Skip to comments.Extend and Pretend (Going over the Fiscal Cliff is part of the solution)
Posted on 11/10/2012 5:04:48 AM PST by SeekAndFind
Now that President Obama has been re-elected, the media is finally free to focus on something besides the clueless undecided voters in Ohio, Florida, and Colorado. The brightest and shiniest object that has attracted its attention is the "fiscal cliff" that we are expected to drive over at the end of the year unless Congress and the President can agree to turn the wheel or apply the brakes.
Fresh from his victory, the President took time today to let the nation know how he proposes to avoid the cliff: to raise taxes on those Americans who make more than $250,000 per year. He made clear than no one making less than that will be asked to pay any more. The two percent of taxpayers that the President is targeting earn 24.1% of all income and pay 43.6% (as of 2008) of all personal federal income taxes. Sounds like a fair share to me. But the four or five percent tax increases on those earners that are being proposed would only yield around $30 to $40 billion per year in added revenue, a drop in the federal bucket. Even if they were to double the amount that they pay our deficit would only be cut by about one third (even if those increases did not trigger an economic slowdown).
So what exactly is this looming menace, and why is it so dangerous? Stripped of its rhetorically charged language the fiscal cliff is simply a legal trigger that will trim the deficit in 2013 by automatically implementing spending cuts and tax increases. In other words, the government will spend less, and more of what it does spend will be paid for with taxes rather than debt. Isn't this exactly what both parties, and the public, more or less want?
(Excerpt) Read more at realclearmarkets.com ...
I do not think it is a coincidence that while the banks are suffering a regulatory backlash as a result of their perceived culpability for the mortgage crisis, the credit rating agencies have been relatively untouched. But the credit agencies played a key role in catalyzing the mortgage crisis by giving questionable ratings to the mortgage backed securities. My guess is the government simply does not want to open up that can of worms as similar mistakes are being made with respect to the agencies’ ratings of government debt.
The truth is that regardless of what you call it, going over the fiscal cliff is not the problem, it is part of the solution. Our leaders should construct a cliff that is actually large enough to restore fiscal balance before a real disaster occurs. That disaster will take the form of a dollar and/or sovereign debt crisis that will make this fiscal cliff look like an ant hill.
Shut the Federal Government down for six months.
If ‘Sequestration’ is NOT allowed to happen now, all those voters in VA that were told they would lose their defense jobs if Obama was re-elected will say, “I voted for Obama, and still have my cushy defense job ..., why should I ever vote Republican again ...”
Do not fear the strong medicine we need to return to health.
i think the republicans forcing a plunger over the cliff at this time is a strategic mistake.
here is my argument: all of japan, uk, europe and the usa are on unsustainable gov’t debt trajectories; in addition, the uk, europe and japan all have much larger banking sectors (reiative to their economies). the size of the financial sector is important because in a sovereign debt crisis, it becomes a banking crisis as well since the big banks hold so much gov’t debt (europe has now moved past the sovereign debt crisis into the sovereign plus bank bailout crisis)
the usa also has better long term growth prospects then these other countries.
when one of these economies gets into a debt and hyperinflation wreck, the economic meltdown will be so severe that everyone in america will realize that monster debt and deficits are a huge risk.
part of the problem now is that liberals have economic “experts” like summers and krugman telling them that the debt is no big deal, and therefore liberals should use the fiscal cliff to gain political advantage, not solve the problem.
Until the Summers, Krugman theory of no-risk massive debt is discredited, the liberals will have a negotiating advantage.
i know that Schiff does not agree with me but because of the smaller financial sector, the USA is least likely to “go first” into a sovereign debt crisis compared to the usa, japan, europe
No snark Reverend - just would like to understand your thoughts.
To me, sequestration plus tax hikes as horrible as it would be, is a good measure
better - not as bad - as more delay toward resolving our debt problem.
If RR were in charge, I would look for economic growth to help us climb out. But now we have no chance at growth.
A few years of terrible pain [under 0dumbo] would not be as bad as a decade of terrible pain we'd get by lifting the ceiling to 30 trillion - which we'll have to do sooner than anyone thinks.
