Fiscal Cliff Tax Rate Spike: How Congress Played Chicken And Lost
In James Dean’s last movie, Rebel Without a Cause, released in 1955, a pivotal scene involves Dean’s character, Jim Stark, and Buzz Gunderson engaging in a game of chicken. The two teenagers are each behind the wheel of a stolen car as they drive towards a cliff in the hills above Los Angeles. The idea behind the challenge is that the first one to jump out of his car is a chicken. Tragedy ensues when Buzz gets a strap of his leather jacket tangled on the door of the car. Unable to free himself, he goes over the cliff, plunging to his death.
In August 2011, in their quest for a budget that included substantial deficit reduction, Congress passed legislation intended to encourage compromise. In rare bipartisan agreement, the house and senate came together to implement the threat of sequestration as an incentive to this end. Sequestration would force automatic budget cuts of $1 trillion over the next 10 years beginning in January 2013.
The combination of sequestration and the expiration of the Bush era tax cuts, due to expire on December 31, has come to be known as the fiscal cliff. Massive and sudden spending cuts, along with increased taxes could have a devastating impact on our economy. So what went wrong? How did legislation that was intended to incentivize congress become the looming threat we now fear?
The trouble with playing chicken — and let’s face it, Democrats and Republicans are playing chicken with our economy — is that you never really know how long your opponent will hang on. For instance, will Republicans get their jackets tangled in the Tea Party goal of no increases in at any cost, to the point of being unable to avoid taking us over the cliff? House Republicans, led by Speaker John Boehner (R-Ohio), live in the shadow of their oath to unelected tea party hacks which puts a quest for power ahead of the needs of their constituents.
At the same time Democrats risk over-confidence in the wake of Obama’s re-election and at times seem less inclined to compromise.
If both parties continue to hold their ground, the fiscal cliff will be unavoidable. It’s time for Congress to face to their responsibility to the nation. Their job is not to defeat the other party; their job is to manage the business of the people of the United States. The petty sniping and finger pointing coming from both sides of the aisle is at best counterproductive and at worst dereliction of duty.
I want to believe Congress will do the right thing, but they have recently demonstrated more interest in crippling their opponents than in doing their jobs. Assuming a compromise is reached by the end of January 31, I would caution every American to look closely at what each side has given up and what they plan to do to get even. Regardless of your political preference, you’re gonna get screwed today. When it’s over, take time to communicate your feelings to your senators and representative so this might never happen again.