Hey, have you heard about this thing called "the fiscal cliff"? Actually, the better question is: Have you heard about anything except the fiscal cliff? Nine months ago, the term had not even entered the media lexicon. And now it's suddenly everywhere. "It looks very much like now until the end of the year we will be spending our Sundays watching various people act all panicky over the Fiscal Glyph that is dominating the news," writes HuffPost's Jason Linkins, who dutifully blogged the Fiscal Cliff Mania that dominated all five Sunday shows (sorry about that, Jason -- hardship pay will be found in your holiday stocking, unless your stocking is included in the sequestration).
It was Fed chairman and neologist-in-chief Ben Bernanke who, while testifying in front of Congress back in February, first used the term to describe the combined effect of the expiration of the Bush tax cuts, the payroll tax cuts, and unemployment benefits, along with the beginning of across-the-board spending cuts (the so-called "sequestration") that were part of the debt ceiling deal (technically the Budget Control Act) of 2011. "There's going to be a massive fiscal cliff of large spending cuts and tax increases" in 2013, he warned.
So even though we've known the deadline was approaching, it wasn't until after the election that the fiscal cliff narrative took over the media discourse. One all-consuming narrative ended, and another instantly took its place. (The opening to Mike Allen's "Playbook" no longer counts down the "days to the election," but it does count down the "days to cliff.") And we all obediently shifted from one storyline to the next, as if it was the inevitable next chapter. The only real debate about the terms of the debate is whether it's actually a cliff we're headed over, or a "curve," a "slope," or an "obstacle course."
Whether or not we go over the fiscal cliff, around the fiscal curve, or down the fiscal slope remains to be seen -- and no doubt heard about nonstop every day through the end of the year -- but one thing is already certain: Our political debate has already gone over the cliff. In fact, it was sequestered long ago, when the acceptable parameters of this so-called debate were initially set.
Just look at the current state of the negotiations. President Obama's proposal -- delivered to John Boehner and Eric Cantor last week by Obama's lead negotiator Tim Geithner -- calls for $1.6 trillion in tax revenue over the next 10 years, the majority of which comes from letting the Bush tax cuts expire for those making more than $250,000, along with $600 billion in savings from entitlement and farm subsidy programs, and $800 billion from reduced combat spending. There would also be $200 billion in new spending for unemployment benefits, homeowner mortgage relief, and infrastructure.
Republicans immediately took to their fainting couches. "Right now I would say we're nowhere, period," Boehner told Chris Wallace. But, in fact, these were the same terms the supposedly shocked -- shocked! -- Republican leaders had already heard from the president himself earlier in the year. "Republicans assumed that Obama's initial offer floated to congressional leaders would go like many others he's made in the past," reported HuffPost's Ryan Grim, "and quickly soften amid staff talks." But this time, the president held firm. As Ezra Klein puts it:
Previously, Obama's pattern had been to offer plans that roughly tracked where he thought the compromise should end up. The White House's belief was that by being solicitous in their policy proposals, they would win goodwill on the other side, and even if they didn't, the media would side with them, realizing they'd sought compromise and been rebuffed. They don't believe that anymore. Perhaps the key lesson the White House took from the last couple of years is this: Don't negotiate with yourself.
And since it's harder to negotiate with Republicans than himself, President Obama has mounted a campaign-style effort to go over the heads of congressional leaders and get the American people involved. On Friday he appeared at a toy manufacturing company in Pennsylvania, proclaiming that the Republicans refusing to budge -- and thus raising taxes for everybody -- would amount to "the lump of coal" for a "Scrooge Christmas."
He then implored Americans to join the fight:
So the key is, though, that the American people have to be involved. It's not going to be enough for me to just do this on my own... that's why I'm going to be asking for all of you to make your voices heard over the next few days and the next couple of weeks. I need you to remind members of Congress -- Democrats and Republicans -- to not get bogged down in a bunch of partisan bickering, but let's go ahead and focus on the people who sent us to Washington and make sure that we're doing the right thing by them.
The president ended his speech by saying, "So I want you to call, I want you to send an email, post on their Facebook wall. If you tweet, then use a hashtag we're calling 'My2K.' Not Y2K, 'My2K,' all right? Because it's about your '2K' in your pocket."
It's really great that the president is appealing directly to the people. But why assume that the people will only respond to a direct appeal to their pocketbooks? Why not also appeal to the need to grow the economy, create jobs, rebuild our infrastructure, and yes, even take care of America's unemployed? Where is the moral imperative -- that can help connect us all -- to rebuild the country?
It reminded me of Newt Gingrich's reducing the Republican agenda in 1996 to six words: "Earn more, keep more, do more." As I wrote at the time, "The problem with this trilogy is that it has no moral imperative. Why, at the very least, wasn't it 'Earn more, keep more, give more'? Is giving too soft a word for the 'Leave Us Alone' coalition?" Likewise, is anything but a promise of more money in our pockets too soft for this Democratic White House?
