Now that it appears more likely than ever to happen, can we please stop calling Sequestration the "Fiscal Cliff"--and give a more accurate moniker--like the "Great Reality Check"? I ask this because on January 1st (barring a Hail Mary play by the President and Congress) Americans--for the first time in decades--will actually have to pay the true cost of their Government.
Washington DC has existed in a fantasy world for years--where spending increases did not have to offset by equal revenue increases--or at least guaranteed revenue increases. There is a cable program called "Til Debt Do Us Part" where this Canadian woman comes in to help couples who have buried themselves in mountains of credit card debt, mortgages and extravagant spending habits. Her first step is to always show the couple what they actually make and how much they spend--and how unsustainable it is. Call it a "Reality Check". She then whips them into shape by ditching the credit cards, cutting back on their spending and encouraging ways to increase income. Well today, we Americans are the "Couple In Debt" and Sequestration is the "Canadian Woman".
For those that get paid on a weekly basis, your slap in the face will come with your January 4th paycheck--as the Bush Era Tax Cuts your have enjoyed for the last ten years or so are gone--along with the Obama Era Payroll Tax Cut which will boost your Social Security and Medicare withholdings. The rest of us will get our reality check on January 15th. But as your anger builds, please keep in mind that we are only being asked to pay our REAL "fair share"--because Sequestration does not add anymore to the federal deficit. In fact, it will reduce the deficit by a TRILLION DOLLARS over the next two years!
Which brings me to another point. Failure to avoid Sequestration is being seen as failure of bi-partisanship and compromise. But when you really look at what is going to happen, it appears both sides accomplish something that they wanted. President Obama and Democrats get the tax increases they wanted (granted, they are on all workers--and not just the small minority of people they really want to punish) and Republicans get spending cuts and deficit reduction (however, the cuts also include military spending and corporate subsidy programs).
Theoretical Economists (aka Keynsians) tell us there is absolutely no reason for the US to face reality. They are the ones calling for continued business as usual in Washington: Spend whatever you want, borrow whatever you have to and keep pushing the repayment as far into the future as possible. Unfortunately for them, that little fantasy world is going to collide with reality on January 1--unless of course, those who need to continue the fantasy to keep their jobs on Capitol Hill panic--and sell us all out again.