The Fiscal Cliff thread.

[SkinsHokieFan]

I guess what I don't do is look at tax rates go up a few points, and then make the jump to more people on public assistance. I see the theory and logic behind what you are both saying, but each of those jumps from more taxes to less spending, from less spending to lower sales, from lower sales to lower production, from lower production to fewer jobs, and from fewer jobs to more people on public assistance is a very tenuous leap to me.

Again, I'm not saying raising taxes at this stage is a good thing, but to equate it to the government defaulting on its debt, or even playing the game of allowing the government to default on its debt is comparing apples to HUGE ORANGES.

Its all fairly logical.

The last thing anyone wants is a dramatic drop in GDP, which is where you get things being equated to the debt ceiling issue.

And certainly you don't want thing thing to go back into contraction.

Lower income people having less money is a bad thing because lower income people spend almost all of their money. Thats where lower sales, lower production, fewer jobs, more public assistance comes from.

[Larry]

I have to challenge the premise of this entire thing: if the Bush tax cuts expire, we fall of an economic cliff? Since when? I'm not saying its GOOD for the economy to raise taxes at this time, but why is that the same thing as the debt ceiling.

I just don't equate the US government defaulting on its debt - thus causing its bonds to become less valuable and interest rates to go through the roof, etc. etc. - with taxes being raised a couple percentage points.

The "fiscal cliff" is the melodramatic term for a whole bunch of things, that are all scheduled to happen at the same time, on Jan 1st.

• Expiration of the Bush tax cuts. (Tax hike of 1-2% on most everybody, and 3% on the top bracket.)
• Expiration of the payroll tax cut. (Tax hike of 2% on all earned income.)
• And a lot of spending cuts. (Including, I think, the spending cuts that were agreed on, as part of the Debt Ceiling deal. And, I think, cuts in Medicare/Medicaid payments to doctors and hospitals.)

Lots of economists have said that having all of those things, each of which would be bad, individually, happening at once, would be disastrous for the economy.

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And the debt ceiling deal could not possibly have resulted in the US defaulting on it's debt. It could have been a disaster for the economy. But defaulting on the debt is just about the only thing that could not possibly have happened.

---------- Post added July-17th-2012 at 10:59 AM ----------

Funny how perceptions are when people are living in an area where things are unlike most of america. My cousin in Tennessee makes a pittance of an hourly wage working what I would consider a non career job. They just bought a new boat, a new truck. They have 5 cars, a family of four with 3 licensed drivers. They have a house and a mortgage. The family of four making under 50K isn't necessarily what you think it is.

Yeah, you're right. The typical family of four making $50K have five cars and a new boat.

[chipwhich]

Yeah, you're right. The typical family of four making $50K have five cars and a new boat.

You must never have been to TN...

Besides you missed the point. Nice.

[HeluCopter29]

Look we have historic low income tax on the wealthy. Mitt Romney's paid 14.9% taxes on more than 100 million in earnings. Warren Buffet famously published that he paid a lower percentage of his income on a few billion in earnings than his secretary. Both of which are insane from a fiscal responsibility stance.

Given there is no formula where spending cuts alone will allow us to significantly impact the deficit; It only seems reasonable that we compromise and do a little bit of both. Cut the Defense budget significantly... Perhaps return to the days when we only spent as much as the next leading 16 world powers. We also raise taxes a little, and we trim a few social programs....

Ultimately what I would aim for is cutting the deficite maybe in half over the next few years, while reprioritizing spending upon infrastructure to enhance the economy. Then hