Fiscal Cliff Politics - The Missourian: Opinion

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Fiscal Cliff Politics

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Posted: Wednesday, December 5, 2012 5:00 pm

Erskine Bowles, the Democratic co-chairman of the long abandoned Simpson-Bowles Commission, compared the fiscal cliff negotiations to “kabuki theater” Monday adding that if two sides come to an agreement too quickly, “their own side would just kill them.”

Bowles’ take on the political drama unfolding on the debt negotiations underscores how politics has supplanted statesmanship.

When it comes to tackling the most important domestic issue facing the country in generations, it appears for many of the politicians involved that it is more about saving face with one’s party than doing the right thing for the country.

Instead of leadership, we are witnessing political theater, gamesmanship and partisan posturing.

With a deadline looming, Republicans and Democrats should be locked in serious negotiations. Instead we get tweets from leaders of both parties — including the president — on how unreasonable the other side is being.

It is tedious and ridiculous. It is also dangerous.

The economic consequences for going over the fiscal cliff are real. Should Congress fail to act by year’s end, a series of automatic spending cuts and tax hikes will occur, all stemming from the 2011 fight over the debt ceiling.

Gone would be the payroll tax break, the Bush-era tax cuts and more than $100 billion a year in defense spending. Taxes would go up for everyone including the middle-class. Economists predict if we go off the fiscal cliff, the country will experience another recession. There would definitely be layoffs which could send the national unemployment rate north of 9 percent. Officials warned that in Missouri alone, falling off the fiscal cliff could result in 40,000 lost jobs.

Perhaps more importantly, the markets would go haywire. All of it amounts to a self-induced economic crisis.

And one that could have been avoided had the president and Congress adopted the original Simpson-Bowles plan (or at least a watered-down version) two years ago.

The commission proposed a combination of higher taxes, reduced spending and long-term structural reforms to Medicare and Social Security.

The proposal would have produced over $4 trillion in savings over a period of 10 years which is an amount economists say is required to begin reducing the federal debt, now estimated at over $16 trillion.

The plan was dead on arrival — failing to get the super-majority vote from its 18 committee members. The tax increases were way too high for Republicans and the entitlement cuts way too rich for the Democrats.

Simpson-Bowles was essentially a nonstarter for the president and Congress which instead opted for smaller spending cuts and sequestration.

The core principles of Simpson-Bowles, reforming entitlements, increasing government revenues while broadening the tax base and simplifying the tax code, are the same core principles of the so-called “Grand Bargain” that pundits say is required to ultimately tame the deficit and set the country on a new fiscal trajectory.

Maybe it’s time to dust off the Simpson-Bowles recommendations.

/opinion