PHOENIX, December 5, 2012 — The fiscal cliff discussions thus far have shown that Washington can’t compromise on steps to ensure future economic prosperity. To some extent that’s a good thing, but Obama’s tactics in these discussions make us wonder whether Obama actually wants to go off the fiscal cliff.
Obama’s insistence that tax rates for the top earners in America increase as part of a package to return us to fiscal sanity is smart politics, not economics.
With the country $16 trillion in debt and racking up trillion-dollar budget deficits every year, Americans, especially those who support big government, balk at taking the necessary steps to rein in governmental waste.
Big spending and hefty entitlements are at the heart of big-government liberal ideology. Liberals don’t want to cut spending or reform entitlements, arguing that the greedy rich in America have more than enough money and can afford tax hikes.
The fiscal cliff negotiations represent an ideological war rather a fiscal debate. It is much easier for President Obama, a liberal, to galvanize Americans in support of a war on the rich rather than in support of reforming Medicare, Medicaid, unemployment benefits, Social Security, and other entitlements that most Americans have learned to depend on.
However, America has entered a stage in its economic dysfunction that demands arduous reforms lest we go the way of Greece. The government must close the budget deficit, but raising taxes in a stagnant economy isn’t the proper step to take.
Raising tax rates on the top 2 percent to 39.6 percent (the rate under President Clinton, and the rate Obama has made his goal) will raise just $80 billion per year, a vast amount of money until you realize that it is at least $920 billion per year short of what’s needed to erase the deficit. Insisting and focusing on that $80 billion is political grandstanding, not serious fiscal policy. We’re about to go over the fiscal cliff and the White House would rather see us go over than back down on a marginal policy.
Treasury Secretary Timothy Geithner threw down the gauntlet Sunday, when he declared that no fiscal cliff deal will be accepted by the White House unless the Bush tax cuts expire for the top earners. “There’s no prospect to an agreement that doesn’t involve those rates going up on the top 2 percent of the wealthiest Americans,” he told CNBC.
Only reforming entitlement can make a real dent in the debt, but Obama would rather stick to his ideology, keep the big government entitlement society intact, and leave entitlements alone than come to a meaningful agreement on the national finances.
Social Security is completely off the negotiation table and Medicare is scarcely there, despite the fact that they are by far the biggest drivers of our ever expanding federal budget. They are also heading rapidly towards insolvency. Social Security, Medicare, and Medicaid need to be reevaluated and revamped to make them less costly and more solvent.
These programs and other governmental entitlements don’t need to disappear altogether, as the liberal media suggest the Republicans want to make happen. They do need to be vastly reformed, or they will go away when our economy collapses.
The fiscal cliff is less than four weeks away, and Obama’s big-government liberal ideology suggests that he’d rather go off the fiscal cliff than take the necessary steps to return to fiscal sanity.
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