More on Archaeology and the Looming Fiscal Cliff

The Archaeology in Tennessee blog offers a series of opinions about American science, archaeology, and the looming fiscal cliff.  These opinions assume that you have read our previous post on fiscal cliff issues and know at least some very basic facts about why we are in this national economic calamity and why we are in danger of an economic tumble.  The opinion points are as follows:

1)     Any deal between President Obama and Congress to avert a tumble over the fiscal cliff will require compromise between Republicans and Democrats. President Obama is willing to compromise by reducing some entitlement spending. However, the degree to which Congressional Democrats are willing to go along with the specific entitlement compromise he has in mind appears to be unclear at this time.  The President would be open to eliminating some federal tax deductions to raise revenue, but he is unwilling to compromise on the need to raise additional revenue by eliminating the George W. Bush tax cuts only for individuals making $200,000+ per year and married couples making $250,000+ per year, which he defines as the wealthiest Americans. The soon-to-expire Bush tax cuts would be reinstated for individuals and couples making less. During the just completed election cycle, he made a campaign promise to raise taxes on this group, and polls indicate that a vast majority of Americans (~ 67 percent) agree with him on this.  He would also like to raise tax rates on the wealthiest Americans to bring in additional revenue, but it has been indicated that he may be willing to compromise on the specific tax rate increase numbers.

2)     Republican John Boehner (Speaker of the U.S. House of Representatives) and house majority leader would like to raise revenue primarily by deep budget cuts in government programs, particularly entitlement programs such as Medicare.  With regard to the George W. Bush tax cuts that are set to expire next year, he wants to reinstate these cuts for all individuals and married couples, regardless of their income levels.  However, he too recognizes the need to raise new revenue so our nation can pay its huge bills, and he has offered to compromise on this issue by eliminating existing federal income tax deductions and loopholes.  He is unwilling to raise tax rates on the wealthiest Americans.

3)     Items 1 and 2 above stake out the baseline positions of each side.  The old saw says that “the devil is in the details.”  Unfortunately, for these two opponents and the American people, the devil is also in the gamesmanship, and a high stakes poker game is being played here, so let us examine the nature of the game.

4)     Back in the 1980s, an American lobbyist by the name of Grover Norquist arrived on the political scene in Washington, D.C. and started an organization called Americans for Tax Reform.  Mr. Norquist believes that the federal government is way too large, and he wants to cut it down to a much smaller size.  One way to do that is by choking it nearly to death.  This means cutting off the air (i.e., money supply) that allows it to breathe and thrive.  Many years ago, Mr. Norquist came up with an idea about how to do this. Have every Republican running for Congress and every incumbent Republican Congressman sign a pledge to their constituents that they would never raise federal taxes—no matter what.  He rightly judged that he could become one of the most powerful unelected persons in Washington, D.C. by holding on to those signed pledges and later using them to publicly threaten any Republican Congressman who showed any signs of deviating from the pledge in future years.  How does this sound: “Mr. Republican.  If you vote to raise even one federal tax after signing this pledge, be it 1 year from now, 15 years from now, 50 years from now, or 75 years from now, Americans for Tax Reform will work against you in the next election and ensure that you are defeated.”  It is our understanding that Mr. Norquist and his organization have sufficient funding and clout in conservative circles to do just that—and most Republican Congressmen are frightened to death by this man and what he can do to them if he so chooses.

5)     Mr. Boehner is unwilling to compromise with President Obama to raise taxes on the wealthiest Americans because he has signed the Norquist pledge and so have most of the other Republican Congressmen (U.S. Senate and U.S. House of Representatives). Figuratively speaking, Mr. Norquist has a loaded gun cocked and pointed right at their heads.  When politicians are in this position, one of their classic game plays has been to exit the situation by playing clever word games—semantics.  Mr. Boehner attempted to do this by offering Mr. Obama his compromise to eliminate federal tax “deductions” and “loopholes” rather than overtly and openly raise taxes.  For example, if the citizen tax deduction for home mortgage interest is eliminated, the federal government gets to keep the money it would have otherwise given up to a homeowner.  It is a clever way of raising taxes without actually using the two words “raising taxes.”  Mr. Norquist then stepped in and told Mr. Boehner that the clever word game would not work and that the pledge to never raise taxes—ever again—no matter what—includes never eliminating deductions and loopholes.

