At IPI we’ve written recently about not only the fiscal cliff that is facing the country in just a few weeks, but also about the “entitlements cliff” that makes the fiscal cliff pale in comparison.
In short, the question posed by the entitlements cliff is “Who is going to pay for $2.2 trillion in entitlement spending on 120+ million recipients each year?”
We’ve even written about the “health care cliff” that, on January 1, raises Medicare taxes AND cuts reimbursements to Medicare providers by a whopping 27 percent.
Between Obamacare, expanded spending on welfare and food stamps, and other programs, the effect of President Obama’s first term was to multiply our existing economic perils, rather than reduce them.
The result is that today almost every dollar of federal revenue is going toward transfer payments and interest on the debt. In other words, all the normal “governing” functions of government are being paid for with borrowed money. This is the definition of unsustainable.
Either government spending must be significantly reduced, or enormous new sources of revenue must be located. President Obama has certainly demonstrated no interest in cutting government spending, and it’s well established that raising taxes on high income earners won’t make a dent in the level of revenues needed to shore up the country’s finances.
Royalties from energy exploration on government lands could be devoted toward our fiscal problems, but the Obama administration has restricted, rather than liberalized, exploration on government land.
The election was an opportunity for the American people to pull back from the abyss formed by all of these “cliffs” we face. But instead of stepping back from the abyss, it appears that the American people have decided take a step closer, lean forward, and gaze into the abyss.
But, as Nietzsche said, “If you gaze long enough into an abyss, the abyss will gaze back into you.”
That’s what some of us are afraid of.
November 7, 2012