to look at spending two months down the road, but my prediction is that we will once again kick the can down the road. There seems to be no willingness of either party to make significant cuts to their pet programs. Republicans won’t touch defense, while the Democrats refuse to consider spending cuts to ANY social program. What results is all spending continues to increase.
FreedomRedux Opinion: A Middle Class Tax increase would have been a better option
For years, the American people have been getting $1 trillion more in government services than they pay for. And since the majority of people like getting something for free (or what they see as free), the American people continue to vote for more and more government services that are unfunded. But this needs to be stopped; the country simply cannot afford to run continual $1 trillion deficits, imposing huge liabilities on our grandchildren. And while many on the left would like to make you think that all of this can be paid by increasing taxes on the rich, the real truth is that there are not enough “One Percenters” to cover all of the spending, even if they were taxed at 100%.
The American people need to make a decision. If we want low taxes, then we can’t have a bloated, expansive government. If we want a cradle to grave nanny state, where the government provides a myriad of services, then the middle class needs to pay for it.
I personally believe that we need to cut back federal spending to a bare minimum and eliminate all of this needless spending. I can’t stand how huge the government has become, and by giving more power to the federal government we are setting ourselves up to be ruled by a tyrannical regime (which is the subject of my recent novel, Escape to Freedom). However, no matter how large or small the government is, we have to pay for it.
Here’s the bottom line: This messy compromise didn’t solve anything.