Can we pass the fiscal cliff without major damage? The fiscal cliff will occur sometime in December. Can the government continue as is, passing the fiscal cliff without significant damage happening?
Up until recently, virtually all political commentators have agreed that the fiscal cliff cannot be broached, as the damage would be too great. However, in the most recent weeks, there have been some political commentators that have stated that passing the fiscal cliff would not be a big problem and it could possibly be a good idea.
It is not clear what thinking could justify this position, certainly not an overall position. If the fiscal cliff is passed without resolution, the effects would hit, quickly. Not only that, the markets would already react negatively in the one to three day period prior to the actual day of the cliff. Furthermore, and more importantly, the government would actually and literally not be able to begin paying it’s bills.
The magnitude of this would be enormous. Recipients of Social Security, Medicare, Medicaid, Unemployment payments, military salaries, highway funds, government employees would all be targets of who would get cut. Ironically, the law evidently states that if this occurs, Congressmen, Senators and the Executive branch would all continue to get paid.
This issue has been discussed before and various congressmen and senators have said that the military would get paid. However, if this happens, then some major programs, be it social security, medicare, medicaid, etc. would have to be cut. Once this happens, it will be guaranteed that millions of citizens would suddenly, loudly and very aggressively become vocal. This would move into street protests very quickly, possibly with days, certainly within weeks. Once people begin not to get “their” money, they will respond.
Street protests are what happened and is still happening in Greece. The visuals across the world of this happening in the United States cannot be underestimated. No, the fiscal cliff cannot be broached and doing so is a bad idea, a very bad idea.