fiscal cliff

Fiscal Cliff Bill and the Do-What Congress

The fine print of the at-the-deadline fiscal cliff legislation could make Americans wonder whether it was a do-nothing Congress or a do-what Congress.Many Americans viewed the just adjourned 112th Congress as a "do-nothing" Congress. After looking at the fine print of the fiscal cliff legislation, they may revise that assessment to the "do-what?" Congress.

After squabbling interminably over tax rates for wealthier Americans, Congress finally approved legislation to prevent most Americans from facing significant income tax hikes at the start of the new year. 

An element of the deal pounded out in the Senate was to allow expiration of a Social Security payroll holiday, which means every working American will feel a slight pinch in his or her new year paycheck.

The balky GOP-controlled House pouted by not acting on a $60 billion storm relief package for badly battered parts of New York and New Jersey, which drew the ire of Republicans inside and outside Congress. 

Despite the huge economic stakes and deteriorating public patience, fiscal cliff negotiators found the time to add in a host of tax provisions that The Washington Post labeled as "curious." That may be an understatement. 

Man-made Cliffs

Ready or not, Americans are on the precipice of a fiscal cliff and climate change that could make Superstorm Sandy and searing summer temperatures the new norm.While politicians parried on Capitol Hill over the fiscal cliff, the World Bank issued a stunning report indicating climate change could raise the earth's temperature by 7.2 degrees as early as 2060.

Coverage of the paralyzed negotiations to avoid the fiscal cliff saturated traditional and online news media. The United Nations climate negotiations in Doha, Qatar, drew hardly a mention.

Plunging over the fiscal cliff will have serious consequences, but not as devastating as melting polar caps, searing droughts, warming oceans and savage storms.

Perhaps not so paradoxically, both cliffs hold the most peril for the poor and those least able to adapt. Failure in DC to reach a budget deal will send tax rates, including payroll tax rates, up and spending on such programs as food stamps down. Failure to address climate change will lead to increased rainfall in some places and less in others, including already parched parts of the Middle East and Africa.

Buffett Antitype to Norquist

Warren Buffett, the seer behind Berkshire Hathaway, is the idyll of the Democratic Party in its quest to raise income tax rates for wealthy Americans.

The Oracle of Omaha has become the antitype to Grover Norquist. Norquist keeps his no-tax pledges in a vault and rules his conservative domain from a seat at the head of a table in a DC office building. Buffett extols the need for tax equity in ubiquitous quotes, appearances on The Daily Show and a new book, "Tap Dancing to Work."

The 82-year-old Buffett, who some call the most successful investor in the last century, doesn't pledge allegiance to trends or fads. He follows his own instincts and research, often in contrary directions to the investment crowd. He laments what he calls the trading culture that generates profits, not wealth.

One of the wealthiest and most influential men in the world, Buffett says he looks for the long-term gain. That accounts for why he invests in railroads, utilities, financial companies, newspapers and, most recently, debt-ridden Spain. It also accounts for why he doesn't see higher taxes as an impediment to investment.

His promise to give away 99 percent of his fortune, his continued residence at the house he bought in 1958 for $31,500 and his preference for public transportation make Buffett an outlier in the magnate set. So does his support for higher tax rates for billionaires or, as he puts it, tax rates higher than his secretary pays.

So while Republicans scurry around trying to avoid ticking off Norquist and his army of conservative contributors, Democrats fawn over Buffett for his magnanimous position on tax equity, philanthropy and the public good.

Buffett's latest round of book tour interviews also offers a sharp contrast to actions by major corporations such as Oracle and Wal-Mart, which are accelerating dividends to the end of this year to help shareholders escape anticipated higher capital gain tax rates next year.

The Fist Behind the No-Tax Glove

Grover Norquist doesn't hold elective office, but wields huge sway over a group of Republican lawmakers who took his pledge to vote no on any tax increases.

Under the pressure of an approaching fiscal cliff and the wake of President Obama's re-election victory, some GOP members are wiggling away from their pledge to the president of the Americans for Tax Reform.

The Washington Post profiled Norquist last year, revealing he keeps the written pledges that lawmakers sign in a vault in Washington, DC. "When someone takes the pledge," Norquist told Jason Horowitz of The Washington Post, "you don't want it tampered with; you don't want it destroyed." That may or may not be a reflection on the caliber of politician he is dealing with.