6)     If that were not enough to contend with in forging a sensible compromise, Mr. Boehner has to contend with the Republican Tea Party members in the U.S. House of Representatives and other ultra-conservative Republican house members who are in sympathy with them.  Even if Mr. Boehner personally and desperately wanted to work with Mr. Obama to achieve a reasonable, win-win compromise agreement, the Tea Party people (who have always worn their ability to be unreasonable as a badge of honor) would be unlikely to cooperate with Mr. Boehner and vote for a compromise bill to save us from the fiscal cliff.  To make matters worse, many of them are “Bible-believing” religious zealots who earnestly believe that President Obama and the Democrats are evil in the deepest religious sense.  In their particular view, the Bible teaches them that one must never compromise with evil—not even on the tiniest of points.  Instead evil must be vanquished and destroyed, even if great sacrifice (like flushing the United States down an economic toilet) is necessary to achieve it.

7)     Compromising with President Obama and the Democrats would be hard enough even if we lived in less partisan times, but Boehner’s own people have cornered him into a nearly impossible position with regard to any sort of reasonable compromise.  However, to be fair about this, a certain amount of clever gamesmanship is also underway on President Obama’s end of the court, so we will now take a look at it.

8)     From a pure negotiation standpoint, the Democrats have the upper hand in several different ways.  President Obama was re-elected by the popular vote and a landslide in the Electoral College.  The Democrats retained the U.S. Senate and added to their majority.  In case you have not noticed, that is at least two-thirds of the federal government.  This gives them what the pundits refer to as “political capital” to wield power as if they owned the government.  Furthermore, the American people, as mentioned earlier, are in favor of increasing taxes on the wealthy and renewing the Bush tax cuts for the middle class—and by a wide majority.  This further bolsters the bargaining power of the Democrats and their ability to win the compromise game, and that may be the key factor.  However, hearkening back to The Lord of The Rings, the Democrats believe that they already possess within their hands the master ring that controls all of the other rings, including the ones the Republicans own.

9)     If the Republicans in Congress fail to come to a reasonable compromise with the Democrats and the nation falls off the fiscal cliff in January, the Bush tax cuts will be automatically eliminated for ALL Americans. The Democrats can then reasonably argue that the entire Republican membership of the U.S. Congress broke their Norquist pledge to the American people—not just a little bit—but in a massive and totally irresponsible conflagration that hit every American family hard and plunged the entire nation back into the Great Recession.  They can make it stick and stick tightly, and they can campaign on it to win back the entire U.S. Congress in the 2014 election.  National polling is already showing that failure to avoid the fiscal cliff, and the ensuing precipitation of another national economic disaster, will be squarely blamed on the Republicans in the collective American mind.  The Democrats see this as their “Big Chip” in the poker game, which is one reason they are less likely to compromise and more likely to press for a win over the Republicans on the fiscal cliff issue rather than a win-win compromise.  If the Democrats get a reasonable compromise, they win.  If the nation goes over the fiscal cliff, the Democrats still win big anyway and can easily hang the albatross of blame around the necks of Congressional Republicans.

10)     President Obama’s ability to compromise on cutting entitlement programs may be limited by his own party in the U.S. Senate. Some reasonably limited compromises involving obvious programmatic waste and inefficiency are possible, and they will probably go along with that in support of Mr. Obama.  The profoundly deep entitlement cuts that the Republican members of Congress want would be a game stopper for the Democrats and probably most of the American people.  For the Democrats, no compromise is possible here beyond a certain limited point.

11)     After examining the situation in some detail, the Archaeology in Tennessee blog has concluded that no Congressional compromise will occur by January 2, 2013, and we have a greater than 90 percent chance of tumbling over the fiscal cliff.  What does that mean?

