Fiscal Cliff = Fiscal Fiction

There is so much misinformation being given to the American People. Listening to the political leaders and talking heads has obscured many important facts about the "fiscal cliff". Here are several of the important ones.

1. We have to raises taxes on the top two percent because we can't afford those tax rates - according to White House.

Our ANNUAL federal deficit is nearly $1,000 billion ($1 trillion). The tax increases on the top two percent earners (> $250,000) will at most yield $80 billion annually. That leaves annual deficits of $920 billion.

2. Social Security does not affect the deficit.

It actually does. While the accounting records for many federal expenditures are segregated, Congress has long ago treated spending as a unified budget. Social Security does have a separate tax to fund, but, those tax dollars will be inadequate in a few years. Then, the rest of the Federal budget will have to source these payments. There is a lot of confusion on this issue to obscure how big the problem is. In effect, the federal government for years has used/spent surplus revenues collected into the Social Security fund accounts.

3. The President campaigned on raising taxes on the top 2%. He should get his way and Congress should pass legislation to raise taxes as he campaigned on.

It is true that he campaigned on increasing taxes. He also campaigned on many other things. It is also true that he likely believes that Congress should concede to his wishes.

However, the President did not run on amending the constitution to eliminate Congress' role in passing tax laws. The one truth about election results in 2012 is that the balance of power remained the same after the election and most of the same people and influences are still in place. That means that Congress and the White House both have a significant say in the outcome of tax policy. Our constitution was not changed by the election.