What's so bad about the fiscal cliff?

[jhu]

Increased taxes and reduced spending. Isn't that what's needed to getour debt under control? According to the CBO, we'll hit a recession in the near term (1 year) and have better growth after that. Both R and D think it's going to be a huge crisis if we don't do something (and they've sold their constituents on that too).

 

[Infohawk]

What do you think would happen to the US and its citizens after it gets rid of its debt?

 

[Anarchist420]

Increased taxes and reduced spending. Isn't that what's needed to getour debt under control? According to the CBO, we'll hit a recession in the near term (1 year) and have better growth after that. Both R and D think it's going to be a huge crisis if we don't do something (and they've sold their constituents on that too).

Slashing spending is absolutely necessary. However, tax revenues don't need to be increased as the govt taxes too much already. What the govt can do is balance budget while selling off its 70-90% of its weapons and land to the highest bidder. Some of that can be used for spending, but the majority will be used to pay off most of the debt. The debt owed to the Fed can be repudiated, so the debt isn't quite $16Tn. The U.S. gov is owed by countries it also owes if I'm not mistaken so that can be cancelled out. Then, some of the leftover debt to them can be repudiated. Finally, the internal debt held by the public can be partially repudiated (not all, maybe 1/3). The intragovernmental debt may not be debt depending on who is asked and what is done.

Here is how the FY2014 budget should be balanced immediately if no parts of the U.S. Federal Constitution can be repealed:
Taxes on gold and silver repealed. Max CG tax rate reduced to 12%
The marginal tax rate for all businesses reduced to 15% (eliminate all deductions for the health care of the currently employed) and a $200k exemption so that small businesses pay nothing and don't even have to file. New firms will set up shop here and America will be competitive again. Repeal of Federal min wage and all other Federal labor laws.
All current tax cuts extended, unless listed otherwise.
Allow those less than 28 years of age to opt of SS. Reduce SS tax rate for employers to 4.2% as it is for employees.
Bottom marginal income tax rate reduced to 5%, with the 15% bracket becoming 10%, the 25% rate reduced to 20%, then the top marginal rate is 24%. The 20% bracket can be slightly compressed from what it was when it was 25% (to partially offset lost revenue) and the top marginal rate of 24% could start at 325K of taxable income. Repeal all Obamacare taxes (and expenditures). Self employment expenses remain deductable, except for current employee health care plans. Up to $60k in personal shelter expenses deductable.
Repeal of the AMT, all arms taxes, import quotas, Dodd Frank, and SOX (repeal of only the former two would reduce revenue)
Export of raw materials (except gold and silver), fruits, meat, and natural resources taxed at 10% and tax on all imported manufactured items @ 6.25%.
Reduce gas tax to 11.1 cent per gallon and tax sports tickets at $100.
Federal weapons and land sales will cover lost revenue, if any is lost.

Now for expenditure reduction:
Reduce maximum personal social security check to 1.85k/mo and freeze it there for 3 years.
Medicare user fees increased for the wealthy as income tax (2/3 of non-SS income, $30k exemption). Make it easier to opt out of medicare and repeal penalty for not registering.
Patents repealed on pharmaceuticals and none other than generic and imported drugs used for Part D.
Pay down most of the debt immediately and repudiate the rest so no more interest has to be paid.
Reduce military spending to $125Bn (based on FY 2011 USD) and freeze it there by closing all bases on foreign soil, no new research, and by closing 2/3 of the bases here. The VA dept and veteran's pensions can be increased by $100Bn.
Freezing of federal retirees' pensions (except for those laid off, see [1]) at FY2006 levels.
Reduce State, Treasury/IRS, and Justice Depts to not total more than 1/4 of FY2012 total levels. DoJ can be reduced by freeing all non violent drug offenders, no drug raids, and executive pardon of all federal defendants. Treasury can be reduced by simplified tax code, reducing IRS employees, and reduce prosecution.
FDA reduced to FY1995 level (non inflation adjusted) by just offering recommendations (no enforcement), Exec pardon of the Amish (and all others) who sold raw milk. Reduction by issuing fewer tests, employee layoffs, and a compensation cap of $75k.
EPA reduced to FY1995 level (non inflation adjusted) by just offering recommendations, opinions, and no enforcement.
Depts. of Edu, Transportation, Energy, HUD, and Agriculture abolished. $25Bn in pensions to those let go [1]. Ownership transferred to current tenants of HUD.
Unemployment reduction to not more than 1/2 of what it was the previous year, in inflation adj dollars (possibly through block grants).
Medicaid and SCHIP expenditures reduced to 1/2 (inflation non-adjusted dollars) of FY2011, changed to discretionary spending.
WIC reduced to 1/3, because breast feeding is best for 8 months of so of life. Not covering milk for those younger than 8 months would likely raise the IQ of many of those dependent on WIC anyway. Changed to discretionary spending.
TSA abolished. DoHS abolished. Presidential and Congressional salary reduced to $40k and Secret Service cut back. Compensation for capital police reduced to 4/5 of what it was the fiscal year before.
Export Import Bank abolished.
FCC abolished.
Health and Human Resources reduced to FY2006 levels (inflation non-adjusted).