Interesting. For as the House of Represtentatives never agreed to the bamacare bill and the SCOTUS declared it a “tax”.. a tax bill would have required passage by the House. So..
Anyway, I say let the sequester take place.
And no debt ceiling increase.
Begin the pain NOW.
The bill did originate in the House. The Senate just gutted it and replaced the guts with 0deathcare.
Doesn’t seem right that this can be done though - as it effectively eliminates the requirement that revenue bills originate in the House.
I think that this points to both the violation by dems and my not fully understanding what happened.
Alas - sequester now and no debt ceiling increase.
Oh - and every bill - EVERY bill should contain a repeal of 0bamacare. Shut the bitch down.
It’s a Road Runner economy. Beep, beep!
I agree with Schiff. Go over the cliff, and let the voters face reality.
If we keep delaying the inevitable, the inevitable will simply get worse.
RE: a tax bill would have required passage by the House. So..
That has ALWAYS been my problem with the John Roberts decision. The Affordable Care Act AS WRITTEN declares it to be a PENALTY, on what judicial basis did he RE-IMAGINE the bill to be a TAX?
ROBERTS and the 4 others are obviously LEGISLATING from the bench.
IMHO, the right approach would be to say -— It is UNCONSTITUTIONAL NOW AS WRITTEN, HOWEVER TO MAKE IT CONSTITUTIONAL, YOU HAVE TO RE-WRITE IT TO MAKE IT A TAX, and then -— THROW THE BILL BACK TO CONGRESS FOR RE-WRITE.
But Roberts and his ilk did not do that. It is an OBVIOUS case of JUDICIAL LEGISLATION and BODES ILL for the future of this country.
We need 10% of Republicans to re-register as Democrats and then nominate Joe Biden in 2016.
“If I can’t solve this economy, I’m a one term president.” The Cipher
“We own this economy.” Debbie Mayohead
The middle and the South will be fine. My bug-out bag is packed. Bring on the pain.
Sorry statists, but you don’t know what “blue” means yet ... Soylent Green is liberals!
De fund everything which is not mandated by the constitution.
And then we’d probably nominate another RINO who would lose to Biden anyways.
Should be a Chevy Volt.
Whether going over the ‘cliff’ or doing something sensible, Republicans are going to passively take the blame for anyone’s pain. Why not go for the gold and get it over with? The sooner this tragedy is exposed after Zip’s election, the better.
I agree - until the pain is felt across the Nation, and real suffering occurs, nobody will have the gonads to DEMAND a change in course. If sequestration occurs, and all of Zero’s plans for higher taxes, more expensive energy, and despotic control of the People kick in, the despair will set in, then turn to anger, and finally result in the People finding a collective voice. It will be ugly though - Waco and other government atrocities will pale in comparison...
Principled, the democrats have the advantage in the negotiations in that they don’t believe the debt is a serious problem, and most of the public agrees with them. the republicans are trying to solve a problem, the democrats are trying to get political advantage.
my view is the public thinking will change when they see one of the major industrialized countries go into a debt and hyperinflation death spiral.
The usa has over a million dollars per taxpayer in unfunded social security and medicare liabilities.
this is not a sustainable situation, and tax increases just postpone reform and make the problem worse.
my thinking is republicans kick the can until one of europe, uk, japan collapses. then use the public focus on unsustainable welfare state to get real reform, because tax increases and fake defence cuts are not enough
Over the cliff and let the recession happen. It was going to happen anyway.
this makes good sense if one has faith in the American people to recognize that a crumbling of another country’s economy is a precursor to our fall.
It will be played as something different. It will be some offensive video that causes Italy to crumble.
Over the cliff and let the recession happen. It WILL happen anyway.
Principled, if the eurozone endgame plays out with a few of the periphery countries leaving and everyone else lives happily ever after, then maybe the Kim Il Sung media in the USA will be able to portray it as unconnected to their excessive debt levels.
But if the entire eurozone goes into a death spiral, including Germany, Holland etc, then even America’s pathetic media will not be able to distract with stories about TomKat or the Kardashians