If the elections of a new president, all members of the House of Representatives, and one-third of the members of Senate constitutes too little change of the political variety, we can look forward to looming financial chaos as well. Upcoming events, political threats and economic happenings in Europe point to very chaotic times next year. All this is on the backs of a lame-duck (walking-dead) Congress.
Lord help us. Time for a dirge?
We are set to take several financial hits at the beginning of 2013, most contracting an economy already just staggering out of recession. Hopefully none will be a knockout punch. But realistically a double whammy of spending cuts and tax increases will likely send the economy off a $600 billion (Goldman Sachs estimate) “fiscal cliff.” Goldman Sachs (of all people) predicts that the US will almost certainly go into recession early next year if nothing is done – and little or nothing is what Congress does best, especially Republicans.
The announcement of disingenuous Speaker of the House, John Boehner, threatening a worse fight over a budget ceiling, could mean even more dire consequences. Boehner’s announcement was somewhat subdued this time, revealing dull, fish eyes. We have seen him bellicose with bulging eyes and a throbbing temple, pounding on a table. Is it an act, or is he bipolar? If not an act, we may next see a high-nuke — a shutdown if he doesn’t get his way with President Obama.
And none of this — the political hubris and the event horizon — even factors in the travails being experienced by the European Union folks – Greece citizens spurring banking runs, German citizens eschewing contributions of help to deadbeat Greeks, and the economic debacles of Italy, Spain, and Ireland, not to speak of GB austerity moves.
The world’s gone mad!! Are we leading the charge?
First there is the expiration of Bush tax cuts, extended by Obama who allowed Republican extortion to push the date out, joined by both parties, exhibiting a lack of visions and long-term planning, which summarily pushed our potential chaos to future dates.
Assuming Republicans do not allow increased taxes for only those earning in excess of $250,000, which can be assured in the current Congress, and further assume Democrats won’t make a deal, all taxes will automatically go up increasing withholding for the stagnant-waged middle class by some $120 to $300 per month. The rich will be hit harder in absolute amounts, but they have millions they can’t spend anyway. Strike one against a staggering economy.
Some $60 billion will most likely be lost as unemployment benefit extensions set to expire at the end of this year, a giant depression on consumer spending and the entry of millions more into the poverty ranks. End payroll tax cuts in 2012 and another $120 billion is taken out of the pockets of some 160 million workers. It’s a combined strike two.
Then there are the automatic spending cuts due for the first of next year. We are looking at $6.8 trillion over ten years. Next year’s share would be $680 billion. Republicans have been talking austerity for so long, they probably have convinced themselves, perhaps talking in their sleep. That would be strike three. Our economy is most certainly out.
The European kick could very well sink us farther in the economic muck we are already in.
Time to slit your wrists? Hope could be on the horizon even before this falls with the lame-duck Congress. People could give Democrats a 60 vote majority in the Senate and drive out the smug Republican majority in the House, sending the bipolar, bronzed Boehner to the minority, maybe even out of Congress. Oh, yes, it needs to be veto-proof with four more years of Obama.
Democrats could well go full-plutocrat but I think we have some room for real reform. Do I think this will happen? Let me put it this way: I thought Bush would not get (I didn’t say win) a first term and certainly not a second.
How good are my predictions?
Tell me here —-> Common Good