The fiscal cliff is looming in the distance, with lawmakers having just one month left to come up with a solution to avert the potential for a financial disaster. Yet no matter which way Washington decides to move, all of the potential options come with their own share of problems that could set the country back substantially.
Congress returned to a lame-duck session last week but didn't appear to be making much progress. At the same time, the president is making his case directly to the American people and met with a select group of middle class Americans at the White House.
Critical thinking says this is "A despicable example of leadership" from our leaders in Washington, who are now scurrying to find a last minute solution. It's shameful because Congress -- stuck in political gridlock -- had three years to address the fiscal cliff. Now with another recession, a deeper deficit and even a situation similar to what's going on in Europe all very strong possibilities, Congress needs to take immediate action and seek a feasible bi-partisan debt solution.
The delusion continues among other big name players. Warren Buffet says the wealthy need to pay more in taxes. The truth is we must extend the Bush-era tax cuts to continue to support our weak economy, which is more than fair because the wealthy already pay more in taxes in one year than some people pay in a lifetime, and penalizing successful small business owners is going to negatively impact unemployment which has been stagnant all year as it is.
Then there are critics like Deputy Defense Secretary Ashton Carter, who claim the fiscal cliff will hurt military training and cripple military spending. Government leaders believe we can't survive unless we fund huge expenses like the Iraq and Afghanistan wars, which cost over $2 trillion dollars of borrowed money plus interest. It's even questionable at times what we were doing in those countries in the first place.
Now that we are out of Iraq and leaving Afghanistan, the politicians are beating the drums of war with Iran. Here's a critical thinking news flash for Washington: We're broke. Actually, we're beyond broke. We can't afford to invade Iran. Unless they are beating down our borders or bombing us we should stop saber rattling and get serious about solving the real threat to our national security: the national debt.
Since 1970, the United States government has run a deficit in all but four years. Imagine running your personal finances this way. We would all be in jail. The only reason the government can get away with it is the unlimited, unregulated power of the Federal Reserve. When the government runs out of money, the Fed prints more.
In addition to the inevitable reality that's going to come with the fiscal cliff weather Washington reaches a compromise or not, comes another problem: the debt ceiling. The government can only borrow up to $16.4 trillion at a time, and spends more than it takes in. According to an analysis from the Bipartisan Policy Center, the government is projected to reach its current statutory debt limit of $16.4 trillion in the last week of December.
Senate Majority Leader Harry Reid, among others, is calling for the debt ceiling to be raised yet again. This is equivalent to the credit card customer who is $19,500 in debt with a $20,000 credit limit, and his credit card company raises his available credit line to $25,000. All this does is put a band aid on a serious problem and in the long run makes matters worse.
It's hard to say if we'll actually go over the cliff and allow current spending cuts and tax increases to go into effect next year, which could possibly bring on another recession, or if Washington will cancel some of these spending cuts and tax increases which will continue to add to the deficit. The Congressional Budget Office, which is non-partisan, says Congress could also take the middle ground, which would extend the Bush-era tax cuts but cancel automatic spending cuts. With this kind of compromise, we could see modest growth but no major economic hit.
As the fate of the nation remains up in the air for now on critical issues such as the fiscal cliff and debt ceiling, the emotionally charged thinking of political leaders has put us in an economic hole that's going to be difficult to climb out of. We need more critical thinking in Washington, and that starts with eliminating the debt, reducing the size of government and getting our fiscal house in order before it's too late.