The "Fiscal Cliff"

Discussion in 'Politics' started by KTF40, Nov 10, 2012.

  1. KTF40

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    I'm posting this thread in order to clarify and highlight just how silly the current debate over the fiscal cliff really is. Much has been made about the idea of raising taxes on the rich as huge point of contention between the Democrats and Republicans. Case in point, opinion articles like this - An opening for Obama on deficits, debt and taxes - latimes.com

    Regardless of where you stand on a continuation of the Bush tax cuts for the wealthy or not (personally I'm not in favor), it's important to understand just how small and trivial this amount is in comparison to out current financial problems. The article above points out those referenced tax cuts amount to about $700 billion over ten years. I've heard other estimates that go as high as about $800 billion over ten years. That means, we are arguing over a sum of $70-80 billion of new revenue annually. Does anyone have any idea how small a number that is in relation to our deficits and debt? That equals about 6% of the last fiscal year's $1.1 trillion deficit and about .004% of our current debt.

    This country is in such bad financial shape, that even if we went over the so-called "fiscal cliff", it still wouldn't solve anything - If the U.S. goes over the fiscal cliff, do we still need to raise the debt ceiling?

    So next time anyone want to make an argument in favor or against raising taxes on the rich, I just hope you understand how small and miniscule this issue is in the grand scheme of things. And that fighting about this or pretending that this would play any significant role in reducing the debt and deficit is quite silly.
     
  2. tamati

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    Cut the military budget by $2- 300 billion, tax capital gains at the same rate as income and eliminate all the loopholes the greedy 1% and corps use to reduce their tax liability, end corporate welfare, and call it good.
     
  3. slurper_la

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  4. AtomicMouse1950

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    Paul Krugman: Obama should call the GOP's bluff on 'fiscal cliff' - Post Bulletin



    To say the obvious: Democrats won an amazing victory. Not only did they hold the White House despite a still-troubled economy, in a year when their Senate majority was supposed to be doomed, they actually added seats.

    Nor was that all: They scored major gains in the states. Most notably, California — long a poster child for the political dysfunction that comes when nothing can get done without a legislative supermajority — not only voted for much-needed tax increases, but elected, you guessed it, a Democratic supermajority.

    But one goal eluded the victors. Even though preliminary estimates suggest that Democrats received somewhat more votes than Republicans in congressional elections, the GOP retains solid control of the House thanks to extreme gerrymandering by courts and Republican-controlled state governments. And Rep. John Boehner, the speaker of the House, wasted no time in declaring that his party remains as intransigent as ever, utterly opposed to any rise in tax rates even as it whines about the size of the deficit.

    So President Barack Obama has to make a decision, almost immediately, about how to deal with continuing Republican obstruction. How far should he go in accommodating the GOP's demands?

    My answer is, not far at all. Obama should hang tough, declaring himself willing, if necessary, to hold his ground even at the cost of letting his opponents inflict damage on a still-shaky economy. And this is definitely no time to negotiate a "grand bargain" on the budget that snatches defeat from the jaws of victory.

    In saying this, I don't mean to minimize the very real economic dangers posed by the so-called fiscal cliff that is looming at the end of this year if the two parties can't reach a deal. Both the Bush-era tax cuts and the Obama administration's payroll tax cut are set to expire, even as automatic spending cuts in defense and elsewhere kick in thanks to the deal struck after the 2011 confrontation over the debt ceiling. And the looming combination of tax increases and spending cuts looks easily large enough to push America back into recession.

    Nobody wants to see that happen. Yet it may happen all the same, and Obama has to be willing to let it happen if necessary.

    Why? Because Republicans are trying, for the third time since he took office, to use economic blackmail to achieve a goal they lack the votes to achieve through the normal legislative process. In particular, they want to extend the Bush tax cuts for the wealthy, even though the nation can't afford to make those tax cuts permanent and the public believes that taxes on the rich should go up — and they're threatening to block any deal on anything else unless they get their way. So they are, in effect, threatening to tank the economy unless their demands are met.

