Now that the US election is over, the news out of Washington is pretty much nonstop coverage of the dreaded "fiscal cliff". Right, left and center are warning of the poisonous package of deep spending cuts pegged to tax increases by Republican lawmakers during their supercynical debt-ceiling stunt in 2011. But the fiscal cliff analogy is an inaccurate and deliberately deceptive name for this phony crisis.
Perhaps "austerity bomb" would be a better description: Nobel prize winning economist Paul Krugman thinks so. The phrase fiscal cliff is misleading, and for good reason; Republicans hope to scare the public into accepting the same kinds of deeply unfair budget cuts in the name of debt reduction that have crippled European economies from Greece to Spain to Portugal to Ireland and more.
For an extremely simple (and amusingly cheeky) explanation of what the fiscal cliff brouhaha is all about, check out this Q&A in US News and World Report.
But to understand why the Republicans are cranking up the hype – to the point of lying about the consequences of failing to reach a long-term budget deal before year end – it helps to take a deeper look. As Dean Baker writes in the Guardian: "Missing the January deadline simply means those who want to preserve Bush tax cuts for the super-rich lose political leverage."
Baker goes on:
The deficit hawks want to promote a sense of crisis because it is essential to advancing their agenda. If the 1 January deadline passes, the political ground shifts to those who just want to see an end to the Bush tax cuts for the wealthy: after 1 January, the Bush tax cuts will have expired.
This means that when President Obama pushes his campaign pledge to keep in place the Bush tax cuts for 98% of households, he will be asking Congress to lower taxes for 98% of the people, not to raise them for 2%. It would be difficult even for a Republican Congress to refuse this tax cut.
The phony sense of imminent disaster is intended to pressure Americans into adopting the same austerity orthodoxy that's strangling Europe. Michael Hiltzik in the Los Angeles Times lays bare the fundamental dishonesty of the ideologists at the heart of this scam:
They haven't stopped with merely applying a misleading label. They've aimed their rescue efforts at fiscal nostrums that do nothing to address the truly urgent economic issues facing American workers and businesses today. They've confined the discussion of tax reform to tweaks that will leave virtually intact the most important tax break for the wealthy (the preferential treatment of investment income), while turning their gun sights on government programs that keep millions of Americans healthy and out of poverty (think Medicare and Social Security).
The deals that get made in Washington in the coming weeks will bear heavily on working people in the US for decades to come. And if we let the deficit scolds stampede lawmakers into undercutting the social programmes that have put a floor under the middle class since the Great Depression, we and our children will pay the price for a very long time to come.
Read more: This explainer from the Center on Budget and Policy Priorities points out what's really at stake.
Sources: New York Times, US News and World Report, Factcheck.org, Guardian, Avaaz, Los Angeles Times, Center on Budget and Policy Priorities