The “fiscal cliff” scare is a phony issue on a number of levels. It is a situation that was purposely created, and is now being used as a justification for taking steps that don’t have anything to do with the “cliff” itself.
One indication of this, and I’m by no means being original in saying this, is the fact that some obvious ways to enhance revenue without inflicting any real pain go unmentioned by our rulers, because the pain they would inflict, tiny as it would be, would be felt exclusively by the .01%.
The financial transaction tax is the best example. A tiny tax on each financial transaction would yield enormous sums of money for the treasury, without doing any harm whatsoever to the wider economy, and it would, as is pointed out at the linked article, impose the cost of recovering from the 2008 crash on those who caused it.
For us commoners, it would mean paying a tax so small on our infrequent stock purchases that we would never notice it. But high frequency traders would feel it.
There are two possible outcomes.
First, the traders could continue their current level of high frequency trades, which trades benefit no one but them, and often lead to market instability. This would be good, in that it would yield a bonanza for the Federal treasury without hurting the rest of us at all.
Or, the traders could stop engaging in high frequency trading, which would also be good.
But the serious folks in Washington don’t want to hear such things. It makes far more sense, apparently, to raise the eligibility age for Medicare, despite the fact that doing so would increase medical costs nationwide and inflict real harm on real people.
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