EagleTribune.com, North Andover, MA

January 6, 2013

Column: Fiscal problems remain just as daunting

Taylor Armerding
The Eagle-Tribune

---- — How about those U.S. Congresspersons? They didn’t quite keep us from falling off the fiscal cliff, but they caught us before we hit bottom, right? And how about President Barack Obama, who routed the Republicans, getting more than enough of them to violate their pledge not to raise taxes?

Happy days are here again. The rich are finally going to pay something like their fair share, although anything that leaves them with a penny more than I have still isn’t really fair – at least that’s the impression I get from my benevolent president.

Obama stood in the breach and protected us from Republicans getting their grubby government hands on our divine right to endless unemployment benefits and any reduction in our divine right to endless increases in Social Security and Medicare.

Celebrate! Celebrate! Dance to the music!

Except, uh, might not be too wise to raise a glass of bubbly just yet. There are still these troubling little realities we have to deal with sometime – not now, of course – now is never a good time to talk about taking responsibility for anything. But sometime not too long from now, if we want to avoid some all-out generational warfare, we are going to have to talk about them.

First, allegedly averting the “fiscal cliff” solves nothing. The whole thing was really just a lot of self-generated political theater by the president, Congress and Fed Chairman Ben Bernanke, who is credited with coining the term. There was no cliff, unless you think returning to the tax rates that existed under President Clinton – which Democrats insist was practically a utopian decade – would be a national calamity.

The problem is not a cliff. It is a growing avalanche of debt. It doesn’t wipe anybody out at the start, but when it gains a critical mass and a head of steam, it can be lethal, to individuals, families and yes, societies.

How is $16 trillion and growing for some major critical mass? How is $4 trillion in debt accumulated under President Bush in eight years and Obama adding another $5 trillion-plus in just four years for gaining a head of steam?

Remember all that talk by the president about “investing” in our future and “paying down our debt in a balanced way”? Well, the “investing” part – the preferred euphemism for increasing spending and the size of government – is happening. But paying down the debt? Not so much.

The word from multiple analysts is that the deal just adopted by Congress (and signed by the presidential auto-pen) will add nearly another $4 trillion to the debt over the next 10 years. I’m not much of a fan of these “over-the-next-10-years” numbers – why not just say $400 billion a year? But either way, the debt is expected to grow by another $1.6 trillion by the end of Obama’s second term.

That’s not paying down the debt in any way, balanced or not. And it will likely be worse – much worse – than the predictions if Obama’s “investments” continue unabated and voters keep believing the fantasy that just sticking it to the rich can pay for it all.

One reason is that not all the rich will be required to “play by the same rules,” as the president is so fond of saying. The last-minute deal will continue tax breaks for the wealthy who happen to be involved in things like green energy, NASCAR tracks, rum distilleries and film and television production.

Another reason is that the rich – even the allegedly liberal rich – respond to economic incentives pretty much just like that greedy, rapacious conservative Mitt Romney.

Conservative columnist Michelle Malkin presented a short irony list recently. In December, Internet search giant Google, a major Obama supporter, shifted nearly $10 billion in revenue to a Bermuda shell corporation to avoid taxes. CEO Eric Schmidt defended it by saying, “It’s called capitalism.”

The Washington Post, one of the major public relations organs for the president’s call for higher taxes on the rich, distributed $70 million in dividend payments early, so its rich shareholders could avoid higher taxes.

And we’ve all heard stories about pro athletes arranging to get a much bigger chunk of their compensation in 2012, to avoid the 2013 tax hit.

Now add to those prominent examples all those who can afford to hire the best accountants to find the loopholes that the president and members of Congress claim they want to eliminate, but somehow never do, and it is doubtful that the $600 billion expected from the rich in the next decade will actually materialize. Congress could make the rates 90 percent on the rich, but if the loopholes remain, nobody will pay that.

Finally, there has so far been no agreement to cut spending. Supposedly that will be taken up in a couple of months – more than enough time for every interest group to line the halls of Congress to demand that everybody but them be forced to sacrifice.

You pretty much know how that’s going to turn out.

So, all the talk in the wake of the Newtown, Conn., slaughter about how precious our children are to us rings a bit hollow. We’re buying now, so they can pay later. When they grow up and face the debt we’re piling on them, they’ll know we were just blowing smoke.

Taylor Armerding is an independent columnist. Contact him at t.armerding@verizon.net