The first pledge signers date back 25 years and include former House Speaker Newt Gingrich and supply-side economics advocate Jack Kemp, an early mentor to current House Budget Chair Paul Ryan.

Norquist hasn't been invited to White House negotiating sessions, yet he boldly predicts Republicans will hold the line against raising taxes. Or else, they may face a challenge from their political right in the next election, he adds. There are plenty of examples to show he isn't kidding or making an idle threat.

Of course, Norquist's adamant opposition to tax hikes isn't an end unto itself, though at times it seems like it. He is a fervent believer in smaller government. One of Norquist's most pungent lines is that he wants to see government shrink so he can "drag it into the bathroom and drown it in the bathtub."

Lame Duck for Holiday Season

Congress is back in town to stare at the same tax, debt and jobs issues as before the election — with the same fiscal cliff looming in a mere 48 days.

In addition to the impact of the 2012 election results, the lame duck congressional session has experienced the financial reverberations of cleaning up after Hurricane Sandy and the surprising sexual revelations that forced the resignation of popular CIA Director David Petraeus.

Pending fiscal mayhem mixed with a DC political drama combining sex, power, cover-ups, imprudent emails and possible national security lapses provides the perfect punctuation mark for what has been a tortuous and seemingly endless political season.

So while Republicans pondered how to reinvent themselves and Democrats openly negotiated on how to negotiate, the Congressional Budget Office renewed its warning of a potential recession unless Congress reaches a bipartisan agreement to avert sharp tax increases and automatic, across-the-board spending cuts. CBO says the U.S gross domestic product in 2013 could drop by 0.5 percent and unemployment rise to more than 9 percent.

Members from both major political parties appear eager to resolve the problem, but at the moment are jockeying for position. House Speaker John Boehner told his chastened GOP caucus some compromise on revenue will be necessary. Democratic Budget Committee leaders signaled an interest in the income tax deduction cap proposed by GOP presidential candidate Mitt Romney, which echoed an idea earlier surfaced by President Obama.

Spanking Congress for Doing Nothing

Ordinarily we would be writing now about what Congress was hustling to get done before leaving town. This year Congress left town before doing very much.

The Seattle Times ticked off what departing federal lawmakers left dangling:

  • A farm bill with provisions to aid farmers damaged by severe drought;
  • A long-term transportation bill;
  • Domestic violence legislation;
  • Student aid; and
  • Budget and tax measures to avoid plunging off the so-called fiscal cliff.

And that doesn't include anything that might qualify as job-creating legislation to speed economic recovery.

Instead, the 112th Congress has earned the epithet of a "do-nothing Congress." It could just as easily be the "blame the other guy" Congress.

So, the country is left to twiddle its thumbs — or wring its hands — for the next six weeks until the general election is over. Then congressional leaders say they will return to town and take up all the major issues it left undone.

A close presidential vote and continued split control of the U.S. House and Senate may not seem like much of a flash of light that illuminates how to unsnarl congressional gridlock. Perhaps, lawmakers have known all along what compromise would look like, but didn't want to tell anyone before they voted.

Dangling on the Fiscal Cliff

Conspicuous by its absence on the main stages of the Republican and Democratic national conventions has been talk about how the country can avoid careening off a fiscal cliff next year.

The fiscal cliff is real and its impacts known. Its pressure on the political system is palpable. Yet no one wants to venture forth to describe what is likely to happen after the November general election as national leaders watch the clock of a $1 trillion time bomb count down.

Congress triggered the time bomb itself to create a bipartisan political dynamic to come up with a budget and tax plan or face draconian budget cuts and automatic tax increases. Spending reductions for defense and other spending programs and hikes on income tax rates and Social Security payroll tax rates threaten to jolt the U.S. economy back into recession.

Despite widespread dire warnings, President Obama and Congress, especially the GOP-controlled House, are so badly stalemated, they haven't even made a serious effort to disarm the time bomb.

And now they aren't even talking about the fiscal cliff on the campaign stump because any significant compromise budget plan will involve spending cuts and higher taxes neither party wants to own heading into an election.