"Fiscal cliff" isn't so bad...

[mikegg]

Correct me if I'm wrong but we're just going back to Clinton era tax policies which worked well for the country?

Yes, there will be a recession and yes, your standard of living will drop slightly but in the long run, we should be better off.

Shouldn't we fix the problem now by sacrificing a bit than to have a massive implosion a couple of years down the line?

 

[NTMBK]

Correct me if I'm wrong but we're just going back to Clinton era tax policies which worked well for the country?

Yes, there will be a recession and yes, your standard of living will drop slightly but in the long run, we should be better off.

Shouldn't we fix the problem now by sacrificing a bit than to have a massive implosion a couple of years down the line?

The sudden shock just as the economy is pulling out of a recession would make it nosedive again. The time to phase in revenue increases is during the boom years after a recession, not when the economy is still fragile. This is the core concept of counter-cyclical measures. The government builds up debt during recessionary periods in order to get the economy out of a recession, then pays down the debt during boom years in order to slow inflation and stop the bubble overheating.

Of course, most governments have been pretty bad at the second half lately.

 

[First]

It's too severe a tax hit all at once, and worse of all it would be quite unexpected, and expectations are everything in markets. If you're going to raise taxes on the middle class (which may be necessary, but I certainly hope not), you'd have to phase it in over time. It's like a run on a bank; if everyone asks for all their deposits all at once, the bank's going to go belly up even if it's the most solvent fractional reserve bank in the U.S. But if existing customers ask for their deposits back over time, eventually a bank can recover with new customers and new markets, given a long enough time horizon. People and businesses need enough time to plan ahead and get their finances and taxes in order if there's going to be a tax increase on them.

 

[mikegg]

The sudden shock just as the economy is pulling out of a recession would make it nosedive again. The time to phase in revenue increases is during the boom years after a recession, not when the economy is still fragile. This is the core concept of counter-cyclical measures. The government builds up debt during recessionary periods in order to get the economy out of a recession, then pays down the debt during boom years in order to slow inflation and stop the bubble overheating.

Of course, most governments have been pretty bad at the second half lately.

Gotcha. But I don't foresee any booms ahead, do you? It's hard for me to see any game changing economic event that can create a boom for us unless it's temporarily artificially created by the government.

 

[Darwin333]

Gotcha. But I don't foresee any booms ahead, do you? It's hard for me to see any game changing economic event that can create a boom for us unless it's temporarily artificially created by the government.

Pssst: We are currently in it and yes, this is pretty much the best they can do. Don't tell anyone I told you though, ok?

 

[HeXen]

dunno how true it is, but I heard the average under 40K joe will see about a $1400 a year increase in taxes.
That would pretty much take my property tax from me if true. What's worse is when I think about how it'll just get mis spent again.