Here’s an image you no doubt remember from your TV watching childhood:
Wile E. Coyote chases the Road Runner across the animated desert terrain. Legs churning frantically, the hungry carnivore overtakes his potential avian entrée, who comes to an abrupt, screeching halt just short of a cliff edge, accompanied by a mocking “Meep! Meep!” and a squealing automobile tire sound effect.
In seconds, the speeding coyote has run out of ground and – for just enough time for the reality (and comedy) of his impending descent to take hold – he hangs suspended in mid-air, looking hopelessly toward the camera, awaiting his inevitable slide-whistle fall to the canyon below.
Obama, Boehner: Road Runner or Coyote?
Now picture newly re-elected President Obama and U.S. House Speaker John Boehner as these two celebrated cartoon characters – and it doesn’t really matter which is which. The point is, one of them may be pushing the other over the “fiscal cliff” on January 1, 2013.
That is, unless Congress and the White House decide to rewind the tape and forestall implementation of the deal they hammered out back in the summer of 2011, when House Republicans held the U.S. economy hostage over raising the country’s debt ceiling.
This fiscal cliff is no children’s game of make-believe. Going over it will automatically sunset George W. Bush-era tax cuts on all American households, hike payroll taxes, which have been set two points lower than normal for the past two years, and mandate federal budget cuts of approximately $560 billion.
According to the Congressional Budget Office (CBO), going over the precipice could plunge the U.S. economy back into recession. The jobless rate would rise to 9 percent from its current 7.9 percent level, and GDP (Gross Domestic Product), which has been growing at an annual rate of 2 percent, would fall at a rate of 2.9 percent in the first half of 2013.
At the moment, the two sides are far apart on many issues, including:
- A mandatory sequestering of $600 billion in Pentagon spending over the next decade, and
- Over the question of tax increases on the country’s top two percent of earners.
Don’t Champion Either Side in Fiscal Cliff Debate
Pundits are already flooding the press, airwaves and blogosphere with predictions and recommendations. Some on the left are championing signals from congressional Democrats to assign the Road Runner’s role to the president, driving Boehner over the brink.
That would force the GOP into greater defense cuts than they would prefer while raising taxes on the bottom 98 percent of Americans, thus eliciting howls of protest from both the right wing of the Republican Party as well as from the 51 percent of the country that just returned Obama to office.
Meanwhile, there are those who believe that if Obama is forced into playing the part of the coyote, he will be held responsible for allowing the nation’s economy to fall menacingly into a double-dip recession – great fodder for a Republican resurgence in the off-year, 2014 election.
The beauty of the cartoon universe is that no matter how much damage Wile E. Coyote sustains from fall after fall from the heights, he always claws his way back up the cliff wall to repeat his losing chase against the Road Runner again and again and again.
In the real world of economic policy, though, actions have results that can’t be reeled back so inconsequentially.
So the question becomes this: if the president and the speaker don’t work out some sort of deal by the end of the year, which one is going to take the plunge, and how much will it hurt?
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].