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What is the "fiscal cliff"?

By       Message Patrick Martin     Permalink
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opednews.com Headlined to H3 11/14/12

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Cross-posted from WSWS


The term "fiscal cliff," first used by Federal Reserve Chairman Ben Bernanke last February, refers to the simultaneous expiration of tax cuts and imposition of spending cuts on January 1, 2013.

The American media has seized on the term "fiscal cliff" and promoted it, in part, to suggest that measures which would otherwise be enormously popular -- ending the Bush tax cuts for the wealthy or cutting military spending -- are threatening, even dangerous.

The main purpose of the media propaganda about the impending "cliff" is to create a sense of financial emergency and override popular opposition to measures the Obama administration and congressional Democrats and Republicans will put forward to avert it, including sweeping cuts in Medicare, Medicaid and Social Security.

This is bolstered by the reaction in the financial markets, where a sharp sell-off could well serve as a political club to ensure that the policies demanded by Wall Street are adopted in Washington.

Far from an emergency that requires dramatic action to slash the federal deficit, the various components of the "fiscal cliff" are all consequences of legislation passed at various times during the Obama administration and can be averted by the passage of further legislation by Congress, regardless of whether that legislation adds to or subtracts from the deficit.

Deficit reduction is not a requirement of any previous legislation, but a political mandate from the financial aristocracy, which is demanding that its two political parties take joint action to make working people pay for a fiscal crisis that is the product of the 2008 Wall Street crash and the trillions expended to bail out the banks and corporations.

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Patrick Martin writes for the World Socialist Website (wsws.org), a forum for socialist ideas & analysis & published by the International Committee of the Fourth International (ICFI).

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