Fiscal Cliff, Ad Nauseam

Without missing a beat, the political conversation has switched from a pathological obsession with the meaningless 2012 election to a pathological obsession with the so-called Fiscal Cliff. The election was much ado about nothing. We can be confident that whatever solution Congress and the President come up with to address the spending & revenue issues before them will be equally meaningless.

In short, the current obsession with some relatively small policy changes is yet another distraction, another Great Bamboozle, a charade which wholly captures the attention of the media, the pundits, and the politicians but has no real bearing on the Empire's decline.

America's decline is about the tragic fate of its people, most of whom have been disenfranchised by a media & political system which is now focusing almost exclusively on the fiscal cliff. It is about the lack of good jobs, jobs which provide incomes on which people can run a household. It is about the hijacking of this nation by wealthy or well-off individuals, often associated with corporate elites, who have received all of the income gains over the last 30 years. The top 20% of Americans own 84% of the nation's wealth, while the bottom 40% own only 0.3% of the wealth. That leaves a whopping 15% for those in the 2nd and 3rd quintiles, which is a lot of people.

It is often said that ordinary Americans lost 5 trillion dollars in the aftermath of the collapse of the housing bubble. If they did, that's $5 trillion they never really had to begin with in so far as that new-found "wealth" was based on unwarranted asset inflation (rising house prices).  For most in the middle class, equity in their house is the sole source of any wealth they may have. In so far as the large majority of Americans received no income gains over the last 30 years, even as costs for health care, for college tuition and for other essential things were soaring far above the official inflation rate, the housing bubble represented the only opportunity Americans had to create some financial security. And now it is gone.

As I discussed in my post a few Saturdays ago Government Spending And The Economy — A No Win Situation, the American economy is highly dependent on government spending. This alone guarantees that the resolution of the Fiscal Clliff will not address the growing public debt problem in the United States, and because our governance is corrupt, the wealthy will not find themselves paying out significantly more money than they do now to meet seemingly bottomless Federal needs. Certainly anything the wealthy do end up paying out will only be a drop in the expanding public debt bucket.

And last but not least, if the economy goes into tailspin because of new taxes and spending cuts, it will be harder for politicians to pretend they care about ordinary citizens. Thus, we can confidently conclude that not much is going to happen—more ado about nothing, or, in the words of the wise man Yogi Berra, déjà vu all over again.

Today is November 17, less than a week before Thanksgiving, with Christmas looming a month after that and, one week later, New Years Day. From now until the end of the year, you will hear more and more about the Fiscal Cliff. Will they? Or won't they? Whatever. The Fiscal Cliff, ad nauseam.

And just like the meaningless election, the resolution of the Fiscal Cliff won't change your fate in any important way.

Comments

[teri]

Dave,
Excellent and pithy summary of the situation.

[Mike Roberts]

To me, it's an illustration of just how out of touch politicians are, with the masses, when the president promises no tax hikes for those "earning" under 250,000 a year. What a relief to those on 249,000, who are scraping by with only one yacht, three cars and a small 6 bed home.

Yes, it'll be in the news, on and off, until the last bitter moment. There'll be talk of progress then the talks will break up in bitter disagreement, then they'll get back together only for hopes to be dashed again but a last minute agreement, working through the night, will get through congress and the Dow will shoot up 300 points, heralding a great future for one nation under God.