We expected it to come down to the wire and it certainly did! With the president and members of Congress working over the holidays, a deal was finally made to avoid the "fiscal cliff" - sort of. The long and drawn-out battle averted devastating tax increases and budget cuts, but taxes were raised and bigger budget challenges loom.
Although this battle ended, the war rages on as we have again hit the nation's debt ceiling, $16.394 trillion. Now, "extraordinary measures" will be taken to ensure we do not exceed the debt limit in the next couple of months.
Because the "fiscal cliff" deal did not address the debt ceiling but did reduce planned cuts, many experts and congressional members are saying larger federal spending cuts must be sought in the debt-ceiling debate.
You might recall the devastating impacts of the 2011 debt debate that went down to the eleventh hour and resulted in the downgrading of the country's credit rating for the first time in history. Many were shocked as Standard & Poor's downgraded the U.S. from a AAA rating to a AA+. In their rationale for the downgrade, they highlighted two key issues: government's inefficiencies in solving eminent and significant challenges, and not doing enough to reduce our national debt. This sounds familiar. I am guessing that the handling of the "fiscal cliff" deal did not instill more confidence in the rating agencies
Reuters reports in "Bigger fights loom after 'fiscal cliff' deal" that the "stakes are perhaps even higher in the debt issue than in the 'fiscal cliff' because failure to close a deal could mean a default on U.S. debt or another downgrade in the U.S. credit rating. . . . In fact, bond rating agency Moody's Investors Service warned Washington on Wednesday it must do more to cut the deficit than it did in the 'fiscal cliff' measure if the country is to turn around its negative sovereign debt rating."
CNN's "Fiscal cliff deal: 5 things to know" also notes that three more "fiscal cliffs" are are on the horizon, including: "congressional squabbles over money" on the "fiscal cliff" deal, "the debt ceiling" and "continuing budget resolution."
The "fiscal cliff" may have been averted, but the long-standing issues of our nation's massive and growing debt have not been adequately addressed. We are creating an environment where grey skies loom, dark clouds are building, and we could soon see a downpour on the nation and our economic recovery.
Further, these debates cost a lot of money. According to CNN Money, the Government Accountability Office said the 2011 debt-ceiling fight wasted $1.3 billion in taxpayer money because of the uncertainty it wrought on the complex task of federal borrowing. Imagine what the "fiscal cliff" deal and next debt-ceiling debate will cost us.
We must get to the root of the problem and prioritize programs, address entitlements and reduce the size and spending of government. Failure to do so is pushing our nation toward financial crisis.
On a truly positive note and a Happy New Year, the first Kihei Fourth Friday town party on Dec. 28 was a tremendous success. It is a great story of leadership and community building, showing that "if you build it, they will come." The core group of roughly 25 Kihei entrepreneurs, along with many volunteers, came together in a "go big" or "go home" fashion, creating a positive experience for the thousands of adults and children who attended. Be sure to attend the next one on Jan. 25 at Azeka Mauka.
* Pamela Tumpap is president of the Maui Chamber of Commerce.