When you hear, or read, "fiscal cliff," we instantly have visions of irreversible doom by crossing over the precipice.
In Washington, people don't speak English as you and I know it. George Orwell would call it "politispeak."
"Why is that? Doesn't the term 'fiscal cliff' refer to economic calamity from an out of control federal budget?"
In Washington, our elected officials fight to the political death on how to spend our money. Whoever gives in first, they both win.
Because Democrats and Republicans could not agree on how to deal with our out of control spending, they entered into a pact right before the 2010 Congressional elections called the "sequestration."
This pact agreed that on Jan. 1, 2013, military spending would be cut 25 percent, welfare spending would be cut 25 percent and taxes would be increased. People in the lowest brackets would have a tax increase of 33 percent and people in the highest brackets would have an increase of 20 percent -- the repeal of the so-called "Bush Tax Cuts." (Note, low-income earners got the biggest cut, now increase, while the wealthiest got the smallest cuts, now increase.)
As much as I think it is a terrible idea to raise taxes in a down economy, allowing the national car to speed over the fiscal cliff would probably be the single best financial reform we could ever hope to accomplish.
But we can't possibly do that. If that happens, the voters, the people relying on welfare and the people paying taxes, will be pissed. All politicians saw what happened in Greece when they cut spending and raised taxes. The citizens were ready to throw their leaders over a cliff. (Notice, they are leaders, not servants.)
To normal folk, when someone has to cut back, that means they spend less by either going without or by purchasing lower cost goods and services. Some call it, "belt tightening."
Not in politispeak. When we "cut" in politispeak, what we really are doing is spending more, but not as much as we originally wanted. Allow me to explain.
A husband and wife agree that they are going to replace their paid-off car with a newer one. But they have had a financial setback. Rather than postponing the purchase for another year, they decide that they really want a brand new car. But the economy being what it is, they will cut back and buy one that is a year old instead. Thus, they cut back and "saved" some 20 percent by "investing" an additional $400 per month they were not otherwise spending over the next 36-42 months.
But alas, there are also the cost overruns. Things like higher insurance premiums, warrantee transfers, and all of the little fixes that come with a used car that we want to be like a new one.
Since, in Washington, the idea of actually reducing spending is unthinkable, expect a desperate, knife to throats, and astonishing loud voiced, fight to the death. Finally, an agreement will be reached that allows everyone to spend even more while taking a modest increase of "investment" from our wallets, a large increase of "investment" from China, and a jumbo increase in "investment" from the Federal Reserve.
After all, if they upset the voters, voters who have learned that they can vote themselves money from the state treasury, how will they ever be able to keep their phony-baloney jobs? Heaven forbid that they be forced to return to "podunkville" and do productive labor for wages similar to yours and mine.