Customer Service-Respect and Appreciation

I think the greatest mistake in business is the lack of customer appreciation and attention.  After all, it is they that provide your company with the opportunity for growth and substance. This is the time most of us reflect on the past year's business, and -- if we haven't already -- firm up our plans and goals for the next 12 months. And of course, customer relationships should be high on the list of things on which to reflect. 

Here, in no particular order, are the 10 most important commitments you and your staff should make to your customers, and to yourselves, for 2013:

1. Be nice: Seemingly so easy yet, apparently for many companies, so hard. The simple quality of being nice to people makes them more receptive to any interaction, and makes all other elements of service easier and more effective.

2. Be accessible, respond quickly: Whether it's getting a real person on the phone quickly and easily, or getting a prompt and complete reply to an email or other inquiry, responsiveness and access are among the most critical determinants of customer satisfaction. In fact, according to the people who measure this stuff, accessibility and responsiveness are two of the four most common traits of the very highest-rated customer service businesses.

3. Give the benefit of the doubt: Always err on the side of the customer. Many companies, particularly when they are in "gray area" situations, fall back on policies and misguided self-protection. If you're not sure who's "right," whenever possible let it be your customer.

4. Don't lose your cool: Don't ever argue or be defensive with people -- there will always be difficult, unreasonable and angry customers, but very few of them are out to get you or your company. We all know that emotion just triggers more emotion, and it's your job as a service professional to stay above it and manage the tone of the conversation. Don't treat customer service as a competition. Odds are if you are doing things right, you won't be dealing with as many confrontational people to begin with.

5. Be generous: Whether it's with your time, tangibles or just in spirit, generosity is a quality that usually pays you back. If you can do something for someone, do it with pleasure. If you can do more, do that too. Go the extra mile.

6. Get to the point: Always get from A to B as quickly as possible. If you already know the likely outcome of a conversation, get to it sooner than later, without making the customer jump through hoops. Eliminate all steps, questions, processes and policies that aren't absolutely necessary. You, too, have presumably been a person needing service, so you know exactly what it means to want to scream, "can we get to the part where you help me now?" Don't make your customers feel that way.

7. Find the "happiest" solution: At the end of the day, all people really want is to be happy, and that's what customer service is generally about. So while you can't please everyone every time, always think in terms of what you can do to make the customer happier when she's finished dealing with you than when she started. There is usually a way.

8. Smile: Whether in person, on the phone or even when writing an email, if you're smiling chances are you'll say or write things in a way that's more likely to be well received. I'm not suggesting walking around 24/7 with a creepy grin on your face -- that just scares people. But a real smile, one that suggests you're happy to help, always makes its way through to the customer. If you're not happy to help, you're in the wrong line of work.

9. Listen: Of course, that's an important quality in all areas of life and business, except that many companies hear their customers without listening to them. Hearing only requires an ear (and maybe a headset); listening requires a brain -- and ideally a heart. Understand what they really want and need, and you're more likely to serve them well.

10. Empathize: This is what it all boils down to -- always. Genuine empathy is where all great customer service starts and ends. If you and your employees don't have it, you can never -- and I mean never -- excel at taking care of people.

If you really need a reminder of what it's all about, keep a pair of someone else's shoes next to your desk and put yourself in them once in a while. Seriously.

If you think you and your business are already hitting on all cylinders, congrats and keep up the incredible work. But much more likely, you're in the "always room for improvement" category. You might be operating at peak performance in some of these areas but not in others, or maybe you're generally great but always want to set a higher bar for your business.

Either way, take an honest look at how you fare in each of these areas. And it should go without saying that your review should include actually learning what your customers think, as well as your equally important employees.

Accounts Receivable-Getting Your Due

Even in what appears to be the best scenario for businesses, sooner or later receivables you counted on will be severely delayed, or worse, never paid.

