The Fiscal Cliff: That's Trillion with a 'T'

James Tonkowich | Columnist | Monday, December 3, 2012

The Fiscal Cliff: That's Trillion with a 'T'

In Yosemite National Park, some rock climbers scale Half Dome’s 2,400-foot face and skip the long hike back down by leaping off the cliff wearing a parachute. It’s called “BASE jumping” and, yes, people really do it, but it’s illegal in Yosemite and for good reason. As you may have guessed, it’s extremely dangerous, as a number of deaths testify.

Which, of course, brings us to going over the fiscal cliff. If you haven’t thought about putting on a parachute and saying your prayers, I would strongly encourage you to consider it. My gut tells me that we’re all going over the edge. And it’s a good thing that misery loves company — assuming that it actually does.

Taxes for all Americans — or at least the just-over 50 percent of Americans who pay any federal income tax — will increase. In addition, federal agencies will experience an across-the-board cut in budgets. If typical bureaucratic behavior ensues, expect cuts that annoy and inconvenience the public rather than disrupt the bureaucrats.

A big part of the difficulty in preventing a painful trip off the fiscal cliff is a fundamental misunderstanding of what “trillion” means. One trillion dollars is: $1,000,000,000,000. It’s a one with 12 zeros, or one thousand billion, or one million million. It’s so big that it’s small wonder that our politicians treat it like Monopoly money. Wrapping your mind around a trillion real dollars, however, is both difficult and vital. So let’s try.

As of 2011, there were only 15 nations out of 185 in the world that had a GDP of $1 trillion or more. Saudi Arabia, Switzerland and Sweden, nations we typically consider to be wealthy, were not among them.

Put another way, if you taxed the entire net worth of the 40 wealthiest individuals in the world, confiscating every dime, you’d have just over $1.066 trillion, still $23 billion short of the $1.089 trillion we borrowed in 2012 and well short of federal borrowing each year from 2009-2011.

My point is that Congress/White House deals that look at a budget deficit of $1 trillion a year (apparently the new normal) and shave off $1.6 trillion over five years are not the product of serious people thinking seriously.

Pretending that adding $700 billion a year to the national debt rather than a trillion will make a meaningful difference for us, our children and our grandchildren is the work of cowards and scoundrels.

And those who think we can tax our way out of this problem without cutting spending (though taxes will have to be raised), are victims of magical thinking. The 1 percent may be rich, but nobody is that rich.

“A billion here, a billion there, and pretty soon you're talking real money” is often attributed to the late Sen. Everett Dirkson. It’s a good line that is unfortunately no longer true. In the current budget debate a billion here and a billion there is a rounding error, mere decimal dust. We need a trillion here and a trillion there. And that will cause pain for just about everyone.

That is why we need, to use Michael Gerson’s phrase, “leaders for lean times.” Writing in the November 30, 2012 Washington Post, Gerson called for leaders who, among other things, have, “The courage to take on large interests. If the largest voting bloc or the most organized pressure group always prevails, then public benefits and burdens become a function of political influence, not need or merit. So politicians, at various points, will be required to resist AARP and Americans for Tax Reform, public-employee unions and tea party activists.”

As every one of us knows, spending money in boom times is easy and makes everyone happy. Cutting the budget and taking a second job to increase revenue in lean times is painful and makes everyone sad and mad. What we need in Washington are people who have the courage to do the right thing for our deeply indebted nation regardless of who’s sad or mad, regardless of bad PR, and regardless of threats of early retirement in the next election.

That is, if we’re going to avoid the fiscal cliff, we need leaders, not politicians. The next few weeks will separate them out for us.

Meanwhile, as you’re Christmas shopping, don’t forget to buy a little something for yourself. May I suggest a good parachute?

Publication date: December 3, 2012