INCREASINGLY LIKELY & DESIRABLE?
By: Henry Makow
As you know, the "fiscal cliff" is a $600 billion combo of tax increases and
spending cuts which will take effect in January, and lead to a recession.
There is no way to avoid going "over this cliff " except to tear
up the Budget Control Act and kick the problem down the road.
Even then, the GOP would have to agree to raise the debt ceiling.
One way or another, the Piper has to be paid. $600 billion has to be raised.
There are many ways to do this. Eliminating the mortgage interest deduction is an
obvious one. This deduction is unique to the US. A valued added sales tax is another
But there is no time for such bold action and both sides are digging in.
One way or another, an annual 600 billion will come out of the economy.
The debate is really over who will pay this bill: The people who voted for Obama or the
people who voted for the GOP?
Neither side will sacrifice their base so I predict that the fiscal cliff may look more
attractive as December 31 approaches. It is the only thing Congress has managed to agree
on so far.
Both sides appear to suffer equally. Both sides
can blame the other. The most egregious injustices can be addressed later.
The result will be a drop in the stock market and
precious metals, until people realize that the world has not ended. Then, it will be
pretty much business as usual with confidence in the US dollar restored. (See deficit
graph at right)