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The Fiscal Cliff and why we can’t avoid it.

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The fiscal cliff is the expiration of the Bush tax cuts at year-end, just as $110 billion in automatic defense and domestic spending cuts — part of the 2011 debt ceiling increase package — kick in with the New Year. About that time, the federal statutory debt ceiling of $16.3 trillion will be breached as well.

Extend and Pretend

Extend the tax cut for a short period. Kick the can down the road on spending cuts. Roll out all the old accounting gimmicks we’ve seen before to put off reality as long as possible when the debt ceiling is breached. Patch together temporary extensions in the debt ceiling as the debates and standstills continue.

It is true that the so-called “fiscal cliff” is the convergence of a lot of things at the same time. But don’t for a minute think that Washington can do anything to keep us from going over the economic edge and plunging into the abyss below.

Because we have already gone over the cliff. One simple metric makes it clear …

In July the government released the gross domestic product numbers for the second quarter of 2012. The part of the story that didn’t make the evening news is this: The federal government added $2.33 in debt for every $1 increase in GDP.

Are you prepared for what is coming?

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Written by opinionoregon

August 31, 2012 at 2:30 pm