A rapidly growing trucking company had a terrific contract with a Fortune 500 company in the oil industry. As long as they delivered on the work nothing could go wrong, right? Double wrong! Things went wrong when a new person was put in charge of the company's accounts payable department.

The new person disputed billing and the billing procedures that had always been accepted. The unilateral decision was made to stop all payments until a lengthy audit was completed.

Cole Harmonson, president and CEO of Far West Capital, a company that specializes in asset-based financing and factoring solutions, told this story. Far West stepped in and saved the day.

The trucking company was blind as to the solution, and Far West came to the rescue. As Harmonson puts it, "We don't just lend money. We partner with our clients to understand the dynamics of what can go wrong -- or, to put it another way, what must be done right."

Far West actually made the trucking company interim loans and helped them collect their money from the Fortune 500 Company within 30 days.

"If your company is growing rapidly, your business will not only have challenges with cash flow, but your internal resources as well as how you respond to your customers may need to change,” Harmonson said. The way you do business internally -- down to the very way you put out invoices -- will need to be changed. "Just because you've always used Sue or Bill to do your bookkeeping, as you grow, your business may require more sophisticated skills."

From the start, Harmonson realized that he was more than an asset-based lender. He described it this way: "I saw that people had potential beyond what they saw themselves, and I began to want to help them realize that potential."

Far West has grown from nothing to 8 billion dollars in asset management. What sets them apart is their understanding of entrepreneurs, as they are entrepreneurs themselves. They go in and help identify what you need as a growing business, and they consider their process to have three prongs. One is recognizing a client's potential. Second, being there as the resource for them to grow.

The third? Taking it to the next level by saying "if you do x, you can get y." They actually show their clients potential they may not have realized. Taking it to the next level means you have to reinvent yourself. You're going down a road that you've never been on, and any number of surprises can and will occur.

What the best asset-based lenders like Far West bring to their clients is support when difficulties come up. They also show you how to prevent difficulties that may come up in the future. They are problem-solvers that can help you with unexpected liabilities, sudden HR issues, and/or problems that are unforeseen to you.

Here's the process such lenders use to make it happen, which you can emulate:

- Evaluate the clients' customer relationship dynamics

- Understand how they manage existing customer relationships

- Analyze how growth will impact this structure

- Enhance the adequacy of the back room

What we learned from Harmonson is to not just look at the transparent credit-worthiness of your receivables. That's just the beginning. A more comprehensive due-diligence process covers the nature of your customers and your customers' customers. You will make better decisions on who you give credit to as a result of knowing this.

Far West sees themselves as that second set of eyes, evaluating whether your financial team is as top-notch as it needs to be. They drive the relationship from the perspective of the entrepreneur based on his or her goals and aspirations. They also encourage you to look at what you need to do to protect your personal net worth. They ask questions to find out what's important to you as the business owner, like "Do you want to grow or sell?" or "Do you want to grow to pass it on?" or "Do you want to grow to diversify assets?"

To summarize, Harmonson's rules for accounts receivable management are:

1. Go over contracts and make sure you have a plan on how to fulfill your contractual obligations. This will help ensure that your contracts are serviced correctly.

2. Evaluate the creditworthiness of your customers, and your customers' customers. Understand the dynamics of the cash flow.

3. Always are watching for sudden charge backs or worse.

4. How do you best ensure the customer will pay that last bill? You may have had a great relationship with a customer, but if and when the customer changes vendors, what can you do to ensure that you are paid? It's critical to know your leverage points. Can you "not" deliver a deliverable when not paid? You may find out that you have a lot more or a lot less leverage than you really do.

5. Make sure that all offices of your company handle situations with customers uniformly.

6. The last, and most critical: PAY ATTENTION TO DETAIL. Totally understand your client's Master Service Agreement, and perform according to that (otherwise you could not get paid!).

Small Business, The Debt Ceiling, and Congress' Inabilibily

Here we go again.

