That’s what Mark Vitner told members of the Rotary Club of Columbus. He is the Chief Economist for Wells Fargo. He says if we define going over the fiscal cliff as an increase in taxes and less government spending, it’s definitely going to happen.
He doesn’t think, however, that it will throw us into a depression, and, after the speech, he told me that the bottom line is that things will get better next year economically, but not by much. The big problem,he says, is uncertainty. Businesses don’t expand and hire more people when there is uncertainty.
From what I have been reading and hearing on television, that uncertainty will only come close to ending when the president and Congress reach a compromise over how to raise revenues and cut spending. The president wants Congress to go ahead and vote to let the Bush tax cuts stay in force for those making less than $250 thousand a year. The rest of the details, such as what to do about increasing taxes on the wealthiest 2 percent, can be worked out later.
A lot, certainly not all, of wealthy Americans are agreeable about paying more taxes. A prime example is billionaire Warren Buffet. He thinks they should be raised on Americans making between $500 thousand and $1 million a year.
Republican leadership is sticking by its demand that the tax cuts remain in force for everyone, including the top two percent, but there are now some legislators saying their of oath of office trumps their oath to Grover Norquist , who has turned out to be a very powerful lobbyist indeed. 95 percent of Republicans in Congress signed his no-tax-increases pledge.
Vitner says that conservatives, even those who would be willing to compromise, fear what would happen to them in their reelection bids if they voted to increase anyone’s taxes. Going over the cliff maybe what will allow them to compromise. If the tax cuts end, they can then vote for another tax cut, then say they didn’t vote for a tax hike, but a tax cut.
A lot is at stake in this mess. As you know, programs like Medicare, Social Security, and the military are involved.
Who knows what will happen. It’s really hard to get some politicians to put country ahead of party, especially when they are afraid their actions will hurt them at reelection time. .