It shows. In their world the President's counter-offer represents the "left" side of the political spectrum. It slashes Social Security $122 billion over 10 years, increases the tax burden on middle-class (but not high-earner) income, and calls for only a $100 billion reduction in planned defense spending.
That's right: The President's "compromise" counter-offer asks seniors, veterans, the disabled, and non-wealthy working people to "sacrifice" roughly three times much as the Pentagon and its contractors. It reduces an 85 year old's benefits by 6.5 percent and a 95 year old's by 9.2 percent, while trimming less than one percent from our trillion-dollar defense budget. What does that say about our values?
And remember: That's just his bargaining position. It'll go down from there.
There is no cliff
But isn't the "fiscal cliff" a disaster to be avoided at all costs? In a word: No. Financial analyst Barry Ritholtz has been one of the few financial voices to point out the obvious: the stock market doesn't care about the "fiscal cliff," or about a possible downgrade in the Federal government's credit rating. And via Wonkblog, he has the chart to prove it.
And I have the chart (here) to prove that, contrary to popular "expert" belief, the stock market didn't care about a ratings downgrade the last time it happened. It also proves that the market fell after the last Obama/Boehner round of budget cuts.
It'll probably do the same thing in their next deal, too. Austerity agreements are terrible for the entire economy -- with the exception of defense contractors and a few other special interests.
So who's really afraid of the "fiscal cliff"? These headlines offer some clues:
- Politico: "Contractors fear sequester's impact"
- Los Angeles Times: "In defense-heavy San Diego, 'fiscal cliff' threat hits home"
- Virgina Pilot: "Firms fear sequester's impact on government contracts"
- Naples (FL) News: "Fiscal cliff: Employers, Naples defense contractors anxious for deal"
- ABC News: "California defense contractors fear fiscal cliff"
"We must not fail to comprehend its grave implications," Eisenhower said of the defense lobby. "Our toil, resources and livelihood are all involved; so is the very structure of our society."
Miracle On K Street
Meanwhile, in the supposedly "deadlocked" city of Washington, there's agreement about something. Bloomberg News reports that "House and Senate negotiators agreed on U.S. defense legislation authorizing about $640.7 billion in the current fiscal year for the Pentagon."
Boy, the Pentagon must have lobbied really hard to get that kind of money in this fiscal climate. Right? Wrong: "On Tuesday, Defense Secretary Leon Panetta called on lawmakers to cut $74 billion in 'needless' spending on weapons -- to no avail."
As we were saying, a reduction of less than one percent -- as we wind down two wars, more or less -- is the left side of the debate now. So who did lobby so successfully, for such an astonishing sum of money?
The defense lobby and its politician friends are hoping you won't ask. Just think of it as a Christmas miracle.
The Name Game