What is the “fiscal cliff” everyone keeps talking about?

Quick hits again — this is for your reference. There’s so much talk about the “fiscal cliff” that I thought some orientation would be in order.

(1) The actual “cliff” — such as it is — is a supposedly catastrophic set of budget cuts and tax increases. It includes a combo of the expiration of the Bush–Obama Tax Cuts of 2010, the kick-in of the forced “sequester” of budget funds, plus anything else they can cram in, like the extension of the debt ceiling, the deadline for which kicks in somewhen in 2013. They (the NeoLibs and MoveCons working together) will make this as complex as possible, so you can enjoy the “win” — pennies from billionaire heaven — and forget the losses — reduction of the safety net forever.

For more on what’s involved in the sequester, see this Yahoo explanation. Ignore the early-paragraph pimping of the badness and scan down for the detail.

(2) The name — The idea of a cliff is something you don’t want to go over. Keep that in mind; the fiscal cliff is a “very bad thing” according to deficit hawks.

(3) The plan — The fiscal cliff was designed by deficit hawks to force big reductions to the federal budget that they thought were needed.

cliff

Cliff via Shutterstock

You read me right. Read those last two paragraphs again, (2) and (3). Note the contradiction? Deficit hawks designed the combo of deadlines and sequesters, then want you to run screaming from it. Why would a serious deficit hawk run screaming from forced deficit reduction?

Answer: There are no serious deficit hawks in Washington; just serious safety net killers. The “fiscal cliff” wasn’t designed to force budget changes. It was designed to force scary budget changes as a cover for safety net reductions.

Paul Krugman has also noticed the contradiction and has more. Do click and read. Here’s a taste (my emphasis throughout):

The fiscal cliff poses an interesting problem for self-styled deficit hawks. They’ve been going on and on about how the deficit is a terrible thing; now they’re confronted with the possibility of a large reduction in the deficit, and have to find a way to say that this is a bad thing.

Here’s more from James Fallows, furrowing the same ground (h/t digby):

That the looming debt and deficit crisis is fake is something that, by now, even the most dim member of Congress must know. The combination of hysterical rhetoric, small armies of lobbyists and pundits, and the proliferation of billionaire-backed front groups with names like the “Committee for a Responsible Federal Budget” is not a novelty in Washington. It happens whenever Big Money wants something badly enough.

Big Money has been gunning for Social Security, Medicare and Medicaid for decades – since the beginning of Social Security in 1935. The motives are partly financial: As one scholar once put it to me, the payroll tax is the “Mississippi of cash flows.” Anything that diverts part of it into private funds and insurance premiums is a meal ticket for the elite of the predator state.

The “elite of the predator state” — couldn’t have characterized Our Betters any better myself.

Yours in good information,

GP

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Gaius Publius is a professional writer living on the West Coast of the United States. Click here for more. Follow him on Twitter @Gaius_Publius and Facebook.

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  • Papa Bear

    just one…

  • Papa Bear

    just one…

  • FunMe

    So is there ANYTHING we can do to stop this nonsense. And the insanity?

  • http://www.rebeccamorn.com/mind BeccaM

    Indeed. Sequestration? Erasable by an act of Congress at any time. Tax cut expiration? Let ‘em expire and half of the current deficit goes away, and I would argue it would be a far less damaging form of ‘austerity’ than what is currently being proposed in all the cuts. Debt ceiling? Another phony crisis, ginned up specifically to push for more safety net shredding.

  • http://www.rebeccamorn.com/mind BeccaM

    I was going to make a similar point, but you beat me to it: This has Shock Doctrine written all over it.

    Manufacture a phony crisis. Demand huge cuts and sacrifices from those who can least afford them, creating a false equivalence between this and some small sacrifice on the part of the wealthy. As in, “Well, we can’t raise taxes on the rich to 1999 levels without also cutting Social Security, Medicare, Medicaid, Tricare, and Pell grants!” And then ram it all through with loaded “the sky is falling!” language.

  • just_AC

    Hey, another thing they will throw in is to change coinage composition – they have been trying for years – they want to say goodbye to the penny and a nickel thats worth more melted as it is in “value” I seem to read a few years ago that it is actually illegal to take more than $10.00 in rolled pennies or nickels over the border.

  • Miro

    It isn’t “Fiscal Cliff”, it’s “Fiscal Grift”.

  • ARP

    I’ve also read this is more of a hill than a cliff. If we go over it, the economy doesn’t grind to a halt the first day. Yes, there will be an impact, but it won’t as sudden (or cliff-like) as everyone says. Also, if we’re negotiating to cut more than what is already in the sequester, I’ll take the cliff and we can fight for getting back middle-class cuts, since a number of the cuts are also in the military.

  • BrianG

    Well done. They are applying Naomi Klein’s Shock Doctrine to our domestic economy to push through (with the help of the always compliant Beltway media) unpalatable cuts that would normally have no chance of passing in a calm rational debate. If this so called “cliff” were so important, it would have been debated throughout the past campaign. If it were so important, Congress would have been in session more days this year.

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