The Right Opinion

About That Fiscal Cliff

By John Stossel · Nov. 21, 2012

Yikes, we're headed toward a fiscal cliff! It will crush the economy! Or so the media and politicians tell us.

The “cliff” is a series of tax increases and budget cuts that automatically go into effect Jan. 1 unless Congress acts.

Will Congress act?

It will! I see the future: The politicians will meet and fret and hold press conferences and predict disaster. Then they'll reach a deal.

It will just postpone the reckoning, but they'll congratulate themselves, and the media will move on.

America, however, continues to go broke.

“They're not going to admit that we're bankrupt, and they won't admit that we're on the verge of a major, major change in our society,” says Rep. Ron Paul, R-Texas. “So they'll keep putting it aside, but then we'll eventually probably destroy the dollar.”

The across-the-board cut, or “sequestration,” was designed to be so distasteful that Congress would be moved to cut more deliberately. If it doesn't act, $110 billion in projected spending will be automatically cut – half from domestic spending, half from the Pentagon.

“They assume that they made it so bad that they wouldn't accept it, but I don't think they did,” said Paul. “They're not even … talking about real cuts. They're talking about cuts in baseline budgeting.”

Right, the old baseline budgeting trick.

“If they propose, let's say, a $10 billion increase for next year and cut it down to $9 billion, they say they're cutting 10 percent. But they're not cutting anything, they're only increasing it $9 billion instead of $10 billion. It's done on purpose so that people get confused.”

Republican House Speaker John Boehner calls the fiscal cliff a “nightmare.”

But why? Trillion-dollar deficits are more terrible.

Cuts of $110 billion would even be good for us because it would keep money in private hands, away from the bloated and freedom-killing bureaucracy.

“When government spending is about $3.8 trillion, you're going to cut $100 billion? That's a deck chair on the Titanic,” said Russ Roberts of the Hoover Institution. “If they're actual cuts, I think that would be great. I'd cut 10, 20 percent across the board if I had my druthers. But across the board scares people because they think, 'Let's save the things that are really important and cut the things that are not so important.' (But) that never works.”

It doesn't work because every cent in the budget is absolutely crucial to someone.

Lately the media are focused on the $400 billion in tax increases that make up four-fifths of the fiscal cliff. We're told that if the Bush-era tax rate cuts expire and the spending reductions kick in, catastrophe will follow.

“The tax increases sound scarier. But we have a trillion- dollar deficit!” Roberts pointed out. “So to me, the idea of raising taxes is probably a good idea. It says this spending that we've been doing is not a free lunch.”

I'm not convinced that giving politicians more money is ever a good idea.

And won't the wealthy high-earners find a way around the higher rates? When rich people do that, much of their money goes to lawyers instead of consumer satisfaction.

The other thing that scares Washington are the automatic cuts to Pentagon spending. “These draconian cuts represent a threat to our national security,” say Republican Sens. John McCain of Arizona and Lindsey Graham of South Carolina.

“The Pentagon is hysterical about it,” notes Ben Friedman of the Cato Institute. “But it's about 10 percent, which would bring us roughly back to where we were in defense spending in 2006 … adjusted for inflation, not exactly a crisis year in the Pentagon. They've gotten very spoiled at the Pentagon. They had years of luxury.”

Automatic cuts might even be good, said Friedman.

“We need probably bigger cuts in the defense budget because we do too much. This will force us to make some choices. We try to be everything in the world … pretending that every unstable country is a threat to us.”

I won't lose sleep over automatic spending cuts. The “fiscal cliff” frightens me less than the bankruptcy cliff.

COPYRIGHT 2012 BY JFS PRODUCTIONS INC.
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15 Comments

Howard Last in Wyoming said:

Just cut all agencies, departments, bureaus, regulations, rules, etc. not authorized by the Constitution. That would probably be a cut of 90% or better. Guess what it would be instant balanced budget. Any high school graduate who took a civics course should be able to determine which items must be cut. Oops I forgot it would not work if the student went to govmint skools after the early 1960's. And before anyone says we need a balanced budget amendment consider that Congress does not follow the Constitution now, so why would they follow an additional amendment? Will the Supremes order a tax increase if the budget is not balanced (see the previous sentence)?

Wednesday, November 21, 2012 at 1:09 AM

Tod the tool guy in brooklyn ny said:

"Get your progressive paws off of the private sector, and that is the last time I'm a gonna tell yas!!"