I'm estimating that would cost not less than $1.9Tn (in FY2011 USD) and not more than $2.2Tn (in Fiscal Year 2011 USD). Of course, it's not perfect, but restoration of civil liberties at home, the restoration of States' Rights, cutting out the empire, cutting out the corporation welfare, and reduction of the bloated bureaucrazy is not only reasonable, it's absolutely necessary to do so now.

 

[techs]

This is why the Tea Party is so dangerous. They are not just ignorant they are stupendously ignorant.
Actually wanting to cause a Great Depression is madness.

 

[Pr0d1gy]

This is why the Tea Party is so dangerous. They are not just ignorant they are stupendously ignorant.
Actually wanting to cause a Great Depression is madness.

Yet people support and laud them for protecting the people. It's such a joke.

 

[yllus]

Yeah, I see it as a great opportunity as well, but I haven't looked into it that deeply either.

 

[Matt1970]

Well ya know, maybe of we had a stimulus that didn't take 10 lousy years to pay out and a President hell bent on class warfare.......

 

[Jaskalas]

This is why the Tea Party is so dangerous. They are not just ignorant they are stupendously ignorant.
Actually wanting to cause a Great Depression is madness.

So what you admit is that we're in a Great Depression and you merely want to mask the problem by kicking the can down the road.

 

[Pr0d1gy]

Well ya know, maybe of we had a stimulus that didn't take 10 lousy years to pay out and a President hell bent on class warfare.......

lol Reality called, he said you can stay gone.

 

[Matt1970]

lol Reality called, he said you can stay gone.

3rd grade called. They want their joke back.

 

[Pr0d1gy]

3rd grade called. They want their joke back.

You mean the same one you just used?

 

[MovingTarget]

This is why the Tea Party is so dangerous. They are not just ignorant they are stupendously ignorant.
Actually wanting to cause a Great Depression is madness.

This. That kind of austerity worked out really well for Herbert Hoover. Austerity should be practiced when times are good, not when the shit hits the fan. That does not mean that the nature of spending shouldn't be changed as not all spending is equal. (considering the economic multiplier effect) The tea partiers like to say that taxes shouldn't be raised to reduce/eliminate the deficit due to "taxes already being too high", but the truth is that taxes are at historic lows in the US.

Going over a fiscal cliff is not a good idea. Its just dumb...and shows that the tea partiers are no statesmen...

 

[Matt1970]

You mean the same one you just used?

No, but any joke is better when I use it.

 

[Matt1970]

This. That kind of austerity worked out really well for Herbert Hoover. Austerity should be practiced when times are good, not when the shit hits the fan. That does not mean that the nature of spending shouldn't be changed as not all spending is equal. (considering the economic multiplier effect) The tea partiers like to say that taxes shouldn't be raised to reduce/eliminate the deficit due to "taxes already being too high", but the truth is that taxes are at historic lows in the US.

Going over a fiscal cliff is not a good idea. Its just dumb...and shows that the tea partiers are no statesmen...

