At this point in time, there is no deal underway to ensure that the country does not run over the fiscal cliff. The Fiscal Cliff will be reached if we do not have a deal in place by late December- so the clock is ticking down. The Fiscal Cliff provides an opportunity for the party; if we can reach a deal (which I believe we can), then we have credited the Republican party as collaborative and in the interest of the American Party. If we don’t reach a deal and get to the Fiscal Cliff, there will be major political challenges across the aisle, and a complete change of pace for the nation.
If a deal is not reached, by January 1st, we will run over the cliff. It’s as simple as that. Within 3 days, the stock market will have made the largest drops in a decade, and layoffs will be spouting all over the place. The spending cuts will begin to kick in, and the attitude among Americans will make a drastic change. No longer will Medicare and Medicaid be major dependencies for people, as these programs will take huge cuts. The military, unfortunately, will also take major hits during this time of economic peril.
Within less than a week, the country’s economy will be in such a dire state, that congress will reach a deal. The GOP will cave on the tax increases, and the Democrats will cave on the massive spending cuts and reforms. The cuts made prior to this will remain permanent, and while those cuts could be restored, they won’t. This deal would simply lessen the effects of running over the Fiscal Cliff, and we would have a completely changed American economic course, as all funding initiatives will have been rerouted.
With several trillion in cuts, and likely a trillion in tax increases, the American government spending will have stabilized and the economy will begin to recover from those three days of economic hell. It’ll be a recession all over again, we’ll have 9% unemployment, $4.00 gasoline, and lots of struggling families, hurting after their Christmas run. But the spending will be under control. The unemployment rate will slowly creep back down because of the stabilized spending, and with it will be gas prices and food costs.
The Republican Party will receive the blame during those three days of economic pain; yet recessions are not attached to the congress, they are attached to the President. We will take the blame for this new, emergent recession, but the blame will quickly move over after a deal is reached after we go over the Fiscal Cliff. President Obama and the Democrats will ultimately receive the blame for going over the cliff, and it’s a mighty good thing we’re not holding midterm elections in January, as we’d lose every seat. But with midterms two years away, the Democrats will lose all of their seats because of a movement in the blame.