Just two weeks after Congress negotiated a last-minute deal to avert going over the fiscal cliff, economists say political squabbles over the nation’s borrowing limit could once again threaten to hurt the nation’s sluggish recovery.

“It’s probably the biggest headwind right now,” said Paul Ashworth, chief North America economist with Capital Economics.

President Barack Obama warned Monday that the nation could face serious consequences if Congress fails to authorize an increase of the nation’s debt ceiling.

“America cannot afford another debate with this Congress about whether or not they should pay the bills they’ve already racked up,” Obama said in a press conference Monday. 

In a separate speech later Monday, Federal Reserve Chairman Ben Bernanke echoed Obama's comments, arguing that Congress must raise the debt ceiling so the government can pay its bills.

Raising the borrowing limit was once seen as little more than a procedural matter, and, as Obama pointed out, an increased debt limit does not authorize Congress to spend more money. But over the past couple years it has become a focal point of Republicans’ efforts to control what they believe is runaway government spending by forcing a debate over spending cuts.

In the summer of 2011, the nation came perilously close to not paying its bills because Congress could not agree on the amount of borrowing it would authorize for the government. The debt ceiling fight roiled the stock markets. The growing political rifts also was one reason Standard and Poor’s cited when it lowered the nation’s debt rating from AAA to AA+, which threatened to raise borrowing costs for auto loans to mortgages.

This time, economists say the latest debt ceiling standoff also could be harmful because it’s yet another example of a political infighting bringing the nation to the brink of a fiscal crisis.

“It’s not so much the debt ceiling standoff itself,” Ashworth said. “It’s what the debt ceiling standoff tells you … about whether Congress is capable of dealing with the problems.”

Another protracted fight and potential crisis could cause other ratings agencies to reduce the nation’s credit rating, said Paul Edelstein, director of financial economics with IHS Global Insight.

“It’s less that these ratings agencies think the U.S. doesn’t have the resources to pay its bills the way a Greece or a Spain (does),” Edelstein said. “It’s just the uncertainty caused by the politics.”

Even if a last-minute deal is struck, economists said the ambiguity created by the fight also could hurt the economy because businesses may be cautious to hire new employees or spend money on projects while a deal was being hashed out.

“I think it’s one reason why the economy hasn’t kicked into a higher gear, and I suspect that businesses won’t take a lot of risk until this is nailed down sufficiently,” said Mark Zandi, chief economist with Moody’s Analytics. “It is a damper on growth.”

Still, Zandi and others say the really serious risk would only come if Congress actually can’t agree at all before the Treasury Department runs out of accounting tricks to keep funding going. That could mean the government wouldn’t be able to pay some of its bills, weakening the nation’s recovery and possibly even sending the country back into recession.

“If the debt ceiling actually becomes binding then the Treasury has no good options, and (it) will do a lot of damage to the economy,” Zandi said.

Republicans agree that failing to increase the debt ceiling would have serious consequences. But they also argue that government spending is a serious problem that needs a solution. House Speaker John Boehner, R-Ohio, and others have argued that the debt ceiling offers a good opportunity to find ways to cut spending.

Economists say there are concerns about the nation’s long-term economic health and it is important to think of ways to cut spending and raise revenue in years to come. But many argue that requires a serious discussion about what can be done to tweak big government programs like Social Security and Medicare over the next few decades.

Laurence Ball, an economics professor at Johns Hopkins University, noted that the old method of raising the debt ceiling with little formal discussion did not solve any debt problems. But he also questioned whether pushing the nation toward a possible fiscal crisis on a tight deadline is the best way to address these issues.

“To solve the problem you’d have to make some hard choices about cutting spending or raising taxes,” Ball said. “It’s very hard work to find reasonable solutions.”

The Trademarks of a Great Leader

The Trademarks of a Great Leader

Character: Great leaders do the right thing regardless of circumstances, situational context or other influencing factors. They will not compromise their value system and personal ethics for temporary gain. Without a consistent and enduring display of sound character you’ll find it difficult to earn the trust and respect of those you lead. While your character will be tested often as a leader, great leaders know there is no substitute for the truth.

