The Fiscal Cliff: Don’t Panic, It’s Only Improbable
On Thursday evening, the House of Representatives cancelled their vote on Speaker John Boehner’s (R-Ohio) “Plan B” solution to the fiscal cliff. Boehner was unable to gather the necessary support from his party because of the tax rate increase on Americans earning over $1 million per year that was part of the proposal.
It was “certainly a victory for conservative principles,” said Tim Huelskamp (R-Kansas), about the failure of Boehner’s proposal. It “didn’t solve the problem but it avoids creating bigger problems, Republicans caving on core principles,” he told reporters, according to Bloomberg.
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His remarks seem punctuated with the hammering of nails into the country’s fiscal coffin. Core GOP principles are seeded in fiscal responsibility, but Huelskamp’s comments touch on what looks like a perversion of reason as America wobbles toward an austerity crisis. The difference between Boehner and many members of his party, it seems, is that the Speaker is willing to compromise on some of Republicans’ basic values for the sake of avoiding the impending fiscal cliff, which many believe could stall economic progress in the U.S., perhaps even leading to another recession. Meanwhile, hard-line conservatives not only appear unwilling to budge, but are taking pride in their unwavering position, making it appear unlikely than any proposal that would increase taxes will be accepted by the House.
If the same sentiment — that any concession is a violation of core principles — is echoed by Democrats, then the country could find itself falling over the fiscal cliff in a little over a week’s time. The markets have underscored the current chapter in Washington’s discourse by shedding over a full percentage point from the the major indices on Friday morning.
Where are we now, and where are we going?
The U.S. Department of Commerce recently issued its third estimate for third-quarter GDP growth, revising its previous calculation of +2.7 percent to +3.1 percent. Good news for an economy flirting with another recession, and particularly strong coming out of just 1.3 percent GDP growth in the second quarter…