The economy is rumbling along, out of control, with nobody at the reins. Straight ahead, the road abruptly ends, yet the horses show no signs of slowing. Next stop: the fiscal cliff!
Much like a scene out of an Indiana Jones movie, the wild ride to Jan. 1, 2013 is developing into a perfect storm of economic and political pusillanimity. And in a sense, it’s been headed this way since the first reel: Facing a financial crisis that threatened to sink America’s credit rating, Congress agreed to increase the debt ceiling, but only if the conservatives were given a major deal to reduce the deficit.
But those same legislators were unable to agree on what combination of tax increases and budget cuts would be employed to shrink the deficit, so they punted that problem to a “super committee” of 12 congressmen and senators who were tasked with untangling the Gordian knot of America’s finances. That super committee was given the best incentive a congressman could imagine to craft a compromise: Failure meant automatic cuts to federal spending across the board, painful to both Democrats and Republicans alike.
It wasn’t enough of a goad: The super committee also failed, triggering those billions in automatic cuts, which will kick in on New Year’s Day.