Fiscal “Random Element of Terrain,” What Does Any of it Mean?

Well, the end is upon us. The date long prophesized grows near and everyone is prepared for the end times. Or at least, that is what CNN and the History Channel would have you believe.

Mayan Apocalypse and Fiscal Cliff seem to fit basically the same script on most networks right now, to the point where programming is interchangeable. Just choose your own disaster! In reality, the world isn’t going to end on the 21st of December and America will not fade into nothingness if we decide to plunge off the year-ending cliff/slope/your favorite terrain feature!

Making this sound like the end of the world might be good for ratings but it’s bad for educating people about what hitting the fiscal cliff really would entail. The exaggeration and hyperbole involved in the fiscal cliff discussion is unhelpful and prevents making progress towards a plan which both will promote economic growth and deficit reduction over the next decade.

For starters, I would encourage people who want the short version of the fiscal cliff debate to read the Congressional Budget Office’s summary of the fiscal cliff showdown. 

The idea behind the fiscal cliff was to ensure that budgetary reductions would go into place for the next decade if the Gang of Six could not find a bipartisan solution to the debt ceiling debate. The scheduled reductions are actually a bipartisan solution, though not a perfect one. The “cliff” simply trades short term economic slowdown for long term reduction in government spending. The CBO argues that unless we address the long term problem in a short term solution, it could actually some positive benefits to go over the “cliff”. (Solutions include a combination of more revenue, better use of funds, closing loopholes and cutting unneeded spending.) Unlike what the Republicans want you to believe, the cuts are not solely aimed at defense spending. Below is a table of the proposed 2013 cuts. Note that the cuts are not instant, but staggered over a decade. This lends to the idea that going off the cliff won’t be the death of us all in the short term.

Resources Before Sequestration

Sequestration

Dollar reduction

Percent reduction

Defense

$728

$54.7

Funding subject to cap

546

41.1

7.5%

War funding, outside of cap

96

7.2

7.5%

Unobligated balances from prior years

84

6.3

7.5%

Non-Defense discretionary (NDD) programs

535

38.5

Non-exempt programs

421

35.5

8.4%

Veterans’ health and Pell Grants, exempt

74

0.0

0.0%

Health centers and Indian health, 2% limit

6

0.1

2.0%

     Subtotal, funding subject to the cap

501

Above-cap funding that is offset by CHIMPs

19

1.6

8.4%

Program integrity and disaster funding,
outside of cap

7

0.6

8.4%

War funding, outside of cap

9

0.8

8.4%

Non-Defense mandatory programs that are not exempt

617

16.2

Medicare payments to providers and plans, 2% limit

549

11.0

2.0%

Other non-exempt mandatory programsc

65

5.2

8.0%

Non-Defense Total, Discretionary and Mandatory

54.7

Courtesy of Center on Budget and Policy Priorities: http://www.cbpp.org/cms/?fa=view&id=3635

As you can see, many different programs stand to have reductions. Combine this with the lapse of Bush-era tax cuts (which we made to expire, these were never meant to be permanent) and others such as the payroll tax exemptions disappearing and you have a formula for long-term budget reduction, which supposedly, is what the Republican party wants. I can support this too, we do need to look at how we spend taxpayer money in this country. Unfortunately, ideological Republicans in Congress don’t actually want deficit reduction. What they want is to ensure that they get their way on tax cuts and defense spending.

We aren’t going to make any progress on our budget if ideologues continue to stand in the way of compromise because of a twenty year old tax pledge and the misguided notion that we currently have too small a Navy and armed service. If we really want to get ahold on the debt, tough choices need to be made. The cliff is here to make sure we don’t back out of these tough choices. I don’t want to see cuts to Medicare under the cliff, but if that’s what it takes to make progress so be it. Republicans need to either do what’s best for the country or stand aside from the ideological obstructionism that was rejected by the American people in the election.

Reprinted from State Senator Curt Thompson's (D-5th) blog. Also, check the Senator out on Facebook and Twitter