Yes, each day we move closer to "the cliff," the media will breathlessly report on how the White House and Republicans are defiantly squared off against each other. And on a few issues -- primarily tax cuts for the top 2 percent -- they are. But if you step back and look at the terms of the debate, it's still a table set by Republicans -- in which the main selling point is $2,000 in your pocket on one side, and an all-out effort to keep more in the pocket of the 2 percent on the other side.
The debate the country should be locked in right now isn't about the fiscal cliff and the deficit but about the growth cliff and the 20 million unemployed or underemployed Americans. Economic growth for the fourth quarter is expected to be under 2 percent -- well below what it needs to be if we're going to substantially reduce unemployment.
Annual deficits are already down by 25 percent as a percentage of GDP since 2009. This is the fastest rate of deficit reduction since the demobilization of the forces after World War II. It already exceeds prudent speed limits, slowing growth, endangering the recovery and extending mass unemployment. The world is worried the U.S. will turn to austerity, not about its deficits.
Of course, if we actually did worry about growth and did something about it, that would go much further toward reducing the deficit than cuts to social programs. "The boom, not the slump, is the right time for austerity," John Maynard Keynes said, and it is as true now as when he said it in the 1930s.
Bruce Bartlett, a prominent Republican economist and historian who served in the Reagan and Bush 41 administrations, recently came to the same conclusion while researching a book. "It was immediately obvious to me that the economy was suffering from the very same problem," he writes, "a lack of aggregate demand. We needed Keynesian policies again."
But instead of trusting the country to understand that, the president has instead largely acquiesced to the Republican mantra that when American families have to tighten their belts, so does the government, and has chosen as his distinction-drawing principle the disagreement over tax cuts for the wealthy.
Tax cuts for the middle class are a start, but if President Obama wants the people's help, he should trust them enough to believe they can understand, and act on, the bigger principles that could actually get the economy moving. Before we get a grand bargain, we need a grander debate, one that's grand enough to include more than just tax cuts.
The president has got the wind in his sails. He's just won an election -- convincingly. And he's facing an opposition whose exhausted vision for the country has curdled into, simply, tax cuts for the wealthy and forever-unspecified loophole closing. The moment is ripe, and people are ready, for something more than an appeal to use the hashtag "My2K."
In his 2012 State of the Union speech, Obama made the case for more infrastructure spending:
During the Great Depression, America built the Hoover Dam and the Golden Gate Bridge. After World War II, we connected our states with a system of highways. Democratic and Republican administrations invested in great projects that benefited everybody, from the workers who built them to the businesses that still use them today. ... But you need to fund these projects. Take the money we're no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.
If this debate were framed as a growth crisis instead of a deficit crisis, that sort of job-producing infrastructure spending could be the centerpiece of the president's barnstorming campaign. "We could get more short-term stimulus -- and arguably more long-term growth -- out of infrastructure investment than out of most of the policies in the austerity crisis," Ezra Klein writes. "But the guiding principle should be remain the same: The first thing we need to do is boost the economy in 2013."
And let's broaden the debate on entitlements, too, by bringing in the fact that, as Louise Story's great series on "business incentives" and jobs showed, state and local governments give away about $80 billion per year to companies as enticements to create jobs that often later vanish.
Texas is tops at $19 billion per year, while West Virginia and Oklahoma give away sums that amount to a third of their budgets. And while Gov. Rick Perry likes to brag about job creation, Texas has the third highest rate of jobs that pay minimum wage or below, and has the 11th-highest poverty rate in the country.
Is this really a free market? The companies are glad to take government money in the name of job creation. But then they talk about the "free market" when shuttering factories and firing workers. If we're going to be talking about "makers" and "takers," we should broaden that discussion, too.
Instead, we've accepted the narrow terms of the "fiscal cliff" debate. Republicans have termed Obama's proposal "fantasyland," but it's a measure of how far we've gone into fantasyland that this is the debate we're having at a time of near-recession, and of dismal prospects for 20 million unemployed or underemployed Americans. It's important to remember that this debate didn't go off the cliff by itself. This was no act of God -- it was entirely man-made. We've known this crisis was coming for an entire year, yet, as Mohamed El-Erian writes, "congressional dysfunction has stopped our political system from dealing with it in a timely and effective manner." And even though the Democrats are likely to win this particular round, "they should realize that this would prove a shallow victory if it is not followed up by a more holistic approach to re-invigorating the U.S. economy."
I hope this happens whether there's a deal or not. It would be great if we could channel some of the ingenuity we clearly possess for producing manufactured crises (debt ceiling, fiscal cliff, etc.) -- and giving them catchy names -- into solving our real problems. One start would be for the president to use his new, hard-fought political capital not just to beat the Republicans at this particular game but to expand the playing field of the next one. The only way we're going to grow the economy is if we grow the debate about the economy.