At the End of the Year
“Fortunately, the so-called fiscal cliff will soon create an extraordinary second opportunity for a breakthrough compromise,” reads the second sentence in a op-ed written by Former U.S. Treasury Secretary Robert Rubin yesterday on The Wall Street Journal’s website. The op-ed detailed the five main risks our country is facing if Congress is unable to act by the beginning months of 2013 to move a number of key measures to address the aforementioned fiscal cliff. But, while Congress has set itself up for another major battle at the end of the year, they have yet to address the real cause behind any of these issues.
As the Bush-era tax cuts and payroll tax holiday expire, the debt ceiling reached, and the sequester put into effect, Congress will be pressured on all sides to act so that the economy does not collapse. The problem with this situation is with Congress itself. While lawmakers are all too eager to tout fiscal responsibility as their personal mantra, they continue to spend our country into debt, running over $1 trillion in deficits yearly. In the above-mentioned op-ed Rubin cites the debt and deficit as three of the main risks behind the convergence of events:
Three, deficits constrain our capacity to make the public investment critical to competitiveness, growth and widespread income gains. Four, deficits hamper our financial ability to cope with economic weakness or geopolitical events. And five, our fiscal position creates a strong potential for some form of severe macroeconomic distress at an unpredictable time.
While the deficit and debt are providing some of the most urgent political pressure in history—culminating at the end of the year—we see no reason why Congress could not act now to head off this growing storm. Recently in the Senate, votes were taken on five different budget resolutions. None were passed because of politics and instead the country continues to operate without a budget. The end of the year may be the best time for the lawmakers on Capitol Hill to come together and do their job, but we would prefer they instead do it now by passing a budget addressing the factors creating this fiscal cliff, the federal budget deficit and our national debt.