What If

Anyone paying any attention to me at all yesterday knows I am very upset about chained CPI and changing the income level at which the Bush tax cuts expire from $250K to $400K.  And I puzzled over that the whole day.  Why, suddenly, and seemingly out of nowhere, is this being forced upon us?  MoveOn.org polled its members randomly and found that 97% of respondents would rather go over the "fiscal cliff" and pay higher taxes than cut the social safety net and increase the amount of income that would still enjoy the Bush tax cuts.  The President promised us during the campaign that he would work to restore a balanced economy and that the wealthy, who have benefited enormously over the last 12 years while the middle class have fallen toward poverty at an alarming rate, would have to pay higher taxes.  As soon as the election was over and attention turned to the looming "fiscal cliff" the promise of no cuts to the social safety net were forgotten, and the President was extending the Bush tax cuts on another $150K of income without the Republicans even asking publicly for either.  In fact, to the best of my knowledge, there was no negotiation at all in advance of these concessions.  It's as if this was the plan all along.

So what does all this mean?  Why would this be the plan?  Well, I do have a theory, and some life experiences that I think give me a window into how these things usually work.  I don't think I have the entire plan figured out, but I think I'm on the right track!  I'm asking you to believe that the business community has a plan to acquire your dollars at any cost to you, and that the government either can't or won't change that without our help.

What if "big business"calculated that going over the "fiscal cliff" will hurt their bottom lines because you will have less money to spend if your taxes go up?  That is true.  That really would happen.  So businesses would naturally turn to researchers in business schools to figure out how to go forward in a way that is true to the goal of maximizing profits.  And the business of business schools is to figure that out.  Even though an idealistic purpose of a business school would be to figure out how to create a vibrant, self-perpetuating business environment, that's not what they're doing, because the individual donors to the schools aren't generally interested in that.  The most influential donors are interested in enhancing their own personal wealth at as rapid a pace as possible.

So, if we assume my assertion about business and business schools is true, we have two things I think we could bet on and win that are effecting "fiscal cliff" negotiations:

1) Businesses will lose money and/or earn at a slower rate if we don't extend the Bush tax cuts for most taxpayers, and

2) There's a sweet spot in the balance between spending and taxing that provides optimal profits.

So, if you accept that both these things are true, and you still need dollars to run the government, where do you go?  You go to the same place we always go--you borrow against the future!  This is where chained CPI comes in.  You have a tax cut now because you are borrowing against your future social security benefits (whether you want to or not), and businesses aren't hurt by higher taxes and your decreased spending power in 2013.

The message I'm getting from the government is that they are going to protect the wealthy at all costs.  There is no chance in this deal of the middle class regaining any of the ground we've lost to the wealthy and corporations, and now they figured out a way to take even more, and get it faster!  I think the President may be getting some much needed infrastructure investment in the deal, but I think the price is too high.

Do you really want to spend your social security dollars now?  What are you going to have to do to be sure you have a choice?

I'd like to see a convincing, definitive analysis of the effects of going over the cliff relative to spending my future social security benefits for tax cuts now.  I believe going over the cliff is the best thing for the working class in the long run.