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Saturday, December 22, 2012

The Fiscal Cliff and the Art of War

Generally the one who first occupies the battlefield awaiting the enemy is at ease; the one who comes later and rushes into battle is fatigued. Therefore those skilled in warfare move the enemy, and are not moved by the enemy.

Getting the enemy to approach on his own accord is a matter of showing him advantage; stopping him from approaching is a matter of showing him harm. Therefore, if the enemy is at ease, be able to exhaust him; if the enemy is well fed, be able to starve him; if the enemy is settled, be able to move him; appear at places where he must rush to defend, and rush to places where he least expects.
With this fiscal cliff problem, we have no leverage, no way to move the immovable object known as Obama and the Democrats. With Obama intransigently standing in the way, it's no use yelling and screaming at him. He likes that. Either figure out a way to go around him, or failing that, just go back the way you came and wait for advantage. Getting impatient and caving is what Obama counts on. Don't do it.

People keep saying that elections have consequences, but I don't think they understand that elections have consequences! You voted for Obama, well goody for you, and hey, by the way, these are your consequences you mouth-drooling imbecile. Bon Appétit.

Words mean something. The problem is that they mean different things to different people. For instance the word "rich," is probably the most contentious word in the English language. It's completely relative to changing circumstance. To an Ethiopian I'm rich. To a billionaire I'm a pauper. Take for instance this hypothetical example:

A family of four wanting to purchase a modest home of perhaps 2000 square feet in San Francisco is probably going to pay upwards of a half-million dollars or more for that home. A basic rule of thumb for how much house a family can afford is anywhere from 150% to 400% of that family's annual income. Splitting the difference gives us CNN-Money's figure which is 250%. When you add in the higher cost of everything in San Francisco County, from taxes, to gasoline, food, entertainment, dining out, etc, a middle-class family of four hoping to live in a modest home in San Francisco would need to make enough money that it would fall under Barack Obama's definition of "rich," i.e. people who make more than $250,000 a year. Now then, here's the magic question: are they rich? Perhaps if they were living in Marion County, West Virginia they'd be rich, but they're living in San Francisco, California, and even a moron should be able to understand why that makes a difference.

There's been a whole lot of talk coming out of Washington DC about the fact that raising the tax rates on those individuals making north of $250,000 would hurt small business, and an equal amount of talk saying that it would only affect the top 2%. Depending on who you talk to you'll either find out that it will affect less than 3% of small businesses that pay individual rates, or you'll find out that these new higher marginal rates will hit the small businesses that employ half of the people that work in small business.

All of that back-and-forth bickering merely serves to obscure the basic fact that America is pretty much done for. America is just like that lucky family that won the lottery seven years ago. We got rich quick and started buying everything in sight: big house, fancy car, elegant furniture, expensive designer clothing, and on and on and on. When we suddenly realized we'd spent up our yearly lottery allotment, we went to the bank and borrowed against next year, and the next and the next. Now the bank wants its money and all we have left is lots of material things that aren't worth nearly what we paid for them.

America foolishly squandered its post-World War II windfall. We were able to get rich quick because after the biggest war in history, all the other developed nations of the world were forced to spend their time and resources rebuilding their shattered cities, while we were able to invest our time and resources in new factories, new skyscrapers, electronics and computer research, new airports, etc. For a couple of generations we had little to no competition. It was a seller’s market because we were the only store. And, just like that lottery winning family, we threw lots of parties. Look at Detroit and tell me it doesn't look like the aftermath of one wing-ding of a shindig! Profligacy became our way of life, and today there aren't many people left alive who can remember what it was like when it wasn't so easy, and none of those who can remember are in any position to change the direction we're going now.

America is that lottery winning family who's still got the banks thinking everything is fine because they haven't started talking amongst themselves, yet. But they will. At some point they're going to start putting two and two together. They're going to look at our GNP. They're going to look at our taxes and our debt. They're going to look at our unfunded liabilities and they're suddenly going to realize we're not a very good credit risk, at all! This is what rating agencies do, and even with the downgrade, they've been very lenient with us so far, but that won't continue. Solving our debt crisis requires a complete reworking of Medicaid, Medicare, Social Security, and now of course Obamacare. It also requires tough love to the corporations, banks, cities, and even states that’ve been living far beyond their means.

We all understand that a tax hike on the "rich" won't bring in enough revenue to change anything. Here's an image for you: Hurricane Katrina is here. The ocean is pouring through a broken levee and we're told to go fill some sandbags. What a pointless waste of time! It's too late for that. We should've made sure the levee was sound while the weather was nice, but of course that would've required work, character, foresight, initiative, all those things that Americans used to have, before we won the W.W.II lottery.

The thing that is the most amazing to me is this: the Democrats admit that raising taxes is just a gesture. It's a formality, a ritual performed for the sake of appeasing the masses. It will do nothing whatsoever to alleviate our debt burden and will in all likelihood put further recessionary pressure on the economy. The Democrats have drawn their line in the sand. They want "fairness" more than they want a vibrant economy. Fine. Here's my plan...plan C. We go over that so-called financial cliff. At some point there will come a day when again all the money is spent. And again Obama will say: raise the debt ceiling. At that moment Republicans will have the leverage to make some changes. Absent that leverage we look like the Washington Generals facing the Harlem Globetrotters. Of the three stooges, we're the dumb one.

It's a strange game. The only way to win is not to play. So they go over the cliff or whatever you want to call it. They go home and they wait for the moment to come when that vote to raise the debt ceiling is finally asked for. Then the fun begins. That's when the worm turns. That's when the Democrats get to taste some of that yummy medicine they've been prescribing. It will be a good day, a righteous day, a day to be savored with all the Schadenfreude sauce we can pour, because on that day, when they want to raise the debt ceiling we just vote no. No. NO! NO!!!

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