Now It Gets Interesting
The President got exactly what he wanted with the fiscal cliff deal. Huge tax increases on the job creators. The new taxes will fund a few days of government spending, and the President got $40 in new taxes for $1 in spending cuts.
For all the weeping and wailing and gnashing of teeth on the professional right, it’s important to understand that this ship sailed on November 6. Mitt Romney lost the election. The President ran on higher taxes for the wealthy. The status quo of existing law was the President’s position. This cake was baked on election night.
Yes, it’s stupid, wrongheaded policy. It doesn’t make a whit’s worth of difference to my tax return, but we will never know the full impact of the jobs that won’t be created because we’re confiscating more than half of what the job creators earn, and incentivizing them to keep what they’ve already earned on the sidelines, instead of investing it.
But here’s where the game changes.
For years, every time level-headed leaders have tried to address the spending crisis, the liberal retort has been that the rich have to pay their fair share first.
Well, it’s done. The President won. He can’t ever again say that the rich aren’t paying their “fair share.” According to his definition, they are now.
And now, his second term is going to be defined by dealing with a spending crisis so incredibly massive that if you could tax every “rich” person 1,000% a year, you still wouldn’t solve it. And we reach that “cliff” in mere weeks when we hit the debt ceiling.
There are only three ways to bring the budget into balance from here and start paying down our $16 trillion in debt.
Washington can cut spending. It’s painful and difficult and there will be a million horrible stories about the effects of those cuts, as people have to re-learn how to be independent of the multitude of overlapping programs and services the government is going to have to get out of the business of providing. These are real people with real, painful problems. It’s not going to be fun and nobody will get joy out of watching it.
They can print money. We’re already doing this trying to prop up the financial markets, but if we tried to fix the debt crisis this way, it would effectively confiscate the savings of every single retiree in this country and throw us into a depression. You think people will be pissed about cuts to their benefits? Just wait until the equivalent of half their bank account disappears overnight.
Or they can grow the economy, driving tax revenues up and shrinking spending on welfare and food stamps as more people become employed. This is the fun way to fix the problem; alas, this President has decided to incentivize the people with capital to keep their $2 trillion parked in savings instead of investing it.
The President just had the best day of his second term. He’s had his fun at the playground of higher taxes.
Now he gets to spend four years locked in the prison of fiscal reality, and he’s just made his job a lot harder.