The Fiscal Cliff

By Bill Maher

Now that the election dust has settled, and the big GOP donors have cut off Karl Rove's thumbs, and Donald Trump's syphilis has runs its course, everyone is talking about the "fiscal cliff." In fact, President Obama talked about it in his first appearance as a "two-termer." After which, let’s face it, he's going to be completely gray. He's going to look like Uncle Ben. Happens to every president. You age exponentially. Can you imagine what McCain would have looked like if he'd been president? He'd look like "Blue" from Old School.

What is the fiscal cliff? It's basically a built-in punishment if Congress and the President don't do their homework. Since they couldn't get a deal done last year, this is what they agreed to do in 2011 in order to raise the debt ceiling: come January 2013, automatic tax hikes and spending cuts would kick in that would be so large ($800 billion, according to the CBO) and abrupt that everyone pretty much agrees it'd send the economy back into recession. The Bush tax cuts expire. Obama's payroll tax cut expires. $55 billion cut from defense spending and $55 from nondefense discretionary spending. Basically, we'd be taking a good deal more out of paychecks and whacking government spending at the same time, which is going to do real damage. And if the Republicans could blame it on Obama they'd probably be for it. But chances are they'll get blamed, so they aren't.

So the President and John Boehner have to go golfing again. And these two do not have a relationship like Reagan and Tip O'Neill. Most of what they're fighting over is, of course, the tax cuts for the wealthy. Obama wants to extend the middle class tax cuts, but feels that we can't afford the Bush tax cuts for the wealthy and that those have to go back to Clinton-era rates. He also ran on this and won. Also, about two-thirds of Americans agree with him.

Republicans, of course, pretend that all that stands between us and darkest night are tax cuts for job creators, and that even though the Bush tax cuts are a huge contributor to the current deficits they say they despise, they're also perfectly crafted and must never be touched. Make sense? I didn't think so.
Interestingly enough, the CBO put out a report saying that tax hikes on the rich really don't hurt the economy the way Republicans contend: "Allowing income tax rates to rise for wealthy Americans, and maintaining rates for the less affluent, would not hurt U.S. economic growth much in 2013."
And this goes to the larger problem everyone is talking about post-election: Republicans live in their own world, where the key to job growth isn't anything but lowering tax rates for job creators. That's not their belief based on evidence. It's their religion based on faith. And the non-partisan number crunchers at the CBO are saying, "No, that's not really true." It shaves a fraction of a point off GDP growth, and in return you get about $1 trillion in revenue over the next ten years.

Hmm. Non-partisan number crunchers say one thing, Republican Party says another thing is true, and blows off the number crunchers. Where have we seen this before?

Now, the inability for our government to deal with this stuff is a real problem. It spooks the markets. It's already spooking the markets. They're going to need to do a deal. But in the past Republicans have basically held the economy hostage for tax cuts for the wealthy. When these deadlines neared, and ratings agencies started downgrading us, and the markets started tumbling, Obama gave in. Maybe that was smart, maybe it wasn't. Maybe it was all he could do. But now it's different. He holds the cards now. He won the election on this.

Some are arguing for Obama to hold his ground, even if it means we go over the cliff a little bit. Because this time everyone will know who to blame. It'll be like when the Republicans shut down the government thinking it would make Clinton look bad, but it ended up backfiring.

The threat of tanking the economy is the only card the Republicans have to play. Obama is proposing a middle-class tax cut for the 98 percent of Americans who make less than $250,000 a year, letting the Bush tax cuts expire for those earning more. If the Republicans block it, everyone's taxes will rise on Jan. 1.

So that's where we are. Let the golf outings begin.