As for falling off of the fiscal cliff, based on assumptive computer modeling, there is no empirical evidence that it really would hurt the economy.
There are also no impending crises involving Social Security, Medicare and Medicaid because they are not businesses. In fact, even referring them as entitlement programs is somewhat misleading because they are more like trust funds that every taxpayer and their employers paid into.
Americans will be barraged with propaganda demanding cuts to Social Security and expanding the private savings alternatives like 401Ks and IRAs because Wall Street wants to charge fees on as much of people's retirement money as it can. Americans had a taste of what can happen with their money in Wall Street's greedy claws in 2008.
While there are many distinctions, the same goes for Medicare and Medicaid. The goal should not be to enrich fee-skimming middlemen by forcing Americans to spend more money through private corporations. It should be to provide retirement and health security through the most efficient means possible.
Regarding the impending defense cut after running the herd off of the cliff, this cut is already happening based on changing military needs. If anything, the process would be hastened, as it should be.
The expiring tax cuts across the board after taking the fiscal cliff dive would hurt the middle and lower class in the long run, but the upper class will lose their tax breaks regardless of whether or not America reaches the cliff and there is no evidence that will harm the economy. In fact, after more than ten years of having those tax breaks in place the economy has gotten worse. Big business is hoarding trillions of dollars rather than investing these funds in job creating production and services.
The effects of the end of unemployment insurance and the payroll tax holiday would cut into consumer spending over time, but that can be easily corrected with new legislation before it becomes a huge factor. And the simple solution to the other cuts in domestic discretionary spending is the same, pass new legislation that either does not allow them or restores them.
The fiscal cliff is really not a cliff or an asteroid, it is more like a slippery slope to austerity for the lower and middle class that can be averted without reaching the big deal that will be hyped this month by politicians and the corporate media.
The most significant factors that increased the federal deficit over the past ten years are increased defense spending, war-spending, loss of revenue from the Bush tax cuts and the economic downturn (see slideshow). Part of the revenue loss from the economic downturn that is largely ignored by politicians and the corporate media is the loss of well-paying jobs that provide a more robust tax base. Other than letting the Bush tax cuts expire for the top two percent and some marginal cuts in defense spending, few of the real issues that caused the massive debt are being addressed in the fiscal cliff debate.
Instead of bickering over which entitlement programs to cut, perhaps lawmakers should consider thinking outside of the beltway box and consider what is truly important for Americans right now. On the short list are jobs, infrastructure, foreclosures, cost of living, health care and a secure retirement plan.
The way to pay for improvements in those areas without creating more debt are to end the wars now, adjust security (i.e. the DHS) and defense spending to current needs, cut the $3+ billion in foreign aid to Israel until it complies with UN resolutions and the IAEA, tax corporations that ship jobs overseas, provide tax incentives to corporations that keep jobs in this country, and allow the tax cuts to expire on the wealthiest two percent of Americans.
Lower and middle class Americans cannot afford more austerity. The wealthiest Americans and the military-industrial complex can afford it.