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Let's Kill the "Fiscal Cliff" Instead of the Economy

Obviously, the fiscal cliff is stupid policy and economic poison.

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I’ve explained in a prior column how the fiscal cliff was created through an insane bipartisan deal in August 2011.  The fiscal cliff was always a terrible job-destroying idea that also began to unravel the safety net by cutting Medicare.  Everyone involved in creating the fiscal cliff acted irresponsibly and inhumanely in seeking to inflict austerity, cause a recession, and unravel the safety net.

What is forgotten, however, in discussions of the idiocy of creating the fiscal cliff is that it was part of a broader bipartisan deal intended to inflict even more self-destructive austerity and even greater damage to the safety net.  The fiscal cliff was an act of idiocy in pursuit of a policy of depravity called “the Grand Bargain” that was actually the Grand Betrayal.

The bipartisan madness has increased since the August 2011 budget deal.  Today, the parties are simultaneously screaming (1) that the fiscal cliff is a disaster because it imposes austerity and will cause a recession and (2) that it is essential that we agree to a Grand Betrayal that will inflict even greater austerity and cause an even more severe recession.  Indeed, the Grand Betrayal mandates austerity over a decade so it is likely to cause and/or deepen multiple recessions.  The Republican and Democratic variants of the Grand Betrayal are doubly destructive and inhumane because they cut the safety net.  President Obama wants to begin to unravel the safety net and cut social programs even though an overwhelming majority of Democrats oppose it and even though doing so will inflict even greater austerity.  That will cause a deeper recession and likely make the deficit larger, so it is as nonsensical as it is cruel.

During this this entire financial farce I have been unable to get the dominant media to make the most obvious point.  Since we all agree that austerity (the fiscal cliff) is a terrible idea that will cause a recession and likely increase the deficit we must logically conclude that all variants of the Grand Betrayal are austerity programs that must be defeated in order to prevent a recession that is likely to increase the deficit.  We should all be opposing any cuts in the safety net because they would inflict austerity.  An overwhelming majority of Democrats and a majority of Republicans also oppose cuts in the safety net as inhumane.

So why don’t the Democrats and Republicans stop trying to do a deal that will inflict austerity?  Why not simply repeal the Budget Act of August 2011?  That would kill the fiscal cliff.  Repeal would kill austerity, prevent the recession, save the safety net, increase growth, and shrink the deficit.  All versions of the Grand Betrayal (Republican and Democratic) inflict austerity, are likely to cause a recession, begin to unravel the safety net, destroy growth, and increase the deficit.

Under the same logic we should be able to agree on two related actions – renew the extension of long-term unemployment compensation and renew the moratorium on collecting the payroll tax.  These policies are superb counter-cyclical programs and have the added advantage of reducing human misery and inequality.  Republicans and Democrats have agreed in the past on the desirability of both actions.

William Black is the author of The Best Way to Rob a Bank Is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as executive director of the Institute for Fraud Prevention, litigation director of the Federal Home Loan Bank Board and deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.