Reposted from Marketwatch
Election wars are masking the fiscal cliff that America is destined to drop off in early 2013, warns the Congressional Budget Office. History tells us our politicians will slowly drive America off the fiscal cliff and into a mid-1930s-style sinkhole. Why? Because no matter who’s elected, our dysfunctional government will continue to be driven by secretive super-PAC billionaires obsessed about either holding on to or regaining the presidency in 2016.
Editorial page editor Paul Gigot on why President Obama is ignoring Senate Democrats who want to forge a tax compromise with Republicans. Photo: Getty Images
America’s fiscal cliff is actually four cliffs. And any one can easily trigger the other three. By 2013 the public will wake up to discover America is still a political war zone facing a recession no politician can solve, igniting further rage with warring politicians and their billionaire buddies.
The fiscal cliff includes four dangerous cliffs:
- The health-care cliff: Admit it, it’s a systemic failure. And repealing or tweaking Obamacare won’t stop the hemorrhaging. Costs will keep rising, no matter who’s chief.
- The taxes/spending cliff: The CBO says that allowing the Bush-era tax cuts to expire, combined with agreed-upon spending cuts, would reduce GDP by 1.3%. That deal is certain to get renegotiated. But until then, uncertainty, and if politicians just kick the can down the road again, new interest costs will increase the deficit, increasing long-term problems.
- The military budget cliff: Do nothing and the Pentagon automatically gets $55 billion cut in 2013, more over the next decade. In addition, Romney’s on record to increase military spending, even as two wars wind down. U.S. Representative Paul Ryan, Republican from Wisconsin, has said the same.
- The social programs cliff: Along with military cuts, the same deal negotiated last year included automatic cuts to domestic social-program spending by $492 billion over the next decade. Cuts will intensify stress on the poor and middle-class jobless.
Obviously there are global threats that could kill recovery: euro-land sinking, China slowing, emerging markets stalling. But the bottom line is that America’s at war with itself, most noticeably visible in gridlocked Washington, less visible in our billionaires’ super-PAC anarchy.
Job wars are far bigger threat than all four fiscal cliffs
The real financial cliff is measured in jobs, warns Jim Clifton, chief executive of Gallup, the polling firm, in his new book “The Coming Jobs War.”
Not just in America, but all nations worldwide. Get it? The lack of jobs is a bigger threat to America than government spending, debt, the environment and terrorism. “If countries fail at creating jobs, their societies will fall apart,” warns Clifton, “experience suffering, instability, chaos, and eventually revolutions.”
Warning: The jobs war will defeat us from within. The U.S. has 8% unemployment, officially. In fact, it’s more like 20% unemployed and underemployed, 30 million. We’re outsourcing too many jobs. We need 5 million net new jobs today, 10 million during the next presidential term according to Gallup’s research.
But unfortunately, our divisive politicians don’t get it. They’re not only making matters worse this year, but little will change from 2013 through 2016, no matter who’s elected president. Why? Because the secret wars of the billionaires’ super-PACs will keep running our government long after the elections, pushing off cliff after cliff after cliff. America is now an anarchy.
In fact, my guess is that whoever loses the 2012 presidential election, he and his party will be secretly relieved, because the pit after the coming fiscal cliffs are so incredibly, irrationally, absurdly deep, that little more will get done in Washington in the next four years than in the last four. In short, the jobs wars will intensify.
America’s ‘worst decade’ now faces ‘double-dip depression’ risk
Racing toward the fiscal cliff reminds me of our earlier prediction of “America’s Worst Decade.” Financial historian Niall Ferguson warns in Newsweek of a “double-dip depression…We forget that the Great Depression was like a soccer match, there were two halves.” The 1929 crash kicked off the first half. But what “made the depression truly ‘great’ …began with the European banking crisis of 1931.”
Likewise, our November elections will push America into the second half of a new era. But it doesn’t matter whether Romney or Obama is our quarterback, the goal posts just keep moving further away.
As Ferguson puts it: “To understand what has been happening in our own borderline depression, you need to know this history. But hardly anyone does.” Get it? He says America’s already in a “depression,” with clueless leaders and no real solutions, much as Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson were clueless in 2008. Worse, no one appears able to stop our depression from turning into another Great Depression.
More bad news: Back in December 2011, the first year of this “Worst Decade in American History,” economist and longtime Forbes columnist Gary Shilling had just issued his semiannual outlook: “Global Recession Likely” for 2012. Now, in his midyear update, it’s worse: “Recent data makes that forecast more probable.”
Recapping some predictions for ‘America’s Worst Decade Ever’
A look back, then ahead: Over the past decade we predicted the 2000 crash, the 2008 meltdown, the 2009 bottom and rally. Historians like Ferguson and others already see the 2011-2020 decade developing as “America’s Worst Decade.” Yet totally predictable. And totally denied. So here’s our update of some of the economic and market predictions in a historical context that will continue unfolding for years:
2012: Billionaires solidify absolute power over our political system
In 2010, the Supreme Court legalized anonymous political bribery, turning America into a superrich anarchy. Now billions flow from billionaires to lobbyists to politicians and super-PACs with one goal: to get favors for special interests.
Meanwhile, the middle class is in a rapid trickle-down to third-world status. So the inequality gap will keep widening as billionaires tighten control of state and the federal governments.
2013: Global population bubble exploding, rapidly wasting resources
America’s superrich capitalists keep siphoning trillions from the middle class. And ironically they also see the world’s population growth of roughly 100 million annually not as wasting the planet’s scarce resources, but as an expanding market for increased wealth-building, proving “more is never enough” as environmental warnings are denied.
2014: Pentagon’s global commodity wars accelerate toward 2020 peak
Near the start of the Iraq war, Fortune reported on a Pentagon report predicting “climate could change radically and fast” as “the mother of all national security issues.” And billions of new people will spread unrest worldwide as “massive droughts, turning farmland into dust bowls and forests to ashes” as world population exploded to 10 billion, with “warfare defining human life.”
2015: ‘Gilded Age’ globalization explodes America’s global empire
About the same time the Pentagon was predicting “global warfare” by 2020, former Nixon strategist Kevin Phillips warned in “Wealth & Democracy” that “most great nations, at the peak of their economic power, become arrogant and wage great world wars at great cost, wasting vast resources, taking on huge debt, and ultimately burning themselves out.”
Niall Ferguson made similar warnings in “Colossus: The Rise and Fall of The American Empire,” that we are in denial, thinking “about the political process in seasonal, cyclical terms.”
2016: Free-market capitalism self-destructs, crashes, bank bankruptcies
The 2016 elections may be too late to plan for what’s ahead. “What if history is not cyclical and slow-moving but arrhythmic?” Ferguson asks. “What if collapse does not arrive over a number of centuries but comes suddenly,” too rapid to respond in time, especially if the president keeps ignoring the lessons of history?
Wake up America. There’s a deadly time bomb ticking. You are living in “ America’s Worst Decade Ever .” Go back and read the remaining years till 2020. See why our nation and the whole world will continue deteriorating no matter who’s president, because this drama will accelerate. As politicians and billionaires continue fighting like grade-school kids at recess, they’ll keep pushing America off the four fiscal cliffs. They fight because “more really is never enough” for America’s narcissistic, obsessed, heartless free-market capitalists.
Wake up and listen to Clifton on the “Coming Jobs Wars” … to environmentalists warning “it may already be too late” … to historians warning of a “rapid collapse of the American empire” … to the Pentagon warning that by 2020 “warfare will define human life” … to a lone hedge-fund manager telling you to “think Swiss Family Robinson” as you nudge yourself closer to the fiscal cliffs.