Fiscal Cliff, No Leader

On January 1, 2013, America careens off a fiscal cliff.  The largest tax increase in the country's history goes into effect.  Spending on defense, Medicare, and other vital areas will be cut indiscriminately.  And, according to the Congressional Budget Office, the fiscal cliff may well push the economy back into recession.

One would think that as president, Barack Obama might feel some small concern over the prospect of economic calamity.  But so far, there's been nothing.  No suggestion on how to remedy the problem, no moves toward bipartisanship, not a single measure set forth to avoid the looming tax increases and indiscriminate cuts.  Nothing.

Instead, the president acts like the fiscal cliff is none of his concern.  It is, after all, merely a ticking time bomb that has the potential to set the country back to the darkest days of 2008-2009, when the U.S. stock market dropped by more than half from its July 2007 peak.  That market debacle accompanied a severe economic recession in which millions lost their jobs, their homes, and their hopes of a secure retirement.  That possibility is staring us in the face again, and the president doesn't seem to care.  He doesn't even seem to know that a problem exists.

At his June 8 news conference, Obama informed the country that "private sector is doing fine."  He also noted that "the private sector has been doing a good job creating jobs."  That's news to the 27,000 workers who may lose their jobs at Hewlett-Packard, and to the 25 million who are unemployed, underemployed, or so discouraged they've quit looking for work.  If American businesses are doing "just fine," you'd think there would be jobs for everyone.

At his Friday news conference, Obama insisted that the economy "would have been stronger" if Congress had passed his jobs bill.  It "would have been stronger" if the Greek economy were stronger (imagine -- the president thinks the U.S. economy is dependent on the performance of a nation the size of Greece!), it "would have been stronger" if states would just go farther into debt and hire more teachers and firemen, it "would have been stronger" if the recent recession hadn't worse than he ever imagined.

Obama is rapidly becoming the "would have, should have, could have" president.  He has an excuse for everything, including an 8.2% unemployment rate and the weakest post-recession GDP growth in memory.

I'm sure he will have an excuse when taxes on small businesses go up 24.3%, as they are scheduled to do on January 1.  He'll have an excuse when unemployment goes back above 10%.  And he'll make excuses when seniors can't get treatment because physicians won't accept the reduced payments that Medicare will be forced to make.  A real leader would grasp the enormousness of the situation and deal with it instead of whining that things "would have been better" if Greeks hadn't been deadbeats.

One would think it was the president's responsibility to try to avert an imminent fiscal crisis when that calamity is staring him in the face.  It's not as if there is any doubt about what's coming.  Following what economist Edward Lazear has called "the Worst Recovery in History" (Wall Street Journal April 2, 2012), the U.S. economy is slouching toward the most heavily predicted economic crisis in history.  Every reputable economic forecaster has issued a warning of the approaching storm.  The only person who seems unconcerned is the leader of the free world.

Perhaps Mr. Obama imagines that he will win re-election and continue kicking the can down the road with even greater stimulus spending funded by ever greater debt.  If so, that is a gross dereliction of duty.

The uncertainty associated with the fiscal cliff is already having a negative effect on the economy.  New investment, especially small business investment, is not expanding as it should in the fourth year of a recovery.  Of the 11 recoveries since 1960, the Obama "recovery" has seen the lowest rate of GDP growth.  Now, an already sluggish recovery is slowing even more.  No one in the country has a clue what sort of tax and regulatory changes the country faces in 2013.  No one is investing in new jobs and production, thanks to Obama's insistence on passing a slew of half-baked reforms.

No one even knows what new regulations will go into effect July 1 under Dodd-Frank because those regulations have not been finalized.  And thanks to Obama's determination to sign a health care reform bill -- any health care reform bill -- no one knows if the vast overhaul signed by the president is even constitutional.  The odds at Intrade, the "world's leading prediction market," are running nearly two to one that it is not.  Two thirds of Americans hope it is not.

So Obama fiddles, and rants and hollers and makes excuses, while the nation gets ready to burn.  If Obama were the "adult in the room" that he pretends to be, he would demand a truly bipartisan solution before the nation neared the fiscal cliff.  But being the political creature he is, his only interest seems to be using the impending crisis to score points with his base.

That's why he repeatedly calls for higher taxes on the rich, as if this were a solution to the $13 trillion in new debt that he proposes by 2020.  The Buffett plan of raising taxes on those earning more than $1 million would bring in $5 billion a year, at best, and probably less as high earners shift income to avoid taxes.  Five billion is 0.325% of what is needed to fund the president's spending orgy.  Where does the other 99.675% come from?

The president is keeping mum about where that money would come from until after the election.  Based on the record of his presidency so far, he probably doesn't care.  Even now, he is proposing more taxes and spending, and huge increases to the national debt.  Those proposals would bankrupt the country and bring about a Weimar-like financial collapse.  Then, as Americans hauled buckets of dollars to the store to pay for a loaf of bread, Obama could say it "would have been better" if we had spent more, like he said.  

It seems that Obama is blithely unconcerned about the fiscal cliff that the county faces.  He is a Pied Piper leading the nation's children, and the rest of us as well, off on the road to economic chaos.  Only a conservative landslide in the fall election can prevent this from happening. 

Jeffrey Folks is the author of many books and articles on American culture, including Heartland of the Imagination (2011).

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