With all the ‘fiscal cliff’ drama going on in D.C., I have been thinking about cliffs lately. In fact, the last time I thought about ‘cliffs’ this much was when Thelma and Louise drove off the cliff in that classic scene of defiance at the end of the movie. But the difference between these cliff imageries is that the ‘fiscal cliff’ is of our own making. It can be undone.
While the key is applying the brakes – finding the deal - well in advance of the cliff, the path to undoing the cliff is compromise. And here is some good news. All this media attention on the fiscal cliff issue, along with the 2012 election, has resulted in a significant shift in attitude favoring compromise. For the first time, according to NBC news, 59 percent of Republicans say they want their leaders to make compromises to gain consensus in the current budget debate. Previously, in 2011, majorities of Republicans said they wanted the opposite. They preferred their leaders stick to their guns on budget issues and as such this is notable turnaround.
Now, according to the latest national NBC News/Wall Street Journal poll, 65 percent of Americans say congressional leaders should make compromises to deal with the budget deficit, even if that means Democrats would need to accept targeted spending cuts to Social Security and Medicare, and that Republicans would need to accept targeted increases in tax rates. Additionally a new poll by Pew Research Center for the People and the Press finds that even more Americans are willing to walk their talk about compromise. For instance, 74 percent of Americans now say they advocate for a balanced approach that combines spending cuts with tax revenue increases.
Even some Tea Party types are trying to ride this growing desire for compromise. For example, Sal Russo, a co-founder of one of the nation’s biggest Tea Party groups, the Tea Party Express, says “We’re not adverse to compromise, and you’ve got to have the votes. And let’s face it, conservatives don’t have the votes in the Senate, and we don’t have the vote in the White House.” These poll numbers, along with ‘reality check’ comments by Tea Partiers, suggest that compromise is no longer a dirty word. Instead, in the case of the looming fiscal cliff it is a strongly desired outcome.
Now if only President Obama and House Speaker Boehner could apply the brakes in advance of skidding off the cliff. In the movie, Thelma and Louise, it didn’t matter if they applied the brakes. Here it does.
The Congressional Budget Office estimates that the sudden reduction in government spending, triggered by the fiscal cliff situation, will likely lead to a recession in early 2013. Economists on both sides of the political spectrum agree that this is the last thing a barely recovering economy needs.
In regards to the impacts on individual state economies the outcome is more nuanced as it depends on how much each state’s gross domestic product is tied to the federal government. States that have a disproportionately high economic reliance on federal spending, i.e. Alaska will get hit the hardest if the fiscal cliff is not averted. According to the Pew Center of the States, over 16 percent of Alaska’s Gross Domestic Product comes from federal spending on procurement, salaries and wages with another 10.5 percent of our Gross Domestic Product coming from federal defense spending. This means that over 26 percent of our state’s economy is tied to federal spending (national average is 10.6 percent); making Alaska one of the most vulnerable states to a failed a deal on the fiscal cliff.
Will the deal come together? It may not be the comprehensive, balanced solution, but I remain hopeful for at least a temporary solution because not only has the nation’s mood swung favorably toward compromise but the stakes are too high even for traditional political games.
• Troll is a long-time Alaskan with more than 22 years of experience in fisheries, coastal policy and energy policy. She resides in Douglas.





Comments (4)
Add commentSacred cows
Kate, all of the theatrics on the fiscal cliff are choreographed mainly for the benefit of the respective political bases. Both Obama and Boehner need to convince the most extreme elements of their parties that they had no choice but to slaughter some of their sacred cows.
But there's a quiet negotiation going on in the background. I think maybe Obama should caving on the marginal tax rate for the rich, at least temporarily. Let them keep that sacred cow. But make them pay dearly for it in other ways, such as:
Estate tax: Drop the exemption to $1 million.
Dividends: Treat them like ordinary income so hedge fund managers and the like can't get away with paying only 15%
Capital gains: Likewise to dividends. If the gains are being taken home as personal income, they're taxed like personal income.
Writeoffs: If your gross income (including dividends and capital gains) is over a million, you can't write off your mortgage, health insurance, children, etc. No personal deductions.
Social security: Taxed on ALL of your income, not just stopping at the first $110,100.
No doubt there are a boatload more of special goodies the wealthy have inserted into the tax code to help them shield their income. Go after all of it.
And let us go over the cliff for now. Keep the heat on until significant revenue concessions are achieved.
No cliffs on the prairie.
Flat tax across the board. Congress included. Make Washington live within America's means. The only cliff decision in D.C. Is who to push off it. And they are the ones that will have to take the leap if they make the right decision.
@lat - you're an economic
@lat - you're an economic fool and you're so mired in your class warfare agenda, you're laughable.
Give us a quick lesson in Econ 101 - who provides investment in businesses and helps drive economic prosperity?
I'll wait...
the cliff ! for a couple of
I say over the cliff !
for a couple of reasons. First, all KARMA, all those moochers that voted to re-elect their Dear Leader because he was going to raise taxes on their productive neighbors, & then spend those proceeds on expanding the moocher state
Their taxes will go up mas well, what comes around, goes around.
The second reason is that yes there may be another recession, but it should be rather short in duration, & the country will be finally living with in it's means.
Great theater
Two politicians are negotiating how deep in debt my kids and grand kids should be before they work a day in their lives. Career politicians who make nothing but noise, and are generous with other peoples money? This cliff was no secret. The leader was too busy campaigning. Between the two, not an inch of experience in the private sector,,,,,,,And we think a bargaining group trying to make a house payment is the problem. Ben And Jerry's ice cream for all those on a food program. Negotiate dignity. Forgive all student loans. Create some more jobs that produce nothing at the end of a conveyer belt. And then wonder why China owns our once proud backside. Its no wonder people are running to smoke weed. Mommy will take care of us. Oh and lets not forget the PEOPLES CAR,,,,Chevy/Government Motors. Volks Wagon.