Wednesday, November 21, 2012 at 5:30 AM

Rod in USA said:

I can't wait for my solar powered car. I think it should have a backup wind turbine power source. Or if that is not feasible for safety reasons, perhaps we could have a car that plugs into the wall outlet, because we all know that electricity is "clean" and "free".

Tom Coburn published a report aimed at the Department of Defense (but really aimed at Congressional earmark shenanigans) titled "Department of Everything" It outlined several areas where we could achieve savings of significant size, rather easily, if Congress would stop non-sensicial earmarks. I rather bet that 1) the items cited are the tip of the iceberg, and 2) every other federal agency has the same issue. Google it and read it: Congress and the administration are the cause of most of our issues, and they refuse to fix the problem. So we get more and more of "compromise legislation" (aka, favor trading at your expense and mine on unconstitutional un-necessary things).

I would also bet that a ten percent cut (in real terms, not a growth rate cut) would be easily doable. To wit: In 1997, we spend less than $2 trillion as a nation. Why just 15 years later do we need to double our spending?

Some liberals like to say the wars are the reason. And to be sure, it costs money to fight a war. However, if you examine the accounting in the reported numbers for the cost of the war, the media like to report fixed costs that we would pay anyway as a cost of the war. You have to look at the *incremental* costs only to get a true picture.

That last point was not to justify fighting wars. I merely point out the tangled web of confusion woven by the government and the media.

Wednesday, November 21, 2012 at 7:28 AM

MIResident in Michigan said:

Yep, I have no problem with the 'sequesterian' cuts - and as Stossel states, it's never a good idea to give politicians more money - so to the GOP: NO NEW TAXES.

Let the sequesterian cuts occur and tax rates go up - give Obama what he wants so he has to own it.

Wednesday, November 21, 2012 at 10:38 AM

Tex Horn in Texas said:

Apparently America must fail before the leftist idiots realize what is happening. Even then, I'm not so sure they will care.

Wednesday, November 21, 2012 at 10:55 AM

Jim in Alabama replied:

Tex, that's the beauty of their ideology. They never fail. They screw things up, blame Republicans and command more power to "fix' them.

Wednesday, November 21, 2012 at 12:54 PM

Kevin from Arkansas in USA replied:

There is no satisfying liberals. No amount of money can ever be enough, because problems can't be solved by throwing money at them especially when that money comes with federal strings attached and leads to loss of local control. Liberals always demand more. Always. No exceptions. Even when the US is entirely bankrupt Liberals will continue to scream: "We didn't spend enough which is why it failed."

Wednesday, November 21, 2012 at 1:25 PM

Kurt.S in Missouri said:

A good way to cut expendatures would be to get completely out of the UN. Who needs a social club when your nation is spinning blindly into financial oblivion? Now that we've started, put an end to all foreign aid. Who needs to prop up petty tyrants with borrowed money? I guess paying farmers not to grow stuff should be pretty much a thing of the past.
These are just off the top of my head. Please add your thoughts.

Wednesday, November 21, 2012 at 11:59 AM

Wayne in Hinesville, GA replied:

Kurt, Let's add the Departments of Education, Energy, Housing and Urban Development, Agriculture, EPA, etc. I wonder how many billions that would save? However, we'll never know because Congress hasn't the guts to do any of those things.

Wednesday, November 21, 2012 at 2:30 PM

Old Desert Rat in Las Vegas, NV said:

Howard Last has it right.....cut 90%,,,,if it is not constitutional, it is not good enough for me.

Wednesday, November 21, 2012 at 2:28 PM

MAJ USA Ret in Saint Louis said:

We must end all unearned entitlements NOW.
Unearned entitlements are those provided based upon the recipients health (the recipient is still breathing). These include Social Security, Medicare/Medicaid, welfare, food stamps, and the host of entitlements linked to race, ethnicity, sexual perversion, on and on.
Entitlements that are earned include VA medical benefits, military retirement, and retirement of the federal workers that were never appointed nor elected, nor whom were promoted into paygrades comporable of appointed or elected.

