Friday, November 16, 2012

Fiscal Cliff Conspiracy Theory

     We all love a good conspiracy theory, and there are a number of possible scenarios available to the imagination regarding the so-called Fiscal Cliff.
     At the witching hour of midnight on December 31, a wide range of taxes will go up and an even wider band of spending will be chopped.  The consensus of opinion is that this is very bad, because it will probably cause a recession.  The most serious effect will probably be that a lot of people who work for the government, or, even more likely, many who work on government contracts, such as employees of defense contracting firms, will lose their jobs.
     The most widely expected alternative to this troubling outcome is that, after much posturing, shouting and fist-shaking, Congress will pass something that will swerve us away from the precipice at the last minute, and the President will sign it.
     But what if they don't or he doesn't?  And, more conspiratorially, what if they have already agreed that they won't?
     Preposterous, you say?
     Well, yes, you're right.  It is preposterous.
     But what if there are some factors in the backs of the minds of the participants that are saying to them, hmm, let's see how we can use this?
     What if, as in the Benghazi cover story, a spontaneous demonstration of partisan bickering is hijacked by some players who have a serious intent to block the process?
     Now, what could possibly motivate such serious intenders of harm?
     First, it has been suggested by some Republican-leaning commentators that President Obama would not mind so much if no agreement were reached, because it would accomplish his objective of raising taxes on the rich.  Then he could blame it on the Republicans.  As for the spending cuts, he could re-establish the chopped spending the following year, after a public outcry against the cuts.
     This seems a little far-fetched, too.  But its logic does have a certain internal consistency--assuming Obama is the kind of cynical strategist it would take to go that route.  (Or is that just politics?)
     But that is just an example, and it is not the point I wanted to make.
     The fiscal cliff was formulated a couple of years ago after failed negotiations on taxes and spending.  The parties agreed at that time that on January 1, 2013 (a lucky year no doubt), taxes would go back to Clinton-era rates and spending would be drastically cut across the board.  This deal kicked the can down the road and, it was hoped, gave the parties an incentive to come up with a more sensible solution before the clock ran out.
     But now we are almost there, with no solution in sight.
     Now, here's the point.  The negotiators put this plan in place.  In the backs of their minds was the thought that the deficit has to be brought under control somehow.  But the participants also knew that the experience of centuries has shown that, in a democracy, budgets can only be brought under control by taking the process out of the people's hands.  Sometimes the people realize they have to put the process into the hands of someone who will just do it.  That is happening in Europe to some degree now.  But it is not happening here.  So, an alternative is: trickery.
     We can't come to an agreement.  Oh, no, we can't do it!  So we will shout and posture and blame, but when the dust clears taxes will go up and spending will be cut.  Oh well!  It needed to be done anyway.
     And what about the economy?  Won't it suffer?
     The interesting thing there is that the economy is showing signs of getting off the mat.  If it wasn't for that factor, there would be very little thought of letting us go over such a cliff.  But the signs of recovery (a real one now, not the wimpy breath of foul air we've seen so far) may give the participants another thought in the backs of their minds that maybe we won't go into a recession.  Or maybe it won't be so bad, and we can blame it on each other, and oh well!  But look, the deficit has been cut!  It had to be done, and maybe everything will be all right in the long run.
     Crazy, huh?  Yes it is crazy, and after all it is just a conspiracy theory, an exercise of imagination.  There are a million of them.  We don't know what goes on behind closed doors.  We just hope that the checks and balances, plus the scrutiny of the press, plus the threat of the next election will prevent anything really wacky from being hatched in the dark.

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