Monday, December 10, 2012

Fiscal Cliff? Not Really - But Republicans are on the Defensive

I watched Brit Hume on O'Reilly tonight and had to agree with his simple analysis of the so called fiscal cliff situation.  Obama is showing his native arrogance because he correctly assesses that he has the advantage in these negotiations.  Two bad things will happen that Republicans don't like, tax rates will increase and defense spending will be cut.  Only one thing will happen that Democrats don't like, Medicare will be cut, and Republicans will take the blame for it.  Further, the public is set to blame Republicans right now, because they can't get their act together on messaging.  Hume blames the MSM, but I think its time to quit doing that.  The MSM is an arm of the left, just get used to it; point it out occasionally, but deal with it.

What's to be done?  Boehner truly has a weak hand, he has to keep his members in line, and they are always worried about the next election.  My strategy would be to stall.  Keep passing short little extensions of the status quo and kicking the can down the road a bit.  Use the time to get the messaging better and trumpet what you are willing to do.  For example, phasing out deductions for the rich will raise revenue in a static analysis.  It eventually needs to be done in order to keep marginal rates low anyway.  So the Republicans need to tout how they are reformers of the status quo and are also putting revenu on the table.  If only, if only, the President would do something about spending.  Just give us a little more time to persuade him.

The fiscal cliff's worst impact will be to the economy over marginal tax rates.  I have looked at the military cuts, and they are mostly back loaded.  Some will immediately take effect and there will be a great hullabaloo, but I don't take them seriously, especially in the long term.  The regulatory cliff will probably be far worse for the economy.  Obama will unleash the EPA and the Labor department on American businesses soon.  With Europe tipping into recession, this will be a bad time for the economy.

Republicans need to avoid blame for this by being very careful about how they handle the fallout over the negotiations.  Obama clearly wants the negotiations to fail, to force the GOP's hand.  Stalling would seem to be the order of the day.

Glad to be back blogging again after a hiatus for a tough class.  I wrote a paper on cloud computing security that proved more difficult than expected.  I am no expert, but I think the opportunity exists for the government to safely use cloud computing.  However, I am concerned about how the government would implement security measures, and more importantly, monitor for security.  This is the direction the current administration intends to go, so it will be an interesting ride.

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