Déjà vu: fatal faceoff at the edge of the fiscal cliff

Obama's jobs speech 2011Ground Hog Day— “It’s déjà vu all over again”— it may feel like December, but we’re back to sweltering in the heat of last year’s mid-summer debt-ceiling crisis. The economy is limping slowly but surely forward, and the Tea Party Republicans are willing to jettison that progress.

Nobody likes or profits from the automatic spending cuts and stiff tax hikes of the Sequester, the everybody-gets-hurt bludgeon that Congress devised to ensure an agreement on the debt ceiling.

At the same time, they don’t seem to mind that their obstinacy will raise the taxes of every other working American. No. Republican zealots are adamantly refusing to sign any agreement that raises taxes only for the wealthiest 1.7 percent of all American households.

“There’s going to be a hit to people who don’t have much capacity to absorb a hit,” said Christine L. Owens of the National Employment Law Project. She continued

A lot of families are going to be in a bad place, not being able to pay their rent, or their mortgage, or their bills.

But that threat failed to terrorize Republican lawmakers. They haven’t heeded the warnings of economists who believe that their recalcitrance will precipitate another worldwide economic crisis, far worse than the one of 2008. (One of the consequences of their refusal to raise the debt ceiling in 2011 was the stock market’s nosedive as it lost 635 points in one day of panicky trading.) The drastic cuts to domestic spending and defense coupled with the tax hikes and the resulting loss of confidence of the financial markets would cripple the economy according to Chief economist of PNC Financial Services Group Stuart G. Hoffman. He believes

It would be a triple whammy … Actually, as many whammies as you could come up with.

Will Republican extremists continue to hold the nation hostage in open defiance of Obama’s reelection and the popular backing of his plan for raising income taxes on the very wealthy? Two days remain before that cliffhanger is answered.

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Filed under economy, Politics

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