Yes, it has been almost a year since my last post. I got very busy working (60-70 hours per week) and didn’t have the time to keep up with the economic news. Also, it was an election year and I didn’t want to wade into all of that mess.
Today’s topic: the ‘fiscal cliff’. This term refers to the fact that the tax cuts passed during Jorge Bush II’s term expired at 12:01 am this morning. That is only half of it, the other half of this ‘crisis’ is the fact that mandatory spending cuts will occur unless Congress votes to repeal them.
The second half of this mess is the result of members of Congress refusing to do their job. According to the Constitution, Congress must pass a budget to fund government operations every year. Congress has not done this for the past 3 or 4 years and counting. The government has been using other procedural moves to fund it’s activities.
The genesis of the mandated spending cuts goes back to August of 2011. At that time, the U.S. government was reaching the legal limit on the debt ceiling. What this meant was that the federal government would not be allowed to issue more debt unless Congress voted to increase the amount that the government can borrow. The Republicans in the House of Representatives refused to allow the debt ceiling to be raised…unless they could get something out of it. That resulted in the so-called ‘Super Committee’, composed of three Representatives and three Senators from each political party.
morons servants of the public were supposed to pass legislation that would solve this budget crisis while reducing the deficit and national debt in the future. Never mind the fact that delegating budgetary powers to a group such as this is blatantly unconstitutional (and therefore illegal). The compromise reached was a series of tax increases and spending cuts that would automatically take effect if Congress failed to pass other legislation.
Well, guess what? Congress sat on its hands for over a year. They didn’t pass a budget. They didn’t increase taxes, or reduce spending. I have no idea what they really did, except close their eyes, put their fingers in their ears, and say “La la la la, can’t hear you!”
So now it is 2013, and taxes on all of us are going up unless Congress acts (they are going up anyway, thanks to Obamacare). Spending cuts will also automatically take effect unless Congress acts. And with the economy still in a recession, these two actions would be a death blow, increasing the unemployment rate and further eroding the incomes of Americans.