Vision: 
Great leaders possess the ability to create a vision for the organizations they lead. They have the foresight to not only create a clear and well-defined vision, but also have the ability to articulately communicate the vision. Perhaps most importantly, they have the ability to align interests and evangelize the vision unifying leadership, management, staff and external stakeholders as well.

Strategy: 
Great leaders are strategic thinkers who have the ability to translate their vision into an actionable strategy to ensure its success. Strategically inclined leaders think in terms of creating leverage, anticipating & leading change, managing risk & opportunities, being customer focused, astutely deploying resources, always insuring the business model is in alignment with current market conditions, yet fluid enough to accommodate changes in market dynamics. Strategic leaders are keenly aware of items that create an advantage or defend a weakness.

Tactics: 
Great leaders tend to be tactical geniuses and display a strong bias to action. They understand the difference between raw data and useful information. Moreover they know how to leverage information and resources to achieve their objectives. They are focused, results driven and achievement oriented.

Focus: Great leaders are focused on the mission at hand. They don’t bite-off more than they can chew by falling prey to initiative overload. Great leaders do not major in the minors and understand that the main thing is to keep the main thing the main thing. Great leaders are committed to not losing focus and not giving-up.

Persuasiveness: Great leaders understand how to manage conflict and close positional and philosophical gaps. They tend to be contextual leaders who know which skill sets to draw upon based upon the circumstances at hand. They lead by serving as opposed to intimidating. Great leaders are masters of inspiration being able to take even the most critical skeptics and convert them into evangelists for the cause.

Likeability: 
Great leaders possess great interpersonal skills. They tend to be people-centric and understand the concept of servant leadership. People tend to like leaders who display good decision skills and high levels of integrity. While great leaders are typically very direct, they are also intuitive individuals who thrive on finesse and subtlety. They don’t expect or need to be liked to get the job done, but realize the value likeability can offer where it can be achieved without comprising trust or integrity.

Decision Ability: Great leaders possess the ability to consistently make good decisions. They thrive on making the tough call and are willing to be accountable for their actions. Great leaders also have the ability to make decisions quickly and often with incomplete data sets. Rarely do leaders have the luxury of being able to secure all of the information needed for a risk free decision. Rather they understand how to make a timely decision while managing any corresponding risks as others are still trying to connect the dots.

Team Building: Great leaders create great teams throughout the entire value chain. They understand the need for talent and are effective at recruiting, deployment, development and retention of tier-one talent. Great leaders also surround themselves with the best professional advisors possible and they openly seek the counsel of others in matters of importance. They are committed to both personal and professional growth. They tend to almost be addicted to increasing their knowledge base and sphere of influence. They are voracious learners always looking for better methods, different approaches, enhanced efficiencies, better technology and increased velocity. They are not afraid of change and growth – in fact, they tend to relish it.

Results: The proof of great leadership is ultimately found in the results being attained. Leaders can be extremely strong in any of the areas above, but if they are not leading effectively or productively, if they are not meeting performance expectations, then they have work to do. Great leaders get results…

Hostess-Twinkies and Lessons to be learned

Hostess-Twinkies and Lessons to be learned

Several weeks ago, Hostess announced that it was winding down its operations, shut its factories and lay off some 18,500 employees. Over time, it seems likely that some of its iconic brands may be revived but, for now, a large number of people are going to have a miserable Christmas season. Even in boom times, this would be bad news.

The easy explanation has been to blame the unions. The same was true when America's car companies failed. But while costs, of course, do count, you have to ask the more serious question: How responsive was this business to a changing, competitive and technologically advanced marketplace? Why weren't labor issues tackled? What was the management thinking? What did the unions seriously expect to gain?

