Coming to a Political Theater Near You: The Cliff
I only realized how angry I was about the cliff several days ago when I started to outline this week’s Fiscal Fitness. By the time I sat down to write it several days later, I was fit to be tied and needed to avoid anything that included caffeine.
You know what I mean by the “Fiscal Cliff” — Federal Reserve Chairman Ben Bernanke’s ultimate Fed-speak for the budget apocalypse that could occur between Dec. 31 and Jan. 2. That’s when a series of existing federal-budget-related policies will expire and others will be triggered that could result in an economic calamity.
Actually, “could occur” masks the real situation. The truth is that the cliff is already scheduled to happen. It may be a crisis, but it won’t be unexpected: We know what’s ahead, the precise moment when it will occur and how it will happen.
The cliff includes substantial tax increases on most Americans and significant military and domestic spending cuts that will affect most individuals and almost every business. It also includes another debt ceiling cliffhanger that, if nothing else, could further convince lenders and rating agencies that, for political reasons, the United States is not as good a credit risk today as it has been in the past.
All of this will be happening during the most unstable political environment that could possibly exist — a lame-duck session of Congress — when the work of Representatives and Senators not returning to Washington, D.C., the following year typically is, to be charitable, less reliable. And that’s if they and their staffs, who all have to find new jobs, move or otherwise deal with their soon-to-be-dramatically-changed lives, show up at all.
The cliff has the potential to create some of the most incredible political theater this country has ever seen. It will include drama, Shakespearian-like tragedy, suspense and farce. If it happens, it will involve the murder of enough jobs that it will look like a whole season of “Dexter.” It also will rival HBO’s “Game of Thrones” for twists and turns about who is on top and who is aligned with whom. You’ll laugh, you’ll cry, and the suspense will be intense.
But no matter how great the political theater might be, the cliff really needs to be called what it actually is: pathetic policymaking.
Actually, calling it policymaking gives it way too much credit.
The cliff is the result of a steady series of policy breakdowns over the past few years, especially the multiple failed direct negotiations between the most senior executives in the government including the president, vice president, Speaker, and House and Senate Majority and Minority Leaders. It came after the Senate was unable to get enough votes to create its own budget commission and the presidential commission created in response didn’t get adequate support for a plan to move the process forward. Add in the acknowledged failure of the anything-but-super committee and the inability of the Senate’s “gang of six” to generate enough interest in what it wanted to do, and it becomes obvious that policies have been avoided rather than made.
I get it: The decisions on everything having to do with the federal budget are difficult and, if you’re running for re-election, best left until after Election Day. I also understand that, if you’re a Member of Congress, there’s a politically strategic value to wait until you know which party will be in charge of the House and Senate and the size of the majority before making a decision on how to proceed on the various revenue, spending, deficit and debt questions that have been left hanging. After all, you might get more of what you want after the election than before.
But I also understand more than ever before about how angry many outside the Beltway seem to be about the elections somehow being more important than the economy. Over the past two weeks I have spoken to five different groups that cut across the income and political spectrums, and all have expressed not just dissatisfaction but something close to total disdain about this situation. More than six months before it begins, the cliff is causing a great deal of heartburn.
My anger may be even greater than theirs because I don’t see there being enough time, votes, consensus or willingness to compromise for cliff-related agreements to be reached, translated into legislation, debated and enacted.
In addition, everything that has to be determined during the cliff is related in some way to almost everything else that has to be considered. For example, a decision on the sequester or providing 2012 alternative minimum tax relief, let alone on extending the tax cuts, will change the projected deficit and, therefore, the amount the debt ceiling has to be raised. That means that it really won’t be possible for anything to be decided until everything is decided.
It also means that the most likely outcome of the cliff will be “The Cliff 2: The Budget Strikes Back” coming to a theater near you at some point next year. The hype, complete with full-page ads, online commercials and previews in theaters, will begin to appear this fall.
Stan Collender is a partner at Qorvis Communications and founder of the blog Capital Gains and Games. He is also the author of “The Guide to the Federal Budget.”