The Democrats seem to have forgotten that they already forged a compromise agreement, and that the fiscal cliff is the result of already giving in repeatedly to Republican demands that have unnecessarily slowed our economic recovery. During the 2011 negotiations, the Republicans knew that a bird in hand is worth more than any number in the bush, and bragged that they got everything that they wanted at the time. They knew that if/when the sequestration failed and the fiscal cliff was looming into view, they would be able to start negotiations all over again and today they are still issuing the same shrill and wrong-headed demands while the Democrats still wring their hands and search their souls for more compromise victims that they might find in the budget. Already we’re seeing trial balloons including cuts and changes to the very programs that we were told were saved by the negotiations that set up the dreaded cliff.
The saddest aspect of all of this play-acting is that the entire concept of the dangers of deficit spending is one that hasn’t made sense ever since we went off of gold or silver standards and chose instead to base our currency on the “full faith and credit” of the U.S. government. The world monetary system operates by taking a leap of faith approach in valuing world currencies. Our currency is sound as long as we say it is and as long as our economy is functioning at a level which continues to generate commerce and wealth and investor confidence. So when CLLRs gnash their teeth and rend their hair while crying about raising the debt ceiling, the rest of the world looks on in dumbfounded amazement. We have long established that we have no treasury that actually backs U.S. debts. If the government decides to raise the debt ceiling, it simply does so, and as long as the world still has “faith” all is good.
The U.S., like the banks and corporations that control it, is too big to fail, at least for now.
It’s interesting that it was the Democrats who wailed about deficit spending under Ronald Reagan, but the Republicans and the rest of the country ignored them. Now the Republicans are doing the same thing, but they have done a better job of ginning up worries among the general public and are using that leverage to create the sense that this is a much bigger problem than it is. Certainly, we need to balance spending and revenue, but the current debate is all about politics and not about economics. There is a bevy of economists who hold this view, Nobel prize winners Paul Krugman and Joseph Stieglitz among them, but the political caterwauling has drowned out their more measured words.
What to do? Ignore the news for the next few weeks, and if you find yourself wandering in the vicinity of the fiscal cliff, grab a stuffed lemming and toss it over the edge. Maybe we’ll get lucky and some members of Congress will follow it over.
Dan DeWalt is an activist and journalist based in New Fane, VT. He wrote this article exclusively for ThisCantBeHappening!