You can't explain this business failure by anything sudden -- it is their second bankruptcy -- and tastes in unhealthy snacks have not undergone any revolutionary change. But the company has been sold three times since the 1980s, at each juncture racking up debt. So this is the classic story of a company that isn't being run for its customers, isn't being run for its employees, isn't driven by a love of product, but which is regarded purely and simply as the vehicle for financial transaction. The people who ran it consistently awarded them pay increases, all the time creating no future for the business that paid them so well.

It's become very fashionable of late to write about business failure caused by galvanic changes in the market place, disruptive technologies, fierce competition, volatile social change, globalization and so-called black swan events. But, rather like its products, this is an old-fashioned story of bad management: Well-paid managers who just didn't care about their future or that of their 18,500 employees.

It used to be said that Twinkies were the only food that could survive a nuclear holocaust. What they couldn't survive was greedy, short-term leadership by cynics who just didn't care.

A Lesson in How NOT to Negotiate-The “Fiscal Cliff” and Washington

Yes, we are all (most of us) freaked out by what is happening in Washington. We can all improve our negotiating abilities by watching Washington bumble their way toward the fiscal cliff.

I have taught negotiation for years, including to individuals and corporate leaders, at several businesses, and to members of business SWOT (Strengths, Weaknesses, Opportunities, and Threats) teams. I have worked with groups at an impasse that appeared worse than what is happening in Washington. Many ended up with agreements that got more than either side originally wanted. That's not only possible, it is commonplace, provided people avoid four pitfalls.

Pitfall #1: Confuse a negotiation with a debate. In a negotiation, your goal is a settlement that is the best possible for all concerned. The research is overwhelming that if you take care of the other side's interests, in addition to your own, you will get a better deal, and better future deals, than if you just try to beat your opponent. People often ask me to “play out” a great negotiation. When I do, people ask: When do we get to the good parts? Good negotiations make awful television. No "gotchas," no moments of outrage and no sound bite. What you see is a bunch of people having a cordial and constructive working session around a table.

In debates, the goal is to score points with an audience. You don't really care what the other side thinks or feels. In fact, the more wounded they appear, the better for you (as long as you don't push it too far and make your audience think you are a bully). When people who should be negotiating debate instead, they do lots of press conferences and speak in sound bites, often with laughter in the background.

In the case of the "fiscal cliff" talks, each side complains about the other, releases word that people laughed out loud when seeing what the other side offered, and makes its opponent seem crazy and irresponsible. Debates make great television.

If this were a debate, the Democrats would be winning, according to most recent polls -- most Americans would blame the Republicans if the country drives off the cliff. But since it's a negotiation instead, we're all losing. This approach appears to force the Republicans to give up one of their key points, which takes us to the second pitfall.

Pitfall #2: Go into a negotiation with a few elements you must have, or there's no point in even sitting down. Some of the best negotiators I have ever met work in law enforcement, usually as part of SWAT (Special Weapons And Tactics) teams or teams of behavioral scientists supporting SWAT members. Do people really ask for helicopters and safe passage to Mexico, like in the movies? Last time I asked that question, over lunch with a friend who is a police officer, they burst out laughing. "Not really," was their answer.

"But what would you do if someone asked?" "Get through it," they said, and referred to a technique called "click down". You ask why the helicopter is important. The likely answer would be: "to get away, idiot!" Humor me. "How do you see getting away playing out?" "I want to be treated with respect," might be the answer, and an ideal response to that is, "you have our respect, or else we wouldn't be talking." The person is then likely to talk much more reasonably about what happens next. Why? It is because it was never about the helicopter. It was about respect. When they were shown it, the need for the unrealistic demand went away.

Part of the problem here is that many Republicans signed Grover Norquist's "no new taxes" pledge. I wrote a year ago that revoking that agreement was necessary to deal with our financial situation, and should be done with honor.

