The discussions in Washington DC have been reported on ad nauseam. There are more reports on the politics than the actual issues, which is typical. Another popular storyline is the concern over the fiscal cliff. The idea being that any deal must get done in order to avert automatic tax increases and budget cuts set to occur at the end of the year. One interesting aspect that has not been discussed very much is the goals of the participants. The republicans and democrats seem to be trying to solve two completely different problems, and the President has the upper hand.
The republicans think they are trying to solve the problem of our huge federal debt, and how we can set ourselves up to not add a trillion dollars to it each year. The concern is that it is only a matter of time before this will lead to a debt crisis. Devalue of the dollar, hyperinflation, economic turmoil, and a much worse standard of living would be the ultimate result of their worst fears. A real possibility in the eyes of republicans is the crisis going on in Europe, and that if we do not curb our spending we will end up like Greece.
The democrats think that the debt has always been there, and the real problem we face is that the United States is not a fair place. These negotiations are a way to implement policies to fix the disparate results of our system. One can simply look at the president’s proposal to avoid the fiscal cliff. This included double the tax increase than just letting the Bush tax cuts expire on the top 2% of earners would garner, and no further cuts in entitlement programs. There is also an additional stimulus of $50 billion and elimination of the debt ceiling, which limits the government’s ability to borrow.
This is just the latest example that the debt is of no consequence to Mr. Obama and democrats. He has been in office for 4 years, and has never suggested any changes to entitlements, which all agree are unsustainable, and the main drivers of our long term debt. Perhaps they believe that all of this excess borrowing hasn’t hurt us yet, so let republicans worry about it. They have much more pressing problems to deal with like income inequality.
Until the republicans realize that they are not negotiating toward the same goal, they are not really in the game. The high debt can be used as an excuse to raise taxes now and in the future. These types of negotiations have been in the past compared to Lucy pulling the football away from Charlie Brown. Republicans, of course, are always represented by Charlie Brown. That comparison seems too mild. Maybe if Lucy hit Charlie over the head with a baseball bat it might be more appropriate. These negotiations may determine how often the President will be able to play whack-a-republican in the future.Hidden Secret Revealed A simple strategy to trade stocks is uncovered!