"Grand Bargain" Not So Grand

Are you one of those who are caught up in these “fiscal cliff” negotiations?

Do you believe that the country’s financial situation is so dire and the prospects for a deep recession so grave that the two parties will certainly come to an agreement before the end of the year?

Do you believe that these negotiations will end with a bi-partisan agreement that will put the country on firm financial footing for the next decade?

If you are among those who share in this fantasy then prepare to have your bubble burst; because these “fiscal cliff” negotiations are only the beginning of a long and complicated process that will take months if not years to complete.

The president and Speaker are merely nibbling around the edges of what truly needs to be done to get our fiscal house in order.  They are trying to reach an agreement on a meager $4 trillion dollar/ten year package at a time when the country faces $88 trillion in unfunded obligations.  Even if they succeed in reaching this “Grand Bargain” there will be more work to be done.

And we are already seeing signs of their kicking the proverbial can down the road.

The latest word out of Washington is that the parties will agree to stop gap measures that will remove the “fiscal cliff” from the equation by pushing the time table to a date certain in the future…a sort of “Sequestration II.” For example they may raise taxes on the top 2% and freeze the rates on the middle class; thereby allowing the president to make good on his campaign promise.  In exchange Democrats will agree to a bazillion in spending cuts including a massive overhaul in entitlements if a compromise is not reached by a future date certain.  This will give Boehner the ammunition he needs to corral support within his caucus.

Bi-partisan compromise!!!!  Hooray for the country!

That is until that future date arrives and nothing has been done…again. 

Entitlement reform, tax reform, immigration reform, defense funding…these are extremely complicated issues that are the foundation of any substantive plan to fix our fiscal woes.  Yet nothing is being done.  These problems have existed for years.  Congress set the sequestration limits and dates to force Washington to make the hard decisions.  Yet here we sit…arguing over a 2% tax increase for the very rich…an increase that will have virtually no affect on our long term financial security. 

And now we are looking at the very real prospect of delaying these decisions again.

These ‘fiscal cliff” negotiations are not the end game.  They are merely the beginning.

Next stop…the debt ceiling debate in February.