Tuesday, November 13, 2012

Fixing the Fiscal Cliff

Unfortunately the moniker “Fiscal Cliff” itself projects visions of the U.S. as Wile E. Coyote discovering on January 1, 2013 that the ground is no longer beneath his fast-spinning feet. Cut the camera shot to his crumpled mess lying on a much lower level than where he started.

Not solving the economic mess encompassed by the fiscal cliff (automatic tax hikes and across-the-board cuts) won’t be that quick, and it won’t be that disastrous. But it won’t be good. Unlike Wile E. who is A-OK after the commercial break, the US economy will not recover for a long time if all those tax policies and spending cuts stay in place for any length of time.

Other commentators have suggested a middle ground between Obama’s higher taxes on the rich and Boehner’s no increase in tax rates. I’ll leave it to them to figure out the how; I am going to postulate a world in which we avoid the insanity of the current stalemate. Then what?

My suggestion focusses on avoiding the next fiscal debacle brought to us by the children we elect to run the country. When I was young and had an allowance, I had to earn it. I had certain chores, and if I didn’t complete them I didn’t get my allowance.

The U.S. Federal fiscal year begins on October 1. If we do not have an agreed budget in place before that date, Congress has not done its job. If they have not done their job, they should not be paid. Congress has not approved a budget for this fiscal year, 10/1/2012 – 9/30/2013; that’s why we have the fiscal cliff problem. The first thing the lame duck Congress should do is pass what I am calling “The Pay for Performance Act of 2012.” Then they should pass a budget, because until they do, they will not be paid.

To be clear, by “budget” I do not mean a budget resolution. I do mean passing all of the appropriation bills required to implement the budget resolution. It’s the deed that counts, not the name.

If the budget calls for a deficit, then the debt limit must be raised. It is lunacy to agree on a budget but vote against increasing the debt ceiling to implement that budget. However, I have no confidence that the boys and girls of Congress will get their act together simply because they aren’t being paid, so when they do finally pass a budget that calls for a deficit, the debt ceiling should automatically be raised to also cover an equal amount for the next year. That will avoid the artificial constraint of facing another debt ceiling crisis should they not agree on a budget by October 1.

There are many other things I would like to fix with how Congress does business, but if they give me this one, I promise not to make other demands for one election cycle. If they don’t… well, that’s what future blogs are for.

~ Jim