12)     It does not necessarily mean that the fiscal cliff argument and an attempt to compromise are all over.  Some are now calling it the fiscal slope rather than the fiscal cliff, meaning that we get to roll slowly into oblivion rather than plunging headlong into it.  At any time, the U.S. Congress can undo the whole fiscal cliff matter with simple majority votes to stop automatic deep budget cuts, reinstate the Bush tax cuts, or strike a compromise with the Democrats.  Our economic world does not have to be turned on its head immediately after New Year’s Day or on any other day.  The madness can be stopped.

13)     In the absence of an annual federal budget appropriation, the continuing resolution that is now funding federal government operations will continue in effect until sometime in March 2013.  If we do go over the cliff or begin rolling down the slope on January 2, 2013, current research funding for archaeology and its associated jobs will probably be safe for another few months beyond that date.  If the draconian budget cuts that are set to go into effect automatically actually go into effect, along with the death of the Bush tax cuts for everyone, all bets are off beyond March 2013. The federal government would no doubt continue to operate under another continuing resolution passed by the U.S. Congress, but it would be one with lesser funding and more limited scopes of work.  Jobs would be lost. Some archaeological field assistants, field technicians, and laboratory technicians will likely be leaving the nomadic road to go live with mom and dad.  Some museum and university research faculty may be looking at salary reductions or the loss of their jobs.

14)     One thing we have not seen addressed in other media venues is the fact that a rescue from the fiscal cliff, be it in January 2013 or August 2013, will not be a win for the American people or American archaeologists.  The fiscal cliff may be portrayed as a looming economic disaster, but even a reasonable compromise to avoid it will still mean significant losses in federal funding for scientific research, including archaeological research.  The whole point is the need to eventually balance the federal budget, and that cannot be accomplished without pain.  If the fiscal cliff can be viewed as sudden death, any reasonable compromise that avoids it will still be a slowly progressing, long-term, and very painful illness that we will all have to endure as best we can.

15)     Another thing we need to consider is whether falling off the fiscal cliff really is clandestine “Plan A,” and no compromise Plan A was ever intended, and all of this political squabbling is just political theater, sound and fury signifying nothing.  Anyone with an ounce of common sense knows that a compromise to avoid the fiscal cliff will not raise the large amounts of money needed to balance the federal budget and pay off our $16 trillion national debt.  The $ 2 trillion – $4 trillion range of anticipated savings over 10 years from a compromise is nowhere near enough money to rectify matters.  It is only a beginning and a rather paltry one at that.  If we do go over the fiscal cliff, everyone would pay more taxes and deep budget cuts would go into effect.  More money would be raised in that way.  With the public already angry at politicians because of the tumble, it might actually become easier over time to raise taxes to levels that would really put a dent into the national debt.

16)     Finally, we need to consider one other possibility.  Some say Congress continues to borrow money and increase the national debt because our politicians cannot summon the political will to do otherwise.  However, if you look at this group of men and women, you find highly educated people who have earned millions of dollars in private business and various professions. These are articulate, highly educated, and very skilled people who easily balance their own checkbooks at home and down at their private businesses.

In many instances, they seem to be oblivious to running up our national debt, even casual and nonchalant about it.  One side of the aisle never saw a $3-trillion war it did not like.  The other side of the aisle never saw a $3-trillion government program it did not like.  In normal times, either side would jump at the opportunity to spend that money on their pet projects.  The only time they seem to care about it is election time.  A year or so after the election ends, the issue fades from their memory, expenses come up, and the tab is paid with borrowed money.  What could make intelligent, responsible business and professional people behave that way about the national debt?  We can think of only one thing that makes any sense at all.

The United States of America has no intention—none whatsoever—of paying back that $16-trillion national debt, $25-trillion national debt, $50-trillion national debt, or $100-trillion national debt.  Congress can borrow and appropriate money like it is going out of style because it really is going out of style.  They plan to borrow until no one will lend us money or buy our bonds.  If any foreign nation tries to collect the principal that is owed them, we will just escort the “repo” man to the back room and show him the 7 megaton nuclear warhead enema his country is going to get if it does not conveniently forget that the debt exists.  “Debt?  What debt?”  That is precisely why government finances are not exactly the same as your personal finances at home.  We think the real plan is:  Borrow and never pay back.

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