The Fiscal Cliff and the United States - Essay Example

Section/# The Fiscal Cliff and the United s: A Future Prospectus of What Actions will Precipitate what Reactions One of the single largest difficulties that greets the United States, and most other developed economies, during this time of economic hardship is the coalescence of austerity measures with increased rates of taxation as governments attempt to reduce budget shortfalls in the face of reduced GDPs and correspondingly low tax yields (Postal, 2012). Although a firm understanding how these two relate would require a dissertation length piece on both social, governmental, and economic trends, this brief essay will attempt to summarize some of the key concerns related with these implications as well as seeking to understand and quantify the ways in which a given government can seek to maintain the optimal balance of freedom, equality and solidarity in order to proceed within such a difficult economic environment as the current nation is experiencing. With the situation regarding the United States’ “Fiscal Cliff” as it has been called, the situation is with regards to a host of tax cuts and new austerity measures that are due to go into affect the first of this coming year (2013) – if not legislative or executive actions are taken to ally them. The purpose of this piece is not to argue between either fiscally liberal or conservative policies as a panacea to the ills of our current financial travails. However, ignoring the present viewpoints that exist on the topic and attempting to analyze them to find a middle path is equally foolish. Accordingly, the author has chosen to devote some brief space to the political ideologies that the two party system of the United States has necessarily espoused (Kellar, 2012). The primary obstacle towards a greater understanding between the two political parties with regards to austerity, spending, and the national debt is with regards to how the situation should be handled. On the one side the Democratic Party oftentimes if much more fiscally liberal than the Republican Party and as such oftentimes has few qualms in running up high deficits. However, the Republican Party itself under the Bush years added to the national debt by a figure of over 4 trillion dollars. Such a sum for the time was an unimaginable one (Hinch, 2012). Aided by nearly a decade of conflict and two wars, the Republican Party lost any and all credence that they had formerly retained with reference to being the party of fiscal responsibility. However, with regards to the individual positions that the political spectrum retains, there can be said to be two. The Democratic Party believes that the best way to find a reasonable solution from such economic difficulties revolve around raising taxes (specifically on the upper middle class and wealthiest citizens). Such an approach has merits; however, speaking economically, it also serves to penalize those job-creators that most directly influence the level of growth and recovery that the nation would experience if such a deadweight loss were not experienced. Similarly, those that support the alternate view to the one listed above claim that any and all budget shortfalls must be remedied by relying on austerity and/or budget cuts to achieve the desired result. Naturally, neither one of these offerings is reasonable due to the fact that it is impossible for our current society to realize the correct levels of freedom, solidarity, and equality that would be necessary to achieve either of these positions. Therefore, it is the recommendation of this author that the ultimate approach would necessarily penalize (tax) all citizens equally; regardless of their economic stature within the economy (Etzioni, 1993). In this way, the government would be able to highly equitable distribute the tax burden among all of its citizens. Additionally, there would no longer be a disincentive for those that made less to attempt to make even more as all citizens would be equitably dealt with in terms of their overall level of taxation. With respect to solidarity, this would infinitely be increased by adopting a plan that sought to tax all citizens equally. Naturally, much ado has recently been made regarding the fact that nearly half of all voters do not currently pay an income tax. The situation itself was of course blown out of proportion due to the final throws of a particularly heated campaign season (Jacob, 2012). Regardless, it is the opinion of this observer that solidarity takes a second place to equality as equality is the greater good and should be realized regardless of whether key stakeholders are able to identify with this or not. For this reason, although many may be opposed to such a solution (due to selfish reasons), the greater good (equality) demands that such a course of action be pursued. Lastly, if one considers freedom as an essential metric and element of the situation that has been described above, it is obvious that one realizes that a degree of freedom must be given away in order to achieve the equality that has been referenced previously. In order for a society to operate, it is necessary to have the requisite levels of each of these three constructs; however, they cannot necessarily be available to the citizens in equal measure. With respect to the economic hardship that is currently being experienced, it is the distinct view and belief of this author that the first construct which must be approached is that of equality – followed by solidarity – and followed by freedom. This is of course not to say that freedom is somehow of a low importance with respect to the way that our society functions. Freedom in and of itself, as exhibited in the way that we experience the culture and political system in the United States is one of the attributes that makes the nation unique in the entire world. Furthermore, without such a unique construct, it would be impossible for either solidarity or equality to blossom and thrive. The reason that freedom has been presented last with respect to this particular issues is that there is very little that an abrogation of freedom could conceivably effect on the manner in which the aforementioned steps would be affected (Coy, 2012). However, this analysis has understood the freedom that currently exists within the United States as a constant and has at least partially taken it for granted in attempting to reconcile the behaviors and thought processes of both equality and solidarity as they ascribe themselves to the issue of the “fiscal cliff”. As many analysts have stated, the situation is compounded by the intractability of the political parties and interest groups. This has made any such substantive movement with regards to seeking to remedy and/or ameliorate the fiscal cliff which is directly attributed to the debt crisis. Rather than attempting to state what norms should be adopted by society, this analysis has sought to prove that the most important value that can be associated with the process which is required to take place is that of overall equality among all shareholders and citizens. Whereas a stratified tax code is sometimes able to generate a high degree of income for the state, the end result is that one demographic or socio-economic strata is unduly punished whilst another is able to ride on the coat-tails of the other. In this way, in order to provide a rationalistic solution to an issue that troubles our society and our government, it is necessary for the state to demand the same level of engagement and input from all shareholders within the process. As such, the overall equality of such a plan trumps the other three determinants. References Coy, P. (2012). The Fiscal Cliff Tax Hikes Alone Are Half a Trillion Dollars. Businessweek.Com, 1. Etzioni, A. (1993). Deficit Reductions in a Populist Age: How to Sell Shared Sacrifice. Challenge (05775132), 36(2), 22-25. Hinch, P. (2012). Facing the Fiscal Cliff. Journal of Financial Planning, 30-31. Jacobe, D. (2012). Businesses Must Prepare for the Fiscal Cliff. Gallup Management Journal Online, 1. Kellar, B. (2012, November 16). Meeting behind closed doors to resolve the fiscal cliff – CNN Political Ticker - CNN.com Blogs. CNN Political Ticker- All politics, all the time - CNN.com Blogs. Retrieved November 19, 2012, from http://politicalticker.blogs.cnn.com/2012/11/16/meeting-behind-closed-doors-to-resolve-the-fiscal-cliff/ Postal, A. D. (2012). Battle Lines Drawn on Bush-Era Tax Cuts. National Underwriter/Life & Health Financial Services, 116(8), 26-28. Read More