The Fiscal Cliff is a slang term conceived by Ben Bernanke for the Budget Control Act of 2011. Why would anyone be against much needed budget control for the United States? Rather, why would anyone be for an out of control Budget legislation? Regardless, the Budget Control Act of 2011 was APPROVED and SIGNED INTO LAW by President Obama in August 2011 to end the Congressional battle over raising the government debt ceiling. The Act was a compromise between Democrats and Republicans on economic policies while temporarily increasing the debt ceiling. They agreed to implement by law, if no other deal was reached before Dec. 31, massive government spending cuts as well as tax increases. For the middle class taxpayers of America, this reality makes up the Fiscal Cliff. So much for campaign promises.
Here is the problem with the U.S. budget. A silent monster looms menacingly over U.S. government finances and grows larger every year. Politicians know about it, but very few of them ever want to talk about it. The name of this monster is "entitlements" - Social Security, Medicare and other social Ponzi schemes that the U.S. government has locked itself into funding. Why are these entitlements under fire? It is the baby boomers. Starting in 2011, TEN THOUSAND baby boomers celebrate their 65th birthday every day and the trend continues for the next TWENTY plus years. Those who have closely analyzed this monster all seem to agree that one day it will create a Financial Tsunami of a magnitude that is absolutely unprecedented, but there is vast disagreement about how to escape this Financial Tsunami or if it is even possible to escape it. Yet, here we are.
We most often hear about the alarming $15.96 trillion national debt and the 2012 budget deficit of $1.1 trillion (Fiscal Cliff). As dangerous as those numbers are, they do not begin to tell the story of the federal government's true liabilities. The actual liabilities of the federal government—including Social Security, Medicare, and federal employees' future retirement benefits (Fiscal Tsunami)—already exceed $86.8 TRILLION (according to an article by Mr. Cox, a former chairman of the House Republican Policy Committee and the Securities and Exchange Commission, is president of Bingham Consulting LLC. Mr. Archer, a former chairman of the House Ways & Means Committee, is a senior policy adviser at PricewaterhouseCoopers LLP). For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion.
By 2020, these entitlement programs will be up around 100 cents of every dollar of federal revenue. That means the interest on the debt and spending on entitlement programs will eat up everything the U.S. government takes in before a penny is spent on anything else (according to a report by the nonpartisan Government Accountability Office). It would be hard to understate the seriousness of the problem that entitlements present.
This Budget Control Act of 2011 is not nearly enough. In reality, that would amount to bailing out the Pacific Ocean with a tablespoon. Frankly, it is hard to imagine any responsible argument for uncontrollable 2012 budget spending of funds we simply do not have. Therefore, we have only two possible outcomes, Fiscal Cliff or Fiscal Tsunami. The Cliff is not enough and the Tsunami is more than we could possibly bear. Neither of which is acceptable for the country to achieve any kind of financial recovery. It is, by any stretch of the imagination, a recipe for national financial suicide. This established order is not working.
Excerpt from For Our Children:
“You want to cut government spending and
raise taxes,” Brian said.
“That’s never worked,” President John
Henry pointed out. “We have to increase revenue and cut expenses for the
American people, the Middle Class. Increase their incomes and reduce their cost
of living.”
“Turnaround the Middle Class,” Brian
questioned.
“In simplest terms, we’re drowning in an
ocean of credit card debt and we can no longer make our minimum payments. Much
like many Americans, this too is our enemy. Of course, we could get more credit
or print more money to prolong the end. Either way nothing is fixed, nothing
has changed. We have mortgaged our future for the greed of today. We must think
and act anew, then stand firm. We will reinvent our system, economy, and our
lives because this established order is not working,” President John Henry
said.