Well you can tell that to the States that have to have Austerity because they can't just print their way out of immediate trouble.

 

[Thump553]

Its a misnomer. Even if we "go off the cliff" on January 1st that action is not irreversible. Congress could thereafter rectify the situation and make their solution retroactive. The GOP, for the first time in decades, realizes and advocates that cutting government spending (specifically the military-industrial side) will significantly cost jobs. In addition after January 1st the GOP pols will technically be released from their pledge to that lobbyist not to vote to raise taxes as the tax increases will occur automatically. A selective rollback of most of those increases is not a vote to increase taxes no matter what their Rasputin says.

I expect Obama and the congressional Dems to remain resolute on ending the Bush tax cuts for the top bracket (gasp-driving their income tax rate up a marginal 3 percent or so). Caving on this before the election would be political suicide.

I predict what will happen is the lame duck Congress will implement a compromise solution in early January retraoctive to the first of the year. If the GOP Congress critters get really stomped in November perhaps an earlier compromise, but I doubt that stomping will occur.

In the highly unlikely event Romney gets elected then almost certainly the GOP will also improve their control of the House and make big gains in the Senate. In that case expect reversal of the military spending cuts, increased tax cuts for the uber wealthy over and beyond the Bush tax cuts, gutting of the social side of government spending and a drastic increase in the deficit (through unfunded spending and decreased government revenues). Ritchy Rich will have successfully played the tea partiers.

All this assumes the Mayans weren't correct and the world ends before January 1st.

 

[MovingTarget]

Well you can teall that to the States that have to have Austerity because they can't just print their way out of immediate trouble.

Sorry, but the coining/printing of currency is not a state matter. You cannot compare the two. I for one would not want that to be a state matter as it would be a fustercluck of epic proportions.

My state practiced austerity/proration even during good times because we base so much of our taxes on sales taxes and are an overall low tax/low service mentality state. We've cut our spending to the bone, so yes, taxes do need to go up!

 

[Pr0d1gy]

Sorry, but the coining/printing of currency is not a state matter. You cannot compare the two. I for one would not want that to be a state matter as it would be a fustercluck of epic proportions.

My state practiced austerity/proration even during good times because we base so much of our taxes on sales taxes and are an overall low tax/low service mentality state. We've cut our spending to the bone, so yes, taxes do need to go up!

We dare protect our rights!

 

[MooseNSquirrel]

Well you can tell that to the States that have to have Austerity because they can't just print their way out of immediate trouble.

Besides the point. Completely unrelated. As per usual.

 

[MooseNSquirrel]

So what you admit is that we're in a Great Depression and you merely want to mask the problem by kicking the can down the road.

Dewd. Seriously. Parse. His. Sentence. Again.

 

[Fanatical Meat]

In simplest terms why is it good not to address a problem you know you have to do something about or why is it good not to pay your debts back?

 

[Pr0d1gy]

It is good not to cut spending when we are already drowning as it will hurt the economy right now, casting us into an actual depression. Is that simple enough?

 

[Munky]

Too bad all this spending has not solved the actual mess, only masked it. You pull back deficit spending and the economy instantly contracts. The million dollar question is how long you think you can keep it up.

 

[JS80]

It's the tough medicine no one wants to swallow. You swallow now and take a short lived "great depression" or kick the can and get a greater depression when the real fiscal cliff comes (europe level debts that are at insolvent levels).

 

[werepossum]

This. That kind of austerity worked out really well for Herbert Hoover. Austerity should be practiced when times are good, not when the shit hits the fan. That does not mean that the nature of spending shouldn't be changed as not all spending is equal. (considering the economic multiplier effect) The tea partiers like to say that taxes shouldn't be raised to reduce/eliminate the deficit due to "taxes already being too high", but the truth is that taxes are at historic lows in the US.

Going over a fiscal cliff is not a good idea. Its just dumb...and shows that the tea partiers are no statesmen...

