Neil Macdonald: Fiscal showdown at the U.S. Congress
Will sanity prevail before the 'fiscal cliff' arrives on Monday?
Americans, it would appear, are about to give the world another lesson in their self-proclaimed exceptionalism.
What other democratic nation's leaders, after all, would deliberately design a fiscal disaster and aim the country's economy straight for it?
And then stand back, holding news conferences, double-dog-daring each other to step over some imagined line, chanting the political equivalent of nana-nana-boo-boo?
It now appears the U.S. will actually plunge over the "fiscal cliff" its politicians concocted two years ago.
The idea, at the time, was to create a situation so damaging, so contrary to the national self-interest, so unimaginably irresponsible that even the most hardline political zealot would have the sense to compromise in order to prevent it.
Bad assumption, it turns out.
With the deadline now three days away, it looks as though Congress has rewritten P.T. Barnum's old aphorism: You can, and possibly will, go broke overestimating the intelligence of the American politician.
As that dismal reality sinks in, a national panic is slowly building. Markets are unsettled. Workers are bracing for paycheque shocks when the new year rolls around.
If nothing is done, all sorts of taxes kick in for everyone here on Jan. 1, and the government will begin indiscriminately slicing hundreds of billions in federal spending, a double blow to a still fragile economy.
Americans, who commonly regard Canadians and Western Europeans as a bunch of socialists, are about to suddenly discover the extent to which government dominates their own lives.
The fiscal cliff measures could subtract more than four per cent from America's GDP, and trigger another recession, Congress's own accounting office has said.
And what have the people who created this mess been doing about it?
Well, having lost an election in which one of their opponents' main promises was to raise tax rates on the wealthy (defined as households making more than a quarter of a million dollars a year), Republicans immediately declared that the election had changed nothing, and promised to block any such effort in the House of Representatives, the one branch of government they still control.
Then, in behind-the-scenes negotiations, President Barack Obama caved on his campaign pledge and offered to exempt anyone making up to $400,000.
House Republicans rejected that immediately.
Republican Speaker John Boehner tried to counter with a bill that would protect everyone who makes less than a million dollars. But he was publicly humiliated when his own party revolted, or at least enough members to have guaranteed the plan's defeat on the House floor.
Evidently, there are Republicans who want to fight the 2014 midterm elections as the party that was literally willing to risk another recession in order to shield millionaires from a return to the taxation levels they paid during the Clinton years.
Boehner finally held a news conference where he effectively declared that fixing the mess, which his party helped create, is no longer his responsibility.
He and other GOP leaders said it is now up to Democrats, who control the Senate, to come up with a solution.
"The Senate first must act," they declared, ignoring the fact that the Senate has already acted, at least on the tax front, and has passed a bill (incorporating Obama's initial $250,000 tax-rate cutoff) that the House could consider any time it wishes.
The debt ceiling
At the same time as all this is going on, the U.S. Treasury announced the government will hit the $16.4-trillion federal debt ceiling again on Monday.
And, once again, rather than authorize the Treasury to continue making interest payments on the nation's accumulated debt, some House Republicans are willing to risk default, with all its disastrous international implications for the faith and credit of the United States.
The party evidently feels it needs to preserve that threat as some sort of leverage for future battles.
Subtract the political posturing and parse the numbers, and this all makes even less sense.
All that separates the two sides is $450 billion over 10 years — less than one per cent of projected federal spending over that period.
So largely on principle, the custodians of America's economy are about to drive it into the ditch, dragging the rest of the world behind them.
Understandably, American voters are staring at all this with disbelief and puzzlement.
Until recently, most of them were telling pollsters they were confident there would be some sort of last-minute deal. It never occurred to them, it appears, that the people they sent to Washington would actually let the country go over this cliff.
But then, they did send those particular people to Washington.
As the hours tick by, Obama and his party's leadership in the Senate returned to town Thursday — the House is coming back Sunday night, barely 24 hours before the deadline — trying for a last-minute deal to save the entire nation from needless financial grief.
If they accomplish that, it will be nothing short of exceptional.