Experiencing a post-election politics hangover?
Don’t know what to do without hearing the words Nate Silver, 47%, Obamacare, Big Bird, who won the debate?, and binders full of women?
Well get ready, America, the next political calamity is right around the corner, full of intrigue, rancor, and … a bunch of can kicking. A whole bunch of can kicking.
Welcome to fiscal cliff 2013.
In his first White House appearance since winning re-election on Tuesday, President Barack Obama on Friday afternoon said that he’s invited congressional leaders to the White House next week to begin negotiations over the fiscal cliff.
Just hours earlier House Speaker John Boehner (R-Ohio), told Obama to figure things out on his end.
It seems the ole’ game of national debt policy football is back … with each side trying to pass the pigskin off to the next guy as quickly as possible.
Boehner on Friday, before Obama's speech, pressured the president to take the lead on a deal to avert tax increases, saying “this is an opportunity for the president to lead. This is his moment to work on a solution that can pass both chambers.”
Obama countered in his White House speech, saying that the election results had proven national support for higher taxes for the wealthy and called for the immediate extension of middle class tax cuts.
Boehner in his own speech was unyielding on raising taxes on upper income Americans – a top priority for Obama – saying that “raising tax rates will slow down our ability to create the jobs that everyone says they want.” Boehner instead called for lowering tax rates while eliminating certain deductions and loopholes as part of a larger tax reform bill.
Phew, this is getting nasty.
Obama wanted to make sure that any failure to reach a decision would be Congress' fault, not his: "One final point every American needs to hear. Right now if Congress fails to come to an agreement on a package by the end of the year, everybody's taxes will go up ... everybody's!"
Obama had this to add: “I’m open to compromise. I’m open to new ideas. I’m committed to solving our fiscal challenges, but I refuse to accept any approach that isn’t balanced. On Tuesday night, we found out that the majority of Americans agree with my approach.”
So … America is now living in Obama’s world, clearly, after the election, but it already doesn’t seem like Boehner wants to play by Obama rules.
Sound familiar? Remember the 2011 debt clock fiasco?
So what the heck is all this fiscal cliff nonsense? The issue has been on the horizon for almost two years and the December 31 deadline, the date when the terms of the Budget Control Act of 2011 are set to come into effect, is nearly here. The term “fiscal cliff” refers to the dramatic changes that would occur as a result of the laws and the immediate consequences that they would have on the economy.
Many commentators feel that the U.S. economy is not stable enough to avoid the shock and as we move closer to 2013, the U.S. is moving closer towards the edge.
So what could happen if we fall/ jump off of this fiscal cliff?
As PolicyMic Pundit Rebecca McCartney reports, failure to avoid the cliff could plunge the U.S. economy back into recession and disrupt the global economy’s still fragile recovery. This would perhaps put the U.S. in diplomatic hot water if they were responsible for triggering another recessionary wave.
The combination of higher taxes and spending cuts could reduce the deficit by an estimated $503 billion, which sounds too good to be true. That’s because it is. According to a new report, the Congressional Budget Office (CBO) has predicted that if the policies go into effect, the GDP would be cut by 4 percentage points in 2013, which would result in the economy spiralling into recession.
Unemployment levels would rise between 1 and 2 percentage points to a maximum of 10%, resulting in up to an additional 2.8 million Americans out of work. The Financial Times has for instance predicted that letting temporary tax cuts and the unemployment benefits expire will reduce 2013 output by 0.7% which would mean the loss of approximately 800,000 jobs
Politicians have to figure something out before December 31. Obama and Boehner are already clawing at each other.
And you thought the cattiness of politics was done after Tuesday.