TAMPA, November 27, 2012 — The 24-hour news cycle is dominated with frantic warnings about the “fiscal cliff.” If you merely listen to the sound bites, there is another “emergency” facing the United States of America and only some drastic action by Congress can avert it.
What nonsense. Don’t Americans ever learn anything from even the recent past?
Just four years ago, we were told that if we didn’t allow Congress to give Wall Street almost a trillion dollars of our money, the end of the world would occur. The “bold” legislation was necessary to “save the financial system.” Other than preventing a lot of billionaires who made bad investments from losing their money, I’m not sure what that was supposed to mean.
We were told after 911 that “the world changed” and the 4th, 5th and 6th amendments to the Constitution would have to be trashed. Americans now subject themselves to unreasonable searches without warrant merely for the “privilege” of getting on a plane. They allow presidents to arrest American citizens without a warrant or charges and hold them indefinitely without recourse to a writ of habeas corpus.
The president can even kill American citizens without due process.
It was all supposedly necessary to protect us from … the shoe bomber and the underwear bomber. Both defeated the new government security apparatus and were subdued by private citizens.
Both initiatives were accompanied by a non-stop barrage of media propaganda trumpeting impending doom if the government wasn’t given more power.
The fiscal cliff scam is playing out exactly the same way. Day and night, Americans are bombarded with the same message. If Congress doesn’t do something, the world will end.
There are two components to this supposed disaster. The first is the “draconian cuts” to government spending built into the Budget Control Act of 2011. Supposedly, they will “gut the military,” while plunging the economy back into recession.
There is only one problem. Even if Congress fails to make a deal, nothing is being cut from the federal budget.
Let me repeat that. Nothing is being cut.
What the government is calling “spending cuts” are actually decreases to future increases in spending. This starts with the concept of “baseline budgeting.” The government assumes that spending in each area will automatically rise by a certain percentage every year. All of the cuts triggered by the fiscal cliff are to spending increases, not to this year’s spending.
That means that if Federal Program A is budgeted for $1 billion in 2012 and projected to go up to $1.1 billion in 2013, a “$50 million cut” to Program A won’t result in the program spending less than $1 billion in 2013. It will spend more. Spending on Program A will go up $50 million, from $1 billion to $1.05 billion. It just won’t increase as much as the government previously projected it to.
With a defense budget that is already larger than the next 20 industrialized nations combined, we’re supposed to believe that we’ll be in some sort of danger if defense spending increases less than the military industrial complex wants it to.
As for the bizarre form of Keynesianism that says that an economic disaster will occur if the government increases domestic spending less during a supposed recovery, even Lord Keynes himself might object.
So what is this all about?
Along with the phony cuts to spending, the fiscal cliff triggers sunset of the Bush tax cuts and an end to the payroll tax “holiday.” That means that the tax rate on the top earners moves from 35% back to 39% and all Americans will have to resume paying the full tax rates for Social Security and Medicare that still don’t underwrite future liabilities.
Now, some might argue that any tax increase during tough economic times is harmful. Therein lies the rub. This whole phony crisis is about exactly that: raising taxes. With an approval rating at subterranean levels, the government wants the people to support tax hikes while continuing the gravy train for government employees and special interests.
Logic dictates that this is the only result that can occur. If the fiscal cliff actually represents federal spending increasing less, and that’s supposed to be “draconian,” then any deal made by Congress must increase federal spending more. So, anything the Republicans and Democrats agree to will be worse than the fiscal cliff in terms of spending.
As for taxes, the only debate currently underway is whether the Republicans will agree to overt tax increases. They’ve already stated that they are open to eliminating deductions. That’s a tax increase. The Democrats want to eliminate deductions and raise rates. Either way, taxes are going up. Anything the Republicans and Democrats agree to will be worse than the fiscal cliff in terms of tax increases.
You can see where this is heading. Sometime before January 1, some gargantuan bill will be forced through to avert the phony disaster. It will contain larger increases to both federal spending and taxes than the fiscal cliff represents, along with the additional pork needed to get the holdout votes. There will likely be further loss of basic liberties buried in it somewhere as well. And leaders from both parties will wave it around in triumph as a “bipartisan solution.”
When will Americans ever learn?
Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.
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