Daley’s View: The Fiscal Cliff, the Grand Bargain, and the Great Fog of Unknowing

It is rarely helpful to use simple clichés when defining complex events –a lesson our media would do well to learn. For months the bloggers, political radio and television hosts, and pundits of all persuasions have been sending out an unrelenting stream of pabulum about the “Fiscal Cliff.” These are words designed to evoke images of horror and tragedy – plunging economies, failed systems, and mangled bodies. Surely the Fiscal Cliff must be a bad thing.

If you believe everything the media ‘reports’, the Fiscal Cliff is bad because it will take $500 billion dollars out of the economy and precipitate an economic crisis – unemployment will rise to 10 % and the GDP will retract. This will happen because spending by the government will decline.

This same media trumpets the “Grand Bargain” as a way of avoiding the dreaded Cliff. Surely something described as Grand must be a good thing. But is it?

The Grand Bargain will cut $4 Trillion out of government spending. Now, if you look at the notion that the $500 Billion spending reduction caused by the “Cliff” is a crisis and then compare it to removing $4 Trillion from the economy as being an imperative, you might, like me, be a bit puzzled.

If pulling $500 billion in government spending out of the economy will cause a crisis, what will pulling out $4 trillion do to the economy?

This puzzlement is amplified by the understanding that the Grand Bargain will be designed to reduce the national commitment to social insurance and the safety net for the poor and the elderly. Here are some of the “Grand” ideas:

  • Raise the Medicare eligibility age. This would not only endanger the health and economic security for those reaching 65, it would also merely transfer costs to the consumers and the states.
  • Reduce the CPI related increases for Social Security recipients. This has nothing to do with the deficit and really hurts women because they live longer and earn less.
  • Put per-capita caps on Medicaid benefits. This would harm the sickest and neediest among us. And it would create doubt about the future of Medicaid just as conservative Governors around the county have to decide whether to expand a program that undergirds the power of the ACA to perform for everyone.

By the way, it should be noted that while going off the Fiscal Cliff will harm many valuable and needed programs, it will not touch Social Security, Medicare, or Medicaid.

So what does this all mean? The media, pundits, and politicians like to use hyperbole, and their descriptions of the current budget crisis in DC are no exceptions. The truth is, the fiscal cliff is not really a cliff so much as a curb, and the “Grand Bargain” is not all that grand and would hurt seniors, women and some of our most vulnerable. There is little else that we really know at this point. So like many others, I glue myself to CNN broadcasts and wait for the latest rumors about the negotiations between the President and the Speaker of the House. And have not a clue about what is going to happen. But I have an uneasy feeling that it will not be good.

Bill Daley is the Federal Issues Policy Director at The Alliance for a Just Society.

 

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