To be clear, the fact that people signed this pledge is fine -- it's in line with a political and economic philosophy many of us (myself included) agree with. It is a problem because it prevents responding to unforeseen crises. There was a time when many Democrats would have signed a pledge to not enter wars. That also would have been reasonable, given a philosophy many of us (myself included) agree with. And if the world changed, as it has many times in the last 100 years, the pledge would need to be revoked to deal with Pearl Harbor, the rise of the Nazis or if Syria uses chemical weapons on its own people.

With that agreement in place, the next pitfall is almost inevitable.

Pitfall #3: Confuse positions with core values. I encourage leaders to never bend on their core values, but to make sure it is their values they are honoring, not their gut feeling that their adversaries are idiots. In this case, Democrats talk as if compromise is a core value (it is not), and Republicans talk as if not raising taxes is a core value (it also is not). The way to get past this confusion is for one side to ask why their position (what they say they want) is so important to them. Democrats would respond that compromise is important to get an agreement. Why is getting an agreement important? Because it's our responsibility to get one, they might say. And why is responsibility important? It just is, when a value circles back on itself, we're talking about a core value. And what about the need to increase taxes on people over a certain income level? The core value is fairness.

On the Republican side, why is no new taxes important? Because many conservatives believe that taxes slow growth and discourage investments by small businesses. Why is growth so important? Because people want to grow their businesses, and we all want to grow the economy, but will not if government gets in the way, their thinking goes. And why is keeping government out of the way important? It is because it's about liberty. And why is that important? Because it is -- so it's a core value.

Jonathan Haidt mapped liberal and conservative values in his "Moral Foundations Theory." Liberals (and many Democrats) value care and fairness. Conservatives (and many Republicans) tend to value a broader cluster of issues, including fairness, liberty and authority.

Imagine what would happen if both sides agreed to build a solution to the fiscal cliff based on the core values of growth, liberty, responsibility and fairness. There would be tradeoffs, but that's a much easier process than to sit people down who abhor each other and lock the door until they get an agreement. They might eat each other first.

Pitfall #4: Thinking (and saying) that this negotiation has to be hard.  My years of negotiation consulting, teaching and study have taught me one thing: If you follow a simple process, negotiations can move so quickly that the progress is stunning. President Barack Obama has said an agreement could be done in a week. If the people came together and clicked down on the other sides' positions (what they say they want) and then formed a settlement based on a small set of core values, here's what would likely happen: formation of a plan that would target national policy on the goal of creating a thriving economy, that is as fair to everyone as we can get, because we have the responsibility to give our children something better than we have.

This process could be done in half a day. I have seen it happen in some of the hardest situations in the world in under an hour, when people finally decided to stop debating and start negotiating.

We are facing a national crisis that none of us have chosen. As others and I wrote as the housing crash laid waste to the economy, a crisis is a terrible thing to waste. By "crisis," I mean a situation of uncertainty. We need uncertainty, because without it we would just get more of the same partisan divide, people telling the media (and us) that they could get this done if only the other side was more accommodating and responsible. So the crisis is here. 

We can use this latest crisis to create tribes of leaders -- not just politicians -- in Washington if we demand that they avoid these four pitfalls. Really, this is not that hard.

I would love to hear from you!  What is your take on all of this?

Lessons in Selling

Before I was a business counselor, before I was a senior executive and after I was an engineer, guess what I did for a living? Nope, I've never been a stand-up comedian (Why, got a venue you need filled?) Actually, I was a salesman. No, not the used car kind, I sold high-tech stuff like energy management systems and environmental lighting.

I'm not exaggerating when I say it was one of the best jobs I've ever had. Lots of perks, plenty of freedom, good relationships and the pay was pretty good, too. Why did I stop doing it? Well, I'm not sure I ever really did. I just incorporated those skills into my climb up the corporate ladder.

That's probably the best selling point for getting into sales. Whether you aim to be a top executive, an entrepreneur or just about anything, selling is a critical skill set. It will teach you how to pitch, negotiate and collaborate. You'll learn how to sell your projects, your ideas and yourself. And you'll learn the basics of business and finance.