See, this is why we are convinced that the left is as ignorant of reality as a possum in a potato bin. Herbert Hoover in no way practiced austerity. As a Republican and a self-proclaimed progressive, Hoover was committed to government, believing that government merely had an efficiency problem that could be fixed. http://online.wsj.com/article/SB122576077569495545.html

Hoover, a one-time business whiz and a would-be all-purpose social problem-solver in the Lee Iacocca mold, was a bowling ball looking for pins to scatter. He was a government activist fixated on the idea of running the country as an energetic CEO might run a giant corporation. It was Hoover, not Roosevelt, who initiated the practice of piling up big deficits to support huge public-works projects. After declining or holding steady through most of the 1920s, federal spending soared between 1929 and 1932 -- increasing by more than 50%, the biggest increase in federal spending ever recorded during peacetime.

Public projects undertaken by Hoover included the San Francisco Bay Bridge, the Los Angeles Aqueduct, and Hoover Dam. The Republican president won plaudits from the American Federation of Labor for his industrial policy, which included jawboning business leaders to refrain from cutting wages as the economy fell. Referring to counteracting the business cycle and propping up wages, Hoover said: "No president before has ever believed that there was a government responsibility in such cases . . . we had to pioneer a new field." Though he did not coin the phrase, Hoover championed many of the basic ideas -- such as central planning and control of the economy -- that came to be known as the New Deal.

http://www.whitehouse.gov/sites/default/files/omb/budget/fy2009/pdf/hist.pdf
Hoover took office in 1929. In 1928 the federal government spent $3.1 billion dollars. In 1932 the federal government spent $4.7 billion dollars, an increase of over 50% in only four years! He also managed, through the largest ever peace-time expansion of government spending, to turn a large budget surplus into a $2.7 billion deficit.

http://blog.heritage.org/2010/10/20/hoover-fdr-and-clinton-tax-increases-a-brief-historical-lesson/ http://en.wikipedia.org/wiki/Revenue_Act_of_1932
Hoover raised taxes on the highest earners from 25% to 63%, and the lowest bracket from 1.1% to 4.4%. The estate tax doubled, and corporate rates went up 15%. That caused the economy, barely recovered from the Smoot-Hawley recession, to double dip into depression in spite of a more than 50% increase in government spending. Might want to think about that for a minute as it is exactly the Obama/progressive prescription for ending the current recession. Roosevelt originally campaigned against Hoover for Hoover's profligate spending, not his austerity. And Roosevelt himself, when he slightly lowered government spending in '37 after the Depression had been defeated, saw exactly how durable is the artificial demand created by government spending. (Although to be fair, Roosevelt also raised taxes in '37 and got some seriously anti-business legislation restored by SCOTUS, both of which contributed to the relapse into depression.) Only Hitler saved Roosevelt from Hoover's fate, as first England and the USSR and later America ordered hundreds of million dollars in war equipment.

This is what happens when we build a generation that gets not only its news from Bill Maher and John Stewart and its economic policy from Barack Obama, but evidently gets its history from the same place. We've actually defined increasing federal government spending by more than 50% in just four years as austerity.

We have literally become too stupid to succeed as a nation.

 

[DucatiMonster696]

This. That kind of austerity worked out really well for Herbert Hoover. Austerity should be practiced when times are good, not when the shit hits the fan. That does not mean that the nature of spending shouldn't be changed as not all spending is equal. (considering the economic multiplier effect) The tea partiers like to say that taxes shouldn't be raised to reduce/eliminate the deficit due to "taxes already being too high", but the truth is that taxes are at historic lows in the US.

Going over a fiscal cliff is not a good idea. Its just dumb...and shows that the tea partiers are no statesmen...

The political reality is that major spending cuts are never easy to pass even during "good times" in Washington D.C. In fact it's when times are "good" that we see all the little poor orphans trotted out and brought to D.C. in order to demonstrate that "Yes we can afford to feed these poor helpless children during these 'Good Times' senator."

So it is more of a misnomer to say that we are able and can put off spending cuts for a better economic climate because the political reality is in Washington that it is always difficult to pass major spending cuts in a political climate that allows the left to continually charge and label anyone in favor of government spending cuts as being "mean spirited", "selfish" or "shills for the rich".