    Obama essentially surrendered in the face of similar tactics at the end of 2010, extending low taxes on the rich for two more years. He made significant concessions again in 2011, when Republicans threatened to create financial chaos by refusing to raise the debt ceiling. And the current potential crisis is the legacy of those past concessions.

    Well, this has to stop — unless we want hostage-taking, the threat of making the nation ungovernable, to become a standard part of our political process.

    So what should he do? Just say no and go over the cliff if necessary.

    It's worth pointing out that the fiscal cliff isn't really a cliff. It's not like the debt-ceiling confrontation, where terrible things might well have happened right away if the deadline had been missed. This time, nothing very bad will happen to the economy if agreement isn't reached until a few weeks or even a few months into 2013. So there's time to bargain.

    More important, however, is the point that a stalemate would hurt Republican backers, corporate donors in particular, every bit as much as it hurt the rest of the country. As the risk of severe economic damage grew, Republicans would face intense pressure to cut a deal after all.

    Meanwhile, the president is in a far stronger position than in previous confrontations. I don't place much stock in talk of "mandates," but Obama did win re-election with a populist campaign, so he can plausibly claim that Republicans are defying the will of the American people. And he just won his big election and is, therefore, far better placed than before to weather any political blowback from economic troubles — especially when it would be so obvious that these troubles were being deliberately inflicted by the GOP in a last-ditch attempt to defend the privileges of the 1 percent.

    Most of all, standing up to hostage-taking is the right thing to do for the health of America's political system.

    So stand your ground, Mr. President, and don't give in to threats. No deal is better than a bad deal.
     
  5. KTF40

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    Help me understand? First of all, I'm not talking about the economy nor a recovery. I'm talking about trillion dollar annual deficits on top of a $16 trillion debt and how little $70 billion is in comparison. Secondly, I'd rather look at Europe to see how effective taxing the rich has been for the economy rather than reading links spouting blatant liberal ideology. And third, I'm already in favor of discontinuing the Bush tax cuts on high end earners as I stated in the op.
     
  6. meatpackingbubba

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    One could confiscate the entire wealth of the top 5% and not solve the problem. Bill Gate's wealth (not his income, mind you; his entire net worth) would fund the government for less than a week. What happens when we run out of people to steal from?

    The problem is uncontrolled spending, mainly via promises to ourselves called entitlements. Politicians use taxpayer money to bribe voters for their support. It is an unsustainable bubble that will end very badly if the course is not altered.
     
  7. AtomicMouse1950

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    Austerity doesn't work, In fact look at the affects of Austerity in Europe. People out of work, riots, their euro has been devalued. People are living in the streets. No Austerity doesn't work. That's what our President will try to avoid. But it's not a fiscal cliff anyway. That's a Right Wing talking point, it's more of a fiscal slope.
     
  8. balsary

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    Agreed, that's why a 20% tax cut for all was such a joke in my eyes. If that wasn't trying to buy votes I don't know what is.
     
  9. AtomicMouse1950

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    An independent tax service (one that Congress uses to sort out, how tax collecting affects our economy) posted online, the idea, that tax cuts for the wealthy don't work, has never worked, and will never work. A week or two, later, Mitch McConnell had the article pulled from the site. Because it proved, using math, that trickle down economics doesn't work. Now this is the very agency, that does the numbers crunching for Congress. McConnell had it pulled because it didn't support their argument, that taxing the wealthy, creates jobs. It does no such of a thing.



     
  10. KTF40

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    Yeah, I'm aware and I don't believe in trickle down economics.

    Why are you replying to my post with this info? It doesn't appear to have a single thing to do with what I said.
     
  11. AtomicMouse1950

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    Exactly WRONG! We haven't been taking in enough revenue over the past 11 years. Bush cut taxes, across the board (favoring the rich) stopped the revenue stream. The Bush Congress, were spending like drunken sailors. The reason why it's at 16 Trillion, is because the Republicans have been blocking efforts to raise taxes to pay for everything. The filibuster will be modified on Jan. 01,2013 believe me. Bush and his Republican cronies in the Congress, put everything on a credit card, including squandering 5 Billion Dollars in surplus, that Clinton handed Bush. Obama came into office and put that credit on the books. That'w why we're where we are. Once you get that sunk into your head, you'll understand it much better.
     