Learning how to sell won't just improve your career. It will make it easier for you to do all sorts of things you have to do in life, like buying and selling, getting help from customer service people, dealing with insurance companies, negotiating with your spouse and kids, and most importantly, personal finance.

Getting into sales was definitely right up there in the top five decisions I've ever made in my life. That's why I think that every manager, executive and entrepreneur should carry a bag once in his career. Here are five lessons that everyone should learn from sales.

Shut up and listen. Nothing you've read or learned is nearly as important as what the person across from you is about to say -- if you just shut up and listen. Besides, when you speak first, you're giving away information and potentially committing yourself to a position. Always listen, learn and then speak.

Problems create opportunities. The most important opportunities to make a difference are always when things go wrong. How you respond in times of crisis, when somebody -- a customer -- needs you, is a window into your true capability. And that spells opportunity if you rise to the occasion and deliver results.

Business is all about relationships. These days it's popular to demonize corporations. That's ridiculous. People run all companies, and business is all about relationships between them. Organizations and teams are groups of people that interact and operate to accomplish shared goals. There's no such thing as a self-sustaining business.

Your customer always does come first. Customers aren't always on the end of a business transaction. You have way more customers than you think. Call it business karma, but whatever you have going on, whatever you expect to accomplish on any given day, when someone, anyone comes to you with a problem, that's a customer. Help her first.

Understand the decision maker's motives. Whether you're trying to sell a product, promote an idea or accomplish pretty much anything in the business world, there will always be a decision maker. Once you identify him, understand what motivates him, what's in it for him. That's the key to getting anything done.

One more thing; the toughest thing about selling is that everything happens in real time. The beautiful thing about that is you learn under fire, and that naturally accelerates the learning process. There truly is no better way to learn how business really works.

Nothing happens without a sale: Employment relies on sales; Finance relies on sales; Commerce relies on sales; Engineering relies on sales; every product without regard to shape, form, and function required someone dealing in the art of the sale.  Look around your surroundings, everything around your internal and external sight of vision was sold by a salesperson.  How important is the salesperson?  I would say critical to our everyday life!

The “Fiscal Cliff”-How will it affect you?

The “Fiscal Cliff”-How will it affect you?

The Facts:

As the end of 2012 approaches, business owners, investors, and the public at large will increasingly discuss the possibilities for the coming “fiscal cliff,” a combination of tax increases and spending cuts that will be automatically triggered at year-end unless Congress decides to act. Should our nation’s leaders decide not to act on these matters before the end of the year, here are some of the potential consequences the citizens of the U.S. may face:

1. Ending of the Bush Tax Cuts: In general, this will result in increased tax rates for most. The current tax structure of 10%/15%/25%/28%/33%/35% will change to 15%/28%/31%/36%/39.6% in 2013.

2. Long-term capital gains tax will rise from 15% to 20% and dividends will likely be taxed as ordinary income.

3. The temporary 2% reduction in employee-paid Social Security tax will expire.


4. The estate tax structure will change significantly, with the exclusion for estate and gift tax to drop from $5.12 million in 2012 to $1 million in 2013. Additionally, the top estate tax rate increases to 55% from 35%.

5. High earners (those single filers earning over $200,000, married filers over $250,000, or individuals married filing jointly over $125,000) will be the most affected. For these taxpayers, certain itemized and dependency deductions will be reduced or removed, and the Medicare tax on these individuals will be raised an additional 0.9%. On unearned income, these individuals will pay an additional 3.8% in Medicare tax.


6. Education, transportation, and energy programs will be the hardest hit by mandatory spending cuts set to take place over the next several years.

While none of these consequences are foregone conclusions at this point, our nation inches closer and closer to the coming “fiscal cliff” as the elections have ended and the new year deadline approaches. Unfortunately, much of the debate for finding resolution on these topics will likely be delayed by an arrogant Congress.

