Fiscal Cliff Deal: Why Failure is an Option

A good rule of thumb when writing about politics is to avoid topics that make you angry. For that reason, I have avoided writing about the fiscal cliff — until now. But, it’s nearly the beginning of a new year and as I write this, and it seems less likely than ever that the two parties are going to forge some sort of a deal; it appears that both of them are prepared to drive over the cliff like Thelma and Louise, with the America in the back seat.

At times like this, it is worth reminding ourselves that, yes, failure is an option. The problem is not partisanship; partisanship is no nastier than it was in the days that Lyndon Johnson implied that a Goldwater presidency would mean the end of the world or when Adams indicated that a Jefferson administration would outlaw the possession of Bibles.

But the government is much more dysfunctional today than it used to be. Usually, when circumstances like these arise, we ask who will be the winners and who will be the losers. The biggest losers in this fiasco will be the American people. Are you a millennial who makes just over $25,000? Congratulations, your taxes might be going up by as much as $1000.

Of the two parties, neither of them will be looking good in the morning, but my guess is that if they decide to go over the fiscal cliff, the Republicans will be the more battered of the two. This is primarily because, if taxes increase dramatically, it will appear that the GOP has lost any sense of practicality to avoid violating a theoretical pledge in even the most modest degree.

This isn’t to say that I believe raising taxes on people making above $400,000 a year (or on anyone, for that matter) is a wise policy. It is likely to slow job growth at a time when millions of Americans are already unemployed or underemployed. But the Democrats want some tax increase and it is probably better that taxes increase for the few than for the many. (Going over the fiscal cliff would also cause the estate tax to increase—a tax which is already notorious for destroying family businesses as it requires them to be liquidated rather than passed down.)

Even though the Republicans will be the real losers — making Democrats the de facto winners — this doesn’t mean that the American people will gain much confidence in the Democrats’ ability to govern, especially as the deficit continues to rise, in spite of tax increases. The rest of the world won’t win from this either; things are already bad enough in Europe and less disposable income in America means less consumer demand for Chinese and Indian goods. As for the developing world, an immediate 9% budget cut to the Pentagon will mean slower response time to international crises such as tsunamis, earthquakes or genocide.

Is there a winner from the fiscal cliff fiasco? It isn’t the Democrats or Republicans; it isn’t the American people; it isn’t the military, government employees, the private sector or the rest of the world. There is still some glimmer of hope, as reports emerge that a deal might be within reach. But if this doesn’t happen the only winners will be the dead.