There Will be a Deal: We'll Never Reach the Fiscal Cliff, And It Wouldn't Matter If We Did

Forbes ^ | 11/18/2012 | John Tamny

[SeekAndFind]

Supply-siders and Keynesians don’t agree on much these days, but when it comes to the alleged “fiscal cliff”, both sides are in agreement that jumping off this ledge would bring tragic economic consequences. Though a strong believer in supply-side principles, I believe even more strongly that conventional wisdom is nearly always wrong. It’s wrong here.

Before getting into why the grand assumptions surrounding the fiscal cliff are ridiculous, it’s best to explain why we’ll never reach this ranch-style house “plunge” onto soft ground. We won’t because the incentives that drive politicians ensure a deal.

That’s the case because with the economy still limping, very few politicians will want to be on record as having voted to raise rates of taxation. Every member of the House of Representatives is up for re-election in 2014, a third of all senators are, and with an eye on re-election they’re not going to vote for large tax increases. At best with taxes, they’ll compromise: lower rates in return for a reduction in economy-distorting tax loopholes.

Considering spending, though it nearly always occurs at the expense of growth, politicians exist to spend our money. That’s what animates them, and it’s true irrespective of party affiliation. The spending of the money of others is to politicians what oxygen is to the rest of us. Because spending is breath to the political class, there’s no way they’d ever allow automatic spending cuts or, “sequestration.” Repeat after me, we’ll never jump off of the “fiscal cliff”, and breathy commentary suggesting we will is written by writers who haven’t a clue about human nature.

Turning to why supply-siders and Keynesians alike are so fearful of the “cliff”, that’s easy too. For Keynesians, they’re deluded by the false belief that government spending is an economic stimulant.

[ZULU]

Well, the fact of the matter is the public WANTS COngress to cooperate - both parties. If the GOP goes along with Obama’s plans, they will be tarred when they inevitably fail.

If they OPPOSE Obama’s plans, they will be attacked by the media AND the public for failing to cooperate with the Dems and being “obstructive”.

I think my solution allows the maximum pain to be inflicted - fiscally - by this nutjob and his accolytes and accelerate the inevitable collapse which will flush them out of power.

You see, I believe they CAN’T succeed with their fiscal philosophies. They have been tried in Russia, Greece, Great Britain, France, etc and FAILED.

So, LET THEM FAIL.

[sefarkas]

The same human nature that said anyone who voted for McCain would not vote for 0bama. Be wary of folks who speak with such certainty about human nature.

[aimhigh]

The voting public will never feel compelled to reduce Federal spending until they are forced to pay their share.