Jonathan Chait has noticed something important: the finance fucktards do not understand what the fiscal cliff is—or claim not to anyway. You, dear reader, may be forgiven if you are a little vague on it. So let me explain.
Because of the Republican “debt ceiling” debacle, unless something is done, at the end of the year, $100 billion each will be cut from military and social programs. Also, if nothing is done, there will be a huge tax increase caused by the ending of the “temporary” Bush tax cuts. If this all happens, the country will again be plunged into a recession. This is surprising, because according to conservatives, government doesn’t create jobs. Oh, that’s right: conservatives are either stupid or evil, so we shouldn’t listen to their claims about the economy—or pretty much anything else. So yes, the fiscal cliff will throw the economy into recession.
Because of this, President Obama is in an excellent situation to make a good deal with Republicans. (At least, he is if he wins reelection.) But as Chait points out, people like Jamie Dimon[1] and Lloyd Blankfein are confused about the fiscal cliff. He quotes a letter they wrote that says, “Interest rates could spike significantly if policymakers do not agree to stop the series of automatic tax hikes and spending cuts and replace them with a long-term plan to tame the federal debt.” Chait is blunt: Uh? No!
Economics is hard, but this is easy. All you have to do is remember the history of the last 4 years. Under most circumstances, when the economy is weak, interest rates are low. The fact that these guys don’t understand this very basic bit of economics shows what I often say: the rich are not that smart or knowledgeable.
The big news is not about these two guys, though. The big news is Peter George Peterson. This is the guy who for years has been making so much noise about “entitlement reform.” He claims that if we don’t do something, there will have to be entitlement cuts in the future. His big idea: entitlement cuts now. He is probably the best example of someone who wants to cut Social Security rather than raise (or eliminate) the cap. I suspect the reason that he never talks about this extremely reasonable plan is that it would cost him money, whereas raising the retirement age to 75 would not. (Peterson is 86.)
Peterson hates the idea of the fiscal cliff. But not because it will be bad for the economy. He hates it because it will pretty much balance the federal budget. And if that happens, he will have no reason to call for cutting entitlement programs. I’m not joking!
The real issue with all of these guys is that they want to do what is in their own financial interests. Anything that they say is just a smokescreen for this. What they want to do—what they always want to do—is cut their taxes, raise yours, and cut your benefits. (You also won’t see them calling for an end to corporate welfare—especially Too Big To Fail insurance!)
[1] Dimon is a Democrat. But as we all know, that doesn’t mean much. All it probably means is that he has a brain that functions at a higher level than a troglodyte. The head of JPMorgan Chase is not on the side of the little guy.
