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By Nick Wakeman

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Nick Wakeman

Fiscal cliff averted, but pain still to come

Along with playing with the kids and relaxing over the holiday break, I kept an ear out for what was going on between Congress and the White House.

It was disgusting, to say the least. Very little was accomplished other than finding a compromise to the tax issue. But sequestration was kicked down the road for two months.

It is very unfortunate and disappointing that a more long-term solution couldn’t be hammered out.

Think about all the time, energy and angst that went into that two month delay. Congress could have done that a few months ago, when they passed a continuing resolution that extends funding until March.

With our luck, we’ll probably now have a triple cliff facing us – sequestration, the CR expires and the debt ceiling running out.

In a few days, the new Congress will be seated, and it’ll fall to them to figure something out.

I’m giving up on predictions, but a lot will depend on whether the new Congress has a different personality compared to the old Congress. Will there be more willingness for compromise? That, I don’t know. Many of the same players are still there, so...

If the taxes issue is really solved now, then that removes one bone of contention, and perhaps Congress can hash out a deal on spending.

Based on recent history, we can probably expect any action to come at the last possible moment.

So right now, we have a two-month planning horizon, but that doesn’t really buy you much visibility if you are making million-dollar decisions.

Essentially, we’re in the same spot we were in August or September, and that’s a shame.

Posted by Nick Wakeman on Jan 02, 2013 at 12:00 AM


Reader Comments

Mon, Jan 7, 2013 Rick in DC

It is pretty simple math - assuming 200 million taxpayers, then for every Trillion dollars the government spends, the average taxpayer needs to pay $5,000 more. Thus with $16 Trillion in debt (and growing) each taxpayer owes $80,000 to the government, just to get back to break-even. This equates to about $250 per month extra taxes for the average taxpayer, beginning now and for the rest of their life. Additional failure to reign in spending will continue to make these numbers increase. But no one in this administration nor the congress will talk about this.

Thu, Jan 3, 2013

Well, kicking sequestration 2 months down the road gives the big defense contractors ample time to give their employees the 60 days' notice of RIF required by the WARN Act without the threat of retribution from both sides - the White House and the employees and their unions.

Thu, Jan 3, 2013 Crashemt

Sorry to say this, but the "Cliff" was not averted. Congress cannot and will not deal with their spending problems any more than a heroin addict will suddenly quit cold turkey of his own accord. The "cliff" just got bigger. All Congress did was slow down long enough to help remove the front caliper brakes of the car we are driving over the "cliff". Hell, the soultion costs $200+ Billion more than it takes in with new taxes. At this rate, the next two month deal will cost the taxpayer 3 times the annual Federal budget in new spending.

Thu, Jan 3, 2013 Bob Sturm United States

Totally agree with you Nick! We should focus on the real issue of spending on non-priority programs and getting rid of the low value programs to fund Disaster Relief for Sandy Victims, Homeland, CWMD and securing our vital infrastructure, especially those that are susceptible to a Chem/Bio, CBRNE event. These "essential" projects should be the first priority along with fully funding benefits for Soldier/Family Benefits and Veterans Benefits. Everything else should be fair game. Focusing on the deal we made actually compounds the underlying problem and sets the U.S. up for the perfect financial storm in 2013!

Thu, Jan 3, 2013

Well, we have to pay for a multi year conquest of Iraq. That trillion dollar undertaking got financed, remember?

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