Fiscal Cliff Alert Status for 2012.12.05: Condition Red


When it comes to the Fiscal Cliff, we all have much to lose.

The CBO projects that going over the cliff means that the economy takes a nosedive during 2Q 2013 and unemployment will easily break 9% by early 3Q 2013.

Should we go down the Fiscal Cliff path then 2013 will be a year of random misery as different parts of the economy adjust to magical movement of money, or lack thereof, in the marketplace. Ours is a marketplace addicted to subsidized money on both the left and the right, whether it be cheap credit cards, zero percent loans to large banks, defense spending or social spending, grants, shared underwriting of public programs or tax credits and deductibles for private investments.

Neither side is close to blinking. Neither side is close to have a ‘deal’ that their own party can support.

Negotiation on avoiding the Fiscal Cliff will go all the way to the 11th hour … and perhaps no deal will come about. More probable than just being possible at the moment.

President Obama has a strong hand for shooting down many aspects of what the GOP wants, although the GOP does not have any actual plan that is supported both within the House and the Senate as of yet. So criticism that Obama has rejected the GOP plan are largely empty words — there is no GOP plan that the GOP itself has endorsed that can provide a guaranteed 51%+ supportive vote in either the House or in the Senate.

And yet President Obama’s challenge is that he needs a deal that the GOP House will approve, and so far there is no real Democratic plan on the table that can provide a guaranteed 51%+ supportive vote in either the House or in the Senate.

The only two people that have a written plan are Simpson-and-Bowles … and neither the Dems nor the Reps are embracing it.

Today’s Risk Level of going over the edge: Condition Red

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