Most have heard of the "fiscal cliff," know that lawmakers are working to address it and realize it is a big problem. But does the general public truly understand what is at stake?
CNN Money's "Bernanke: 'Stakes are high' on fiscal cliff" article notes that Federal Reserve Chairman Ben Bernanke has urged lawmakers to act as soon as possible to avoid the fiscal cliff, citing projections from the Congressional Budget Office that predict the $7 trillion combination of spending cuts and tax increases (in January) could send the U.S. economy toppling back into recession.
Nobody wants another recession! We are still reeling from the last one. With all of the quick fixes already made, massive and mounting debt, a devaluation of our dollar, a European debt crisis that hampers our economic growth, a terribly slow recovery from the last recession, and a lowered bond rating, we are firmly pressed against the wall. It is going to take urgent action and leadership to avoid the fiscal cliff.
Preventing another recession calls for a plan that unites the president and key congressional leaders before the end of the year. Sounds simple, right? It must be done, so it will be done? Businesses are used to making swift decisions to avoid a crisis, but this is politics and here our history is not so good. The last two times we had to address raising the debt ceiling to avoid shutting down the federal government, decisions were not reached until late in the eleventh hour, meaning we narrowly avoided crisis. And, last year, the lack of a long-term plan to address our debt problems and political infighting that delayed action were concerns noted by rating agencies when downgrading our bond rating. This cannot happen again.
Ultimately, we need to revisit national priorities, reduce our spending, bring in new revenue and come up with a long-term plan to address our debt. Will that happen by the end of this year? Probably not. What is likely is that a series of compromises will be made to deal with the immediate issue. However, we must dig deep and address root problems - massive debt and unsustainable systems - and come up with a plan to address them. It is something that the Maui Chamber of Commerce has been advocating for on both federal and state levels for a number of years now.
The days of spending beyond our means are over. We cannot keep taking out new loans to pay down old debt. That is like making your mortgage payment with your credit card. It is unsustainable. More and more regional governments are facing bankruptcy and the federal government would be as well if they did not have the power to print more money. However, in doing so, they devalue the dollar further and contribute to inflation. We are in a downward spiral that negatively impacts our economy and security. What is at stake is life as we know it and the freedoms we enjoy.
It is time to better educate ourselves and others on this issue. For a good overview on the U.S. debt crisis, visit: www.youtube.com/watch?feature=player_embedded&v=Ln6VGCB8f_c. (Note that this is an older presentation and the national debt level is over $16 trillion, not $14 trillion as shown.)
This looming fiscal cliff is not new and the end of the year is fast approaching. Call upon members of Congress to reach a solution now and make addressing our national debt a top priority next year.
* Pamela Tumpap is president of the Maui Chamber of Commerce.
