Despite action on ‘fiscal cliff,’ perils remain

Guest Editorial
Congress narrowly averted a “fiscal cliff” Tuesday. But the lame actions in Washington, D.C., were reminiscent of the hoopla preceding the end of the Mayan calendar a couple of weeks earlier.

The Senate bill passed by the House late Tuesday avoided income tax hikes for most Americans and haphazard spending cuts. But unlike the mythical Mayan threat, the perils that brought us to the edge of the “fiscal cliff” are real. And they still remain. The federal debt continues to climb unabated while Congress and the president dither, unable to make hard decisions because they are too locked into a game of conning the voters.

The “fiscal cliff” emerged from the Budget Control Act of 2011, when the federal government (again) failed to deal with a deficit budget and a growing debt. The Dec. 31, 2012, deadline was supposed to force Washington leaders to make hard choices, lest they push the nation into a recession fueled by higher taxes via the end of the Bush-era tax cuts.

Politicians — being what they are — pandered to the public. So the debate — and Tuesday night’s solution — centered on secondary topics, such as raising taxes on the wealthy.

When the dust settled, the tax cuts were extended for all but those making more than $400,000 a year ($450,000 for couples). That may nail the 1 percenters, but it does nothing about the debt. Estimates say the tax hikes will raise $600 billion over the next 10 years. Meanwhile, the debt is expected to grow another $8 trillion.

And that assumes that high earners won’t figure out a way to shield that income from the higher tax. Meanwhile, while most wage earners avoided a higher income tax, almost all will see their payroll taxes jump by 2 percent. That’s $500 to $1,000 a year in renewed taxes for many middle-class families.

That would be a painful but palatable hit if only something were done about the rising cost of providing government-funded benefits. But there has been no progress on this front, mostly because no one has any stomach for the fight.

Republicans are rightly concerned that Democrats will demonize them for stealing health care and retirement benefits from the poor and elderly. So they keep their talking points focused on meaningless cuts in the federal budget, while waving their no-tax-cut pledges in the air.

As all this theater plays out, the future of the nation’s children and grandchildren continues to be plundered for benefits that can’t be sustained.

A study by the Urban Institute, referenced by New York Times columnist David Brooks, says the average Medicare couple pays $109,000 in payroll taxes but receives $343,000 in medical benefits. Such a gap — and not payments to Big Bird, as the so-called business expert Mitt Romney fatuously suggested — is why our nation is facing a crushing future.

Obamacare is not the problem; nor is it the answer. The cost of medical care is going up faster than the system can sustain it. That obligation burdens our federal budget while Medicaid healthcare costs for the poor are pounding state budgets.

The solution isn’t easy. It will require hard decisions on the delivery of health care, which won’t happen if Republicans resort to health rationing scare tactics. It will require restructuring of benefits, but that won’t happen if Democrats ratchet up their scare tactics aimed at senior citizens.

Neither side seems willing to be the grown-ups. So, basically, they roared up to the edge of the “fiscal cliff,” peered over and then proceeded ahead, only pretending to change course.