Fiscal cliff - could be worse

Oltz

Personally I think we should go off the fiscal cliff as it was negotiated to be mandatory cuts in exchange for the debt limit increase. We have in our hisory often promised cuts inexchange for increased spending or borrowing and historically the cuts have never actually taken place. This time the cuts will happen and all we need to do is nothing.

The debt ceiling is actually going to need to be increased again very soon and the best option may be to set up a second round of mandatory cuts and rate hikes to go with it schedule them for 2014 and see if they negotiate in better faith this time in the debt reduction super committee. This is our only avenue to austerity in this country currently as nobody in Washington is willing to put themselves on the line for the needed measures.

Will it be hard yes will it have some negative outcomes yes but that is why they are tough choices. Without them we are only punishing ourselves and everyone under the age of 40 is going to need to pay or the spending of the past 30 years one way or another. The only question is when and how much extra interest the debt gets to accrue.

Personally I want to see the cuts happen before the rate increases...fool me once shame on you fool me twice shame on me.

mheslep

Another round of cuts have to come by way of reform to entitlement programs or they really do not do much. The current small cuts in the Jan 1 sequester do not touch entitlements.

As for a second round of tax hikes, I think that's also a one trick pony. This time, Jan 1, federal taxes go up across the board, payroll taxes jump from 4.2 to 6.2%, the top income tax rate will go to 39.6+3.8 = 43.4%, dividends formerly at 15% also go to the income rate, estates worth $1M to $5M go from zero to 55%, and deductions decline so that everyone's income exposed to those rates grows. Source.

I can't see another tax hike to follow this one, at least not one with any expectation of actually bringing in more revenue.

Angry Citizen

I'd rather have more debt than an ounce of austerity. See what austerity has done to Greece and Spain?

russ_watters

Convinced creditors to waive some existing debt while adding new debt in order to prevent total economic collapse?

The problem you're missing here is that at some point you can't have more debt. In order to get more in debt people have to be willing to lend you money.

Personally, I would prefer that both of them collapse into anarchy for a few years. Westerners need to get slapped into recognition that government spending is not a blank check and bottomless money pit.

As with the couple of opinions above, I am in favor of allowing most of the fiscal cliff to happen, plus reforming "entitlements" (starting by stopping calling them "entitlements").

SixNein

I think universal health-care is worthwhile to pursue for a variety of reasons, and it can be done fairly efficiently. Even the most basic health-care access can help to prevent conditions and diseases that require intensive and life long treatments. In addition, it can help health experts identify and isolate bugs quicker. And I would even go so far as to say it's a national security risk. Overall, universal health-care should help increase our participation rate in the overall-economy due to the early prevent of conditions and diseases that takes people out of the marketplace. And a higher participation rate should lead to a more optimal economy.

But I do agree that under the existing model, such an effort will be unable to manifest itself into reality; instead, it will cause a lot of people grief. A model built on socialized crony capitalism is bound to fail.

boomtrain

you forgot to mention it'll bring about world peace...

do you have sources for any of those claims?

russ_watters

Lets talk a little about the political gamesmanship going on because I really don't understand what the various players are after, particularly Obama.

Obama is repeating (CNN report I'll link when I get home) his campaign refrain of "lets begin our work with where we agree", which is the extension of the Bush Tax cuts for all but the upper bracket -- and oh, by the way also include a debt ceiling increase. He follows that with "don't call my bluff". What bluff? I don't get it. Is he saying that if Republicans don't give him the middle class tax cut extension he's going to let taxes go up for everyone? Is that what he wants anyway? Is he trying to spin a potential win-win situation by getting what he wants either way and/or blaming Republicans for a tax increase even if he actually wants it?

Beyond that, what is not on the table for Obama is interesting to me: any proposal to not raise taxes. That includes the two options for raising income taxes and also allowing the social security tax reduction to expire. So Obama is apparently not considering any proposal that doesn't raise taxes. Let me rephrase: Obama wants to raise taxes in the middle of a weak economic situation. It just isn't clear to me by how much or if he's trying to blame it on others.

And as I said, he wants a debt ceiling extension. Is there any room for negotiation and does anything else about the fiscal cliff and debt issues concern him? "Entitlement" reform? Spending cuts? Are they on the table at all?

