THERE IS a feeling that, fiscally speaking, 2013 will be like Groundhog Day, the movie. We'll just keep living brinkmanship over and over.
The late-night congressional voting this week that averted the notorious fiscal cliff kept us from lurching over the side, but we are by no means on safe ground. It puts off the toughest decisions about spending cuts for military and domestic programs, including Medicare and Social Security.
Lawmakers who voted against the 11th-hour compromise are also hoping to get their revenge when a vote on extending the debt ceiling occurs in a few weeks. The debt ceiling must rise soon to avoid default on U.S. loans.
An analysis by the Associated Press reveals that the deal reached between President Barack Obama and congressional Republicans continues to let Americans enjoy relatively high levels of government service at low levels of taxation. The only way that's possible, of course, is through heavy borrowing, which future generations will inherit.
The New Year's Day agreement raises taxes on individuals earning over $400,000 and couples earning over $450,000 a year -- less than 1 percent of all U.S. taxpayers -- and preserves the Bush-era tax cuts for everyone else. But paychecks will be slimmer this year because the employee share of the payroll tax reverts to 6.2 percent from 4.2 percent.
The AP noted that while Americans widely denounce the mounting debt, not so many embrace cuts to costly programs like Social Security or Medicare. And most want tax increases to hit someone other than themselves.
Some economists were disappointed that a broader deal to significantly reduce the deficit over the next 10 years could not be reached. They claim that could have boosted business and consumer confidence and accelerated growth, necessary to keep the economy on the right track.
"This is another ‘kick the can down the road' event," William Gale, co-director of the nonpartisan Tax Policy Center and a former Republican White House adviser, told the AP. "It is a huge missed opportunity."
Gale believes failing to reach a deal would have meant a combination of big tax increases and deep spending cuts that would have provided major political leverage for both parties to achieve greater deficit reduction as they worked to ease some, but not all, of its bite.
The government currently borrows about 40 cents for every dollar it spends. This week's deal leaves most government programs operating as usual, postponing yet again the threat of serious reductions.
Polls tell us public approval of the 112th Congress finished at 11 percent. The 113th Congress now takes over, and we can only hope it won't be a repeat performance.