Kill all entitlements for elected officials as well. We don't need term limits. Just don't make it profitable to stay in office for decades at a time.
Include the legislative, judical branches as well as executive branches.
Elected officials serve because they want to. And some (I would like to say most) serve honorably. That does not mean they should earn life-long retirement benefits.
Finally, instead of military retirment pay (currently indexed to the Social Security system), provide a lump sum upon retirement. It would encourage military to seek profitable private sector careers and provide a cushion while they secure that career.
We've lived with the post depression recovery long enough. It's way past time to execute FDR's boondogle of Social Security, welfare, and all the spin-offs. Leave charity to the private sector. It would increase attendance in churchs. And the private sector is far better to encourage the able-bodied to earn their independence instead of living off the the independence earned by others.
John Kenedy's Peace Corps taught us if we give a man a fish, he eats for a day. But if we teach that man to fish, he eats for a lifetime. Time to stop the hypocrisy and practice what we preached.

Wednesday, November 21, 2012 at 5:47 PM

Robinius in Broomfield, Colorado replied:

So my Social Security check (I get my first one in January) is unearned? Then why did the government take over $100,000 out of my paychecks over the last 44 years not counting Medicare? But the military benefits are earned? In what way are military benefits earned but my Social Security is not? Oh! I see! MAJ USA ret in St. Louis you are a hypocrite watching out for yourself and trying to screw everyone but you and your buddies. How pathetic! You should be ashamed of yourself.

Wednesday, November 21, 2012 at 9:14 PM

Wayne in Hinesville, GA replied:

Robinius, You have to understand that the Maj will surely take his Social
Security when he becomes eligible. Social Security has never been an entitilement except for the first few years it was in existence when it was building up the Social Security Trust Fund. Now it is being called an entitlement by the Demorats because they have made it possible for individuals to draw it who have never paid a penny into the system. It's true the military doesn't contribute to their retirement but the life of a military individual can't be compared to his/her civilian counterpart. That person in the military always knows that his/her life could be on the line at anytime. You are absolutey right that your Social Security check is not an entitlement. You paid into it and now its time to collect.

Wednesday, November 21, 2012 at 11:11 PM

Howard Last in Wyoming replied:

Old Sarge, I was self employed so I had the privilege of paying double the FICA. I put away in my own retirement account approx. the same amount as FICA. I am now getting a return about an order of magnitude greater than SS. For those that went to govmint skools that is ten times. I just want back what was stolen from me at a suitable rate of return. Yes stolen what would you call it when something is taken from you under duress. Don't pay your FICA and see what happens. Joe Stalin's best friend FDR's scheme has to be ended, the sooner the better. Remember when John Corzine the crook from NJ was a senator? He was against people investing their SS in the stock market. I therefore assume when he was head of Goldman Saks he told his clients to keep their money under the mattress. Here is an interesting question to ask a crook and/or mental midget in Washington. Name five bills that you voted for that are Constitutional and name the section of the Constitution that authorizes them. You will get one of two response, an open mouth blank stare, or "that is a stupid question". You will get the same responses about the Constitutionality of FDR's scheme. BTW it was Otto Bismark who cam up with the idea of SS and Adolph refined it. FDR fits right in with these two great humanitarians (for liberals this is sarcasm).

Thursday, November 22, 2012 at 12:14 AM

Army Officer (Ret) in Kansas replied:

I'm with you on this one, Robinius. For those whose wages were confiscated for Social Security like you it IS earned. For those who collect SS but who did not pay into it (or only paid a pittance compared to what they get in return), it is UNearned.

Military retirement pay is also earned - but it falls under the category of "deferred compensation." Being a military retiree AND having worked in the private sector, I am entitled to both military retirement and SS when the time comes - because I EARNED both.

As far as I'm concerned, paying you your SS is a sacred obligation of the United States taxpayer - the government took your money at the behest of our duly-elected representatives without asking in exchange - for the promise that you would be entitled to checks in the future. You are OWED that money starting in January.

Likewise with my military retirement and SS when I hit that age myself.

There are certainly better ways to handle both military retirement and SS in the future, but any way that reneges on obligation due to services rendered to the government (me, Sarge, the Major, and a few others), OR money extracted by the government (probably all of us) is morally abhorrent. I gave the government over 20 years and we've both had money taken from us - in exchange for the government legally and morally obligating itself to pay up later.

"Later" is now for you (but still later for me).

May you spend you SS in good health - YOU earned it.

Thursday, November 22, 2012 at 12:54 PM