Americans may find it useful to remember how the nation got to this point.
While politicians and many in the media treat the "fiscal cliff" as some sort of apocalyptic event, as if it were a date foretold on an ancient Mayan calendar, it is in fact an invention of the politicians themselves; a set of drastic steps designed to present such a horrible and unthinkable situation as to trump the natural inclinations of politics. Whereas representatives and senators tend to think in terms of their own constituents and decisions that would help ensure re-election, the cliff was a mutually agreed upon set of circumstances that would force those interests to come together and compromise for the good of the whole.
It may yet work, although so far the strategy hasn't moved either side very far.
We should also note that politicians on both sides had hoped the 2012 elections would bring clarity to the matter, with each side hoping its philosophy would prevail. That didn't happen, although Democrats gained a bit of traction by retaining the White House and picking up seats in Congress. Each side retains the power to block the other.
Nearly two years ago, Congress created a bipartisan committee to design a long-term solution to the nation's deficit-ridden budget and its growing national debt. This so-called "super committee" was charged with coming up with at least $1.2 trillion in savings over 10 years through cuts, tax increases or any other legal means. It was to do so by Nov. 23, 2011. And just to make sure both sides took the committee's work seriously, the agreement was for $1.2 trillion in haphazard cuts to be triggered at the start of 2013 if the committee failed in its task.
The committee never came close to succeeding. Members were heavily lobbied by their own parties in terms of things to which they should not agree, rather than suggestions for possible points of agreement.
It just so happened that the Bush-era tax cuts and a temporary cut in payroll taxes also were set to expire at the start of 2013. Several other tax measures will expire then, as well. In all, the nation faces $500 billion in tax hikes and $200 billion in cuts if Congress and the president can't agree on a plan.
But every single aspect of the "fiscal cliff" was artificially created by Washington politicians. Congress and the president could simply change the rules, repeal the automatic cuts and extend the other tax cuts until both sides can reach an agreement, but doing so may be worse than going over the cliff. If would indicate to the rest of the world that the United States truly has a dysfunctional government, and it would destroy whatever credibility Congress currently retains.14 comments on this story
The good thing about the automatic cuts, or sequestration, that would begin taking effect Jan.1, is that they are large enough to suggest the proper scope of what the nation needs in order to keep itself from the path to insolvency. The bad news is that even such stark consequences haven't budged some politicians toward the center.
Conventional wisdom is that even if Congress and the president reach an agreement to avoid the cliff before next week, it won't be the type of long-term reform needed to put the nation on a sound fiscal path. That means many more cliffs and crises ahead.