The fiscal cliff is a powerful metaphor. It sounds like an impending disaster, but in reality, we’ll wake up on the morning of Jan. 3 and life will be unchanged. Sure, tax rates will nominally be higher, some tax breaks will have been canceled, and the government will be expected to implement major cuts in military and domestic spending. If that continues for several months, it will have an adverse effect on the economy.

But letting the law take effect will also have some real benefits. For one thing, on the other side of the cliff, we’ll be a big step closer to the kind of fundamental reform of the tax code that both Democrats and Republicans say they want. Two provisions that limit the deductions and personal exemptions the wealthy can take — similar to the cap on deductions proposed by Mitt Romney — will come back into effect. Capital-gains rates will rise from 15% to 20%, and dividends will be taxed at normal rates, reducing the incentives for tricks like the notorious carried-interest loophole. And instead of a tax system that produces less revenue as a percentage of GDP than at any time since 1950, we’ll move toward one that is adequate to the needs of a modern, dynamic economy. The fiscal cliff is, all by itself, a budget deal and a step toward tax reform; A flawed and dangerous one, to be sure, but a far superior starting point for a real budget agreement than the temporary rules of 2012.

Once tax rates and other provisions have returned to their previous levels, as planned, Congress and the White House will have a little time to look at taxes and spending and decide how best to keep the economy moving now and in the future. Is it by cutting taxes for low- and middle-income working families, who were hit hardest by the recession and gained little in the George W. Bush years, when most of the benefits of growth went to the top? Or is it another round of tax cuts for those who have gained the most?

Let’s remember also that the fiscal cliff is not a natural phenomenon; it’s the law. None of the tax cuts that will be changed by it were supposed to be permanent in the first place. Some of the cuts — mostly those from the early Obama years — were to provide economic stimulus during the recession. Those should be revisited every couple of years, and if we think the economy still needs a boost, we should renew them for another year or two. But, the bulk of the tax cuts that expire date from 2001 and ’03. At that time, when our country had budget surpluses, both Democrats and Republicans wanted to cut taxes. But Republicans wanted to cut them by about twice as much and to make much bigger cuts for the wealthy than for the middle class. Rather than compromise with Democrats, Republicans twice employed a special rule, known as reconciliation, to use their narrow congressional majorities to push their version of tax cuts through. Because that special rule can’t be used to make permanent changes that worsen the deficit, they had to put an expiration date on those tax cuts. So the fiscal cliff is a long-overdue chance to revisit choices from the past and better address what we need to do for our future.

In the world on the other side of the fiscal cliff, Democrats and Republicans will have no choice but to work together on tax cuts that will be fairer to the middle class and encourage economic growth. And then, over several years, we have an obligation to look closely at Medicare in particular and figure out how to slow the growth of health care costs in that program. That work can only begin on the other side of the fiscal cliff.

Personal Opinion:

To barge through this political gridlock and get the parties into position for real compromise, I hereby suggest they go over the cliff.

The implications would not be felt for several months, giving time for making amends. Both sides would have "held out to the end," satisfying their most ardent flag-wavers. The threats of tax hikes and spending cuts would be real, putting politicians on the spot without time to dally.

And the challenge would become one of adding benefits and mitigating tax pain, a much easier proposition than reducing benefits and adding pain before the deadline.

Republicans would agree to reinstate tax cuts for everyone except individuals making more than $200,000 a year and families making more than $250,000.

Democrats would agree to more entitlement program reform than they would before the cliff deadline.

Today's admonitions are based on worst-case implications if the tax hikes and spending cuts go fully into permanent effect, which is not in the cards, regardless. Let both sides jump in the soup together by letting the cliff deadline pass. Then we'll see the fur fly, and at the end of a few weeks all hands will wring out the kind of compromise solution they can't reach until dawdling is not an option. The changed political dynamic will bring it on. The fiscal cliff will have done its tactical duty.

So, you Thelma and Louise’s out there; What do you think?