$5.7 Trillion Timebomb

The Republicans have sworn to never raise taxes, the Democrats believe in a balanced approach and asking the rich a little bit more. What is a compromise that finally makes both sides buckle? The very one that they already passed into law.

Nobody Wins...

Nobody wanted it, most people agree it could bring our already sluggish economy to a screeching halt, yet there is little in the way of stopping it from taking full effect. Picture this, a double barreled shotgun, in the right chamber you have a bill that was passed in August that concentrates cuts on the Pentagon while exempting Social Security, Medicaid, Medicare beneficiaries. It was considered a victory by republicans at the time, putting additional pressure on the Democrats to bend to demands made for more across the board budget cuts, while still preserving the wide spread pledge made to Grover Norquist of no tax increases.

But, 12 years earlier, the left chamber of this proverbial shotgun was loaded by George W. Bush by a republican congress. In order to pass his tax cuts using the 51-vote budget reconciliation process, he had agreed to let them sunset in 2010. At the time, a victory by Democrats who declared these tax cuts a payout to the rich that would ultimately hurt the lower classes  A last-minute deal extended them until the end of 2012 as part of a deal to avoid tax hicks so early in a recession recovery.

Let's fast forward to the far off time of January 1st, 2013. The elections are over, a decent chunk of congress is already packing up their bags having lost their seats, the White House lease may be up and an eviction notice on the door at a time when Congress would have to act to avoid both of these barrels from being fired at the same time. Resulting in a recoil of both a $3.8 Trillion dollar tax increase, and a $1.9 Trillion dollar defense spending cut. Most of that will effect the contract defense industry.

Some have speculated that this has backfired and is playing right into the Presidents hand, that now Republicans will have to agree to a deal, less they have to explain why there are both tax hikes and defense cuts occurring as they stand by, two staple issues for conservatives. While playing into a narrative that the right is doing nothing but obstructing and delaying.

What's at stakes for the Democrats  Well, as in 2010, they don't want to he seen as allowing taxes to go up on the working and middle class during a recovery that most people are laying at the feet of the donkies. Which could change dramatically should republicans win big next month. They may feel that there is a window that they could successfully pass the buck to the right.

Sens. Orrin Hatch (Utah) and Jeff Sessions (Ala.), possible feeling this scenario playing out, pressed  Treasury Secretary Timothy Geithner on Monday to lay out a precise timeline for when the government expects to near the debt ceiling and what "extraordinary measures" can be taken to prolong the deadline. But, even this action is little more then an attempt to understand how bad of a situation the government is finding itself in.

You may be asking; Almost $6 Trillion in revenues and tax cuts over the next 10 years? Wouldn't that make a huge impact on the deficit and debt, couldn't this be a welcome reform? Prehaps, if it didn't spiral us into another recession, how much debt would we eliminate of our current $16 trillion. A trillion? Two trillion? maybe five Trillion? Well, the CBO projects we will still add almost $4 Trillion of debt even if all these things occur in the wake of a healthy recovery. I can think of no better case that we need reform, not more taxation.

Then why is this gut check being avoiding during our election cycle? Why is nothing trying to be done to avoid this time-bomb before it's too late? We are expected to hit our $16.4 Trillion dollar debt limit right about the same time as these 'triggers', all these factors together could be devastating to the economy and our defense. Where are the republicans? Well, wouldn't it be interesting that the party that has cried foul at excessive debt and running with the mantra "Government Doesn't Create Jobs!" would be the ones fighting for jobs paid for with government contracts and against triggers that are specifically designed to eat away at the deficit. Or perhaps our friends on the left. Allowing a raise on taxes to the 98% that they caved in to save two years ago, and having to be held accountable for the tens of thousands of people getting blindsided by layoffs after Obama's administration tried so hard to postpone the news until after the election. Would more be gained from saving jobs and tax rates, or by letting the right look all the worse for letting these events happening.


It's the worst of the game of politics we've seen in some time. Nobody truly want's these cuts and hikes.

Mark my words, something will be done, a deal will be struck. It will cut billions in new spending that will be labeled as cuts, the tax cuts will be extended for a year or two, that will not benefit any new growth. Let me ask you, if you knew you where getting a pay cut next year would you spend spend spend, or save save save? Temporary tax cuts don't work. And now ten years into this tax cut, people would have to go through a transition that would impact the economy negatively if these cuts expired. These rates or the old higher rates, we need to remove this storm cloud hanging over us.

These looming landmines and these conditions are not conducive to a growing economy, and these types of issues probably aren't going to be solved on day one of any new administration or congress. I am disappointed that these questions are not being brought up at the Presidential debates and wish the media would make up for this fact by asking what the respective plans would be to stop pushing these issues down to the next election and to the next generation.