As you probably know, come January 1st 2013, taxes are scheduled to go up on everyone and automatic spending cuts will kick in. This is the law as proposed and signed by President Barack Obama. He built this, and we voted for it. Yet he does not want his fingerprints on a tax hike on the middle class. Nor does he want his fingerprints on a prolonged recession. He must go through the motions of negotiating so he can then blame higher taxes and a recession on Republicans. There is absolutely no reason to believe he cannot do this. He really has all the cards.
Hence, Republicans have no cards. They cannot win no matter what they do. Yet they too have interests. Republicans don’t want their fingerprints on anyone’s taxes going up. Nor do they want automatic cuts that don’t address the real problem of entitlements. Lastly, they do not want to allow the economic damage that will result from both tax hikes and continued runaway entitlement spending. I don’t see how they alone can stop any of this.
That’s not to say they won’t reach an agreement and pass something. They usually do. It will happen at the very last minute. Then they will both declare victory and go home. The press will write about how the Republicans blinked, and how once again Obama outmaneuvered his less capable opponents. The truth is nothing will actually be solved, and best-case scenario, we will just kick the can down the road once again.
As a student of economics, I say pass nothing! Let current law prevail. Let all the taxes go up. Let the sequester spending cuts go forward. What a great experiment in economics we would be conducting! What a great lesson for future generations! This is our civic duty as educators and parents. No more kicking the can down the road. We’ve done that too long. All that does is muddy the waters and obscure the causal relationship between our actions and their consequences.
While we're at it, why not stop borrowing? Let's just print every dollar we need! Borrowing is just another way of kicking the can down the road. That makes sense when fighting an existential war, but we are borrowing from our kids to pay ourselves entitlements! How can we justify passing on this debt and inflation to our kids? Why not take the hit ourselves, today, like men and women of character would?
We voted for this, now we should be allowed to live in the country we deserve. Forward, I say! Forward off the cliff!