Week Ending December 7th – Cliff Edition

This week we learned that nothing matters. Nothing. Not unless it’s about the Fiscal Cliff. Then it matters. Really, really matters.

Why?

Because serious people everywhere say so. And, as we all know or ought to know, serious people everywhere know what they’re talking about.

That the entire discussion is riven through with contradictions, errors, misconceptions, and lies, has no bearing. The Fiscal Cliff is all that matters. Unless we fix It the economy will plunge to its doom in a sea of red or black ink depending on which TV analyst you listen to.

Every aspect of other economic news is now interpreted through its impact on the Fiscal Cliff, or on how the Cliff affects it.

So the drop in consumer confidence is due to fears of the Cliff. The slowdown in hiring is because business fears the Cliff. Any hiccup on Wall Street is caused by market fears of … you know what. The entire universe is on deathwatch due to the great crisis about to engulf us.

Yes. The Cliff is a big deal.

Well not really. But that’s between you and me. Those of us who worry about the economy think the big issue remains how to jolt the economy from underutilization of resources back towards full utilization of those resources. We have an economy plugging along whilst leaving about 6% of its capacity idle. That’s a lot of wealth not being created. That’s a lot of lives going to waste. It’s an indecent and inhumane circumstance. It’s cruel. It is callous. But, since it doesn’t bear directly on the Cliff, no one cares.

The only reason we are talking at all about the Federal budget deficit and its impact on total government debt is because a few well financed right wing think tanks decided it was an issue. They created a campaign to get the attention of our nation’s elite, and succeeded beyond their wildest dreams. It was a brilliant marketing effort.

That the supposed crisis did not emerge from the state of our economy but from the imaginations of the think tanks is evidenced by the confusion that surrounds it.

Will going over the Cliff add or subtract from our debt? Both. It depends on the audience.

Will taxes go up? Or just tax revenues? What about tax rates? Will spending be cut? If so what? Does anyone have a plan to deal with the debt crisis anyway? A plan, that is, that doesn’t include anything that might hurt the elite. That seems to be important. Raising taxes on rich people or big business is a non starter. They generate jobs. It’s the  people who live off the job generators who ought to suffer. They add no value. Maybe they ought not be allowed to vote – that way they wouldn’t distort elections and the economy would be safe for job generators.

All of this has been discussed this week in one forum or another.

The muddle is such that no one now doubts the seriousness of the problem. Near panic is setting in. The situation calls for immediate action. And drastic action at that.

The Great Fiscal Cliff Caper, as I am sure historians will anoint it, is a shallow, venal, class motivated effort to prolong the hold of a few on the reins of our economy. There is no real basis for crisis. We do not have a debt problem and the majority of our deficit would fade away were we to address with any vigor the true problem: sluggish growth.

Greater growth would generate higher tax revenues. It would lower government spending by reducing crisis created transfer payments. And it would soak up our high level of underused resources. It would put in place a platform from which we could deal with whatever residual budgetary problems we imagine we have. Which apart from health care costs aren’t that many.

But, since our elite is largely unaffected by the lingering issues we have with slow growth, it is difficult for them to take it seriously. It is not, in their eyes, a serious issue at all. They immunized themselves during the crisis. They absolved themselves of blame. It wasn’t greed or shoddy banking. It wasn’t the accumulated effect of right wing economic policies. It wasn’t a market failure. It wasn’t a glitch in capitalism. It wasn’t deregulation. And it definitely wasn’t about inequality. No. It was about burgeoning government spending and reckless monetary policy.

They need to divert us from all this.

So they want to focus our energy on slaying mythical dragons. They whip up fear of hyperinflation caused by excessive money. Of – gasp – debt downgrades. Of excessive borrowing by poor people. Of – double gasp – the lack of affordability of entitlements. Yes. Those entitlements are the great satan. For if we are to afford to lug around all those dependent souls, that Romney 47%, we will have to tax the elite a little more. And that will cause such a ruckus at the polo club that we ought not do that. So let’s cut entitlements. The poor can afford it. The rich can’t.

But to do that we need to invent a crisis.

Let’s call it the Fiscal Cliff.

And the rest, as they say, is history.

It’s a lie, but if we all hold hands that lie can become a truth. No one must break ranks. The elite must discuss nothing else. Nothing else matters.

Not this week anyway.