Tuesday, December 4, 2012

How About a Scenic Overlook?

I knew there was going to be a great deal of chatter about the deal that needs to be reached between Congress and the President concerning the fiscal cliff, and I must say the media hasn't disappointed me.  While there have been some talks between the President and Boehner to attempt to find common ground, the right and left wings of the two Parties, through their mouthpieces in the national media, continue to paint a picture of polarization.  What seems like a fairly straightforward compromise dictated by the results of the election, is being presented as bogged down.

The only way to solve this issue is for enough of our elected representatives to step up and realize there need to be cuts in spending and increases in revenue.  There is simply no other way to make the adjustments necessary now to avoid worse options in the future.  Some Republicans have hinted they are willing to abandon the Norquist camp and will consider some tax revenue increases.  Limiting itemized deductions for some taxpayers is the route they would take to increase revenue without raising tax rates.  The President continues to insist the election results dictate increased tax rates on upper income individuals.  This is one area where the common ground is quite obvious, but it seems like they can't get passed the semantics regarding increased revenue as opposed to increased tax rates.

I do feel there will be no mad cap plunge over the fiscal cliff, but rather the citizenry will have an opportunity to observe, from a scenic overlook, a country on the verge of enjoying a period of better growth, increased Federal revenue, more balanced spending as a percentage of GDP, a manageable debt level, and a restructuring of the various entitlement programs, if the politicians can reach a compromise.  Our forefathers had the insight to create a government with checks, balances, filibusters and other procedures designed to protect minority interests while reflecting the majority's point of view on most issues.  Compromise on issues important to the majority of citizens must be foremost in the minds of our government employees.  If they were to irresponsibly choose to plunge the economy over the fiscal cliff, we will survive, but the President's legacy will definitely pay the price.

Look for this drama to drag on until Christmas or the end of the year, with the media making a huge deal about each and every proposal and counter proposal.  This Congress will make just enough of a compromise, such as postponing some tax increases, delaying some of the more draconian cuts, or some other stop gap measure designed to take us to the edge, but not go into a free fall, until the next Congress can pick up the issue and hopefully reach the bargain necessary.  My hope is the markets are prescient on this issue and won't recoil at the end of December, providing another flat year for the indices, or worse!