Just More Political Noise

Are you tired of hearing about the “Fiscal Cliff?”

So are we…especially since it doesn’t really mean anything in terms of the country’s fiscal solvency.

Here’s why!

Since the November election all that we have heard is that the president wants to raise taxes on the wealthiest Americans and that Republicans do not.  This ideological argument has overwhelmed the news cycles for weeks.  The truth is that the raising of taxes by 2-4 points on 2% of the country is as infinitesimal as a pimple on an elephant’s ass in terms of the real fiscal problems facing this country.

According to economists, the United States of America currently has $88 trillion of unfunded liabilities and no idea whatsoever of how we are going to pay for them.  Our funding mechanism, the tax code, is subpar at best and ill equipped to meet the challenge of the burdensome debt. 

Congress likes to say that our debt to GDP ratio is 65%; good when compared to other industrialized countries.  But unlike other countries we don’t factor in the debt accumulated by state and local governments.  When we do, our debt to GDP ratio rises to dangerously unhealthy 120%.  Not good!

Economists say that the only way to make any headway toward true solvency is to reduce the debt by $9 trillion over the next ten years.  Yet our elected leaders can’t find common ground on even $2-$4 trillion in debt reduction for fear of losing their jobs come next election.

We hear all this talk about taxes yet the root of the problem lies within the sacrosanct social programs of Medicare, Medicaid and Social Security.  Any discussion about long term fiscal security that does not take in “entitlement reform” is a waste of time.  And to those who say that Social Security doesn’t add one penny to the debt and deficit…while that is true, Social Security DISABILITY is an obligation that will run out of money in two years.

The fact is our political leaders don’t really give a damn about the debt and deficit.  If they did they would allow the sequestration tax increases and spending cuts set for 12/31 to roll into effect.  While these measures would slow the economy and have serious consequences for millions of Americans they would be a major step on the road to fiscal solvency.

While we are not advocating that Washington take this course of action,  it should be noted that it is tough measures like this that are eventually going to be required if we are serious about putting  our financial house in order.

All this hand wringing about taxes is just political noise.