  12. meatpackingbubba

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    mouse, if control and command economics worked, the Soviet Union would still be around.

    And by the way, check the government revenue levels over the past three decades. With the exception of reduced revenue due to the recession, the government vacuums ever more wealth in dollar form from the private sector every year.

    I hope the citizens of this country remember what makes us special: our liberty. Which includes being secure in our possessions. Taxes fine; income redistribution and making one segment of society the boogeyman for our ills, not such a good idea.
     
    #12 meatpackingbubba, Nov 10, 2012
    Last edited: Nov 10, 2012
  13. AtomicMouse1950

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    Actually it doesn't, nor has it. The rich pay a rate between 14%-33%., that's the official book on it. The reality, is that the wealthy pay less income tax than that. Because of the loopholes in the tax code. And the off shore accounts, in the Caymens, Switzerland and other tax havens. The off shore accounts that the IRS cannot get to. Romney and others were given a tax amnesty by the Bush Republicans, to off shore their assets, and they had I believe one year to do so. Coca-Cola, G.E. and many large corporations opened up a P.O. Box in the Caymens.... Just so they could avoid paying taxes. It even allowed the people on Wall Street to do so. But regular income taxs, like what us poor folks pay, are much different and separate from Corporations which needs to be adjusted. Corporations may even pay less than the 14%-33% tax rate. For several years it's been determined, that G.E. paid no income tax at all. I'm sure there have been others. It's time to fix this. And bring shipped jobs back here, where they belong. And incentivize those corporations to do so.




     
  14. sargon20

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    'Uncontrolled spending'? So how would you fix the problem? Taxes haven't been as low as they are now in 60 years . Don't you think that has something to do with the red ink?
     
  15. Jason

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    Sometimes it is a choice of bad options. From a UK perspective the only options for the USA are bad.

    Certainly austerity causes problems - unemployment in particular. But austerity may still be the best option available. A country cannot borrow more money to "invest" its way out of a debt crisis.

    The USA is living a charmed life because the international markets believe the USA is too big to fail and that it's bonds are a safe bet. If this confidence goes the cost of servicing debt could explode. Options for the USA include:

    - QE. Hard to see any solution that doesn't include a lot of this.
    - dollar depreciation, therefore policies designed to push the dollar down
    - higher tax and lower spend with the primary intention of keeping the bond markets happy. Austerity is essential not for the saving it creates, but for the confidence it inspires.
    - trading with other national central banks to avoid a currency crisis. The USA has to be even more engaged in the world economy, which includes a willingness to commit funds to support other currencies.
    - US people educated to accept a lower standard of living.
     
  16. AtomicMouse1950

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    I disagree... Austerity doesn't work. It exacerbates the problem even further. The proof is all around you. It's the worldwide social conservatives who've made the problem worse, by shrinking taxes. And countries got duped into it. Obama will try to see to it, that we live within our means, but, do so, so that it's responsive to the needs of the many. That is how we will avoid the fiscal slope. By being responsive and responsible.
     
  17. slurper_la

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    proof in point: the USA is rebounding while many EU nations, following austerity programs, are falling further behind
     
  18. AtomicMouse1950

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    You can listen to the BBC World Service and know that much.

    BBC - World Service - Home

     
  19. KTF40

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    Not to completely derail this thread from its original point and I could be completely wrong, but aren't the Euro countries like Spain and Greece have no choice but to accept austerity? My understanding it's either go bankrupt or demonstrate some fiscal sanity.

    The same would occur here in the US, but as Jason stated there seems to be an international perspective that the US is too big to fail.
     
  20. AtomicMouse1950

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    Borrowing Money
    Who did greece borrow money from ? - Yahoo! Answers

    the above links might explain it better than I can.