What bothers me is that doing nothing makes something happen at least on the spending cuts and he is not clearly articulating what he really wants. Now that he doesn't have to campaign anymore, he has that "flexibility" he told Russia to wait for, so why isn't he using that flexibility to actually do bipartisan negotiation and even do things that may be politically unpopular but fiscally necessary? Instead, he seems to be doing the same leading-from-behind-while-muscle-flexing he did with his healthcare reform: make provocative, politicized, inflexible statements about a small and/or vague part of the issue and let other people figure out the rest of it.

Republicans for their part seem to be willing to deal. Several have rebuffed their Norquist pledge, to their credit (though better would have been to never sign it in the first place ) and stated explicitly that they may be willing to raise taxes. And there may be enough for an actual vote to raise taxes to pass in the House.

What worries me is a repeat of the '80s where Republicans gave concessions on tax increases and Democrats reneged on promises of spending cuts that were supposed to follow. That's what "just pass what we agree on now" really says to me. Maybe that's his plan? The problem with that though is I don't think politicians really have the stomach to accept the cuts of the "sequestration". Its just that no one is talking about it, so I have no idea at this point where that is going. We're not in an active campaign and Obama never has to campaign again. It should not be this hard to figure out what people want. Why is this so hard?

Opinions?

Alfi

Opinions?


why ask ...


unless backed by some 'authority' ... they seem-to-be not allowed here.

russ_watters

That is very, very wrong. In fact, I'd say you've mostly missed the point of the politics forum: it exists largely to share opinions on world events. Otherwise, it would just be a repository for links to news articles.

Assertions of facts must be supported. Opinions, by definition, do not require factual support/citation. As-worded in the guidelines at the top of the forum:

mheslep

Not just several. If Boehner speaks for the GOP, then the GOP position is a yes to raising tax revenues, though maybe not via rates:

But to get those increases in new law, Obama and Reid have to address some cuts. So far, nothing. Democrats like Durbin have explicitly rejected cuts to Medicare and SS.

mheslep

Might I ask why not? The US spends 60% more today than what it spent at the height of the Reagan defense build up in the cold war (constant dollars)



The pending defense cuts would be on the order of $40 billion / year for ten years, against the spending of ~800B. Is that drastic?

mheslep

The President gave speech today on the fiscal cliff topics. He mentioned the deficit seven times, used 'balance' seven times, referenced 'tax'es several dozen times, but not a word on reducing spending. Not for anything. He did mention working on the deficit "next year".

http://www.whitehouse.gov/the-press-...s-middle-class

BobG

Boehner's interpretation of increased revenue:

In other words, Boehner's position is the country needs tax cuts to increase government revenue.

BobG

Sadly, it's because I'm as optimistic about Congress's ability to cut defense smartly (vs cut defense anywhere it doesn't affect jobs in my district) as I am about their capability to balance a budget.

I wouldn't say it's a drop dead issue for me. But it would definitely raise some trepidation.

And, full disclosure, I'm a defense contractor living in a city with five military installations.

mheslep

I don't think that's accurate:
Other GOP politicians have cited the $trillion/10 years of deduction cuts found by Simpson-Bowles commission as a possible target.

Cutting deductions and leaving marginal rates as they are, would dollar for dollar be better for the economy in my view.

SixNein

Honestly, this should be just common sense....

But....

On prevention:

http://www.uspreventiveservicestaskf...procmanual.pdf

For example, here is a list of vaccinations of preventable diseases:
http://www.cdc.gov/vaccines/vpd-vac/

Something as simple as oral checkups can go a long way. For example,
http://www.telegraph.co.uk/health/he...-suggests.html

As far as national security, have you ever stopped to think about the prospects of a bio-terror attack?

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1448404/


Explanation of participation rates in the economy:
http://en.wikipedia.org/wiki/Labor_force

russ_watters

Does that include and/or is the difference based on the two wars? If I remember correctly, one of Obama's spending cutting claims was based on the winding-down of the wars. I'd like to see it cut by perhaps a third from 800B but as with Bob I have no confidence whatsoever in Congress's ability to make smart cuts. Defense spending is in many ways the largest boondoggle we have.