Lots of words written and spoken about “the fiscal cliff” — an invention of Congress, yet Congress now seems powerless to UNinvent it. What a “tragicomedy” — mixing a Greek tragedy and a Shakespearean comedy! Only in America could representatives of the people be entrusted with great responsibility and then greatly fail.
But enough on the problem, how will it be solved? Odds are, it won’t be. Perhaps a last minute, closed door compromise will be hatched, ensuring the problem is forestalled and “kicked down the road” (another entry to the drinking game already started with the phrase “fiscal cliff.”) But more likely, no compromise will be reached and the tax rates return to the Clinton era (which Democrats say led to the 1990s boom?) and the sequestration of $50 Billion in defense and $50 Billion in other discretionary accounts will take hold. IMHO, the fiscal cliff is not as bad as that and we will survive although there will be pain felt in certain sectors of the economy for the short-term.
The tax increase will be felt across the board and howling will ensue. After a while, certainly after the media hammer the GOP for “allowing the rates to rise,” then more talks may lead to a compromise, and the “Bush tax cuts” will be restored.
The best part? We can stop calling the current rates “the Bush tax cuts” and start calling the rates as of Jan 1 “the Obama tax increases!”
Nah, that won’t happen.