Fiscal cliff should be no.1 priority for presidential candidates
Vice President Joe Biden’s speech was a great opportunity for students at UW-Eau Claire. He brought up plenty of topics that were important to the student body and community members, and it is good that we were able to gain a better understanding of them.
But a topic that was for the most part not touched upon — and this is largely a reflection of what both campaigns are doing — is the enormous problem of the fiscal cliff.
The fiscal cliff, for those unfamiliar with the topic (and it should be a concern if you are), is a phrase for double-headed fiscal trouble that will occur at the end of this year.
Two different things are set to occur if Congress does not act on them:
1. The Bush tax cuts will expire for everyone, and
2. Across the board spending cuts will take effect, as a result of previous spending cut
The combination of both things happening at once spells disaster for a still-struggling economy. With an incredibly slow recovery (the most recent disappointing jobs report shows there is still much work to do before we can breathe more easily), fiscal wisdom screams against raising taxes for anyone as well as cutting government programs.
Why is this? When government spending is cut back, it does a lot of different things: programs don’t get as much money, federal workers take a hit, etc. But without going into too much detail, the bottom line is that there is less demand in the aggregate economy as a result.
A lack of overall demand is precisely the problem we are still having today; if there is no demand to buy anything, why would companies increase production (and therefore hire more workers)?
Also, when taxes are raised, this means people have less disposable income. As I’ve already addressed, there is not much going on as far as consumption as it is. Decreasing everyone’s disposable income would only further complicate the situation.
In order to prevent an even slower growth in our economy, we naturally would want to extend these tax cuts and stop the spending cuts from happening. But what do we hear from our candidates on both sides? We are stuck in a trivial debate about who deserves a tax cut.
President Obama and most Democrats do not think the wealthiest Americans really need the additional tax cuts they have been getting, and therefore they should not be included in the extensions. In fact, that is the closest I heard Biden get to talking about the fiscal situation on Thursday.
I don’t disagree with this. But Mitt Romney and, more importantly, House Republicans, have made it their mission in life to be martyrs for the nation’s top earners.
We can go on and on all day about this specific issue, but when reality’s ugly head is staring you in the face, why would we be foolish enough to argue about one tiny part of it?
The solution to our economic woes will not be determined by whether the rich receive more tax cuts or not; it will be determined through this broader approach of trying to get that demand back into the economy.
I honestly don’t care if the richest of us end up getting a tax cut again; what I do care about is ensuring the tax cuts as a whole happen, as long as the biggest consumers in the economy get their share of tax breaks — the middle class. And I don’t care right now if defense spending is incredibly bloated. I do care that spending won’t be cut so drastically right now. That’s just bad fiscal policy all around.
The solution to our problems cannot be found in bickering over such small details of the larger issue here.
What we need from whichever candidate is elected in November is a strong leadership that transcends the triviality of it all to somehow get that gridlocked Congress to come to a solution to this incredibly serious fiscal problem. If the tax cuts are allowed to expire and across the board spending cuts do happen, do not expect any serious recovery to occur any time soon.
The fiscal cliff should be the number one issue talked about on the campaign trail, in case readers still did not catch that after reading this. The future of our nation’s economy could be filled either with more hardships or hopefully a better recovery. And right now, that is much more important than arguing about tax breaks for millionaires.