If it were only a normal New Year's Eve, the worst we could expect at the
stroke of midnight Monday would be that someone carelessly sets off fireworks
that start a fire, or maybe even just that someone gets kissed at a party who
didn't want to be kissed (or wanted to be kissed by someone else).
But this New Year's Eve is different. It also could be the eve of a fiscal crisis that could touch every American and, if not dealt with comprehensively and relatively quickly, could send the country back into recession.
The people responsible for beating the clock at the end of the year and avoiding going over the so-called "fiscal cliff" are those who created this conundrum in the first place: the politicians in Washington, D.C.
It is up to the president and the Congress to figure out how best to deal with laws -- either expiring or going into effect -- that beginning Jan. 1 could raise taxes on all taxpayers and require across-the-board spending cuts in the federal budget. Either outcome could have a profound negative impact on the country's already fragile economy.
As the countdown continues, it is imperative that the White House and the Congress work together, something that has been rare over the past four years. And that means both sides have to be willing to compromise, a concept from which many in Washington seem to be estranged.
The political leaders return to Washington today and are expected to resume negotiations after a disappointing breakdown in talks before the Christmas holiday. With only five days remaining until the New Year, it is unlikely that a "grand bargain" substantive agreement can be reached, and once again the two sides will agree to kick the proverbial can down the road, delaying many tax hikes and spending cuts.
Some economists, as reported by the Associated Press Wednesday, are predicting that even if the country goes over the cliff in the short term, the impact on individuals and the overall economy would be felt gradually instead of immediately. The politicians, they say, would have the opportunity to retroactively reverse the $671 million in spending cuts and tax increases mandated by the Budget Control Act of 2011.
But it was the 2011 law that gave us the "fiscal cliff" as a compromise to end an earlier crisis mired in partisan gamesmanship: the debate over raising the debt ceiling. Had the debt ceiling not been raised, the country would not have been able to borrow money and, thus, would have gone into default.
The solution was, if Republicans in Congress agreed to raise the debt ceiling, the administration and Democrats would agree to major spending cuts. The two sides settled on a plan of automatic tax increases (partly by letting the Bush-era tax cuts expire and increasing tax rates) and across-the-board spending cuts in defense and domestic programs, effective Jan. 1, 2013. It was a plan neither side thought the other would allow to happen.
Here we are at the end of the year with no agreement, and with the next debt ceiling expected to be reached sometime in the first quarter of next year if there is no bipartisan compromise. The very debate in 2011 had a negative economic impact on the country and on markets around the world.
Once again dysfunction in Washington threatens the country's economic stability and the pocketbooks of individual Americans.
What is called for is leadership from both parties, both branches of government in Congress and from the White House.
The grave problems facing this nation require astute, dedicated and bipartisan attention, with emphasis on what is best for the country as opposed to a political party.
None of these issues can be solved any other way.
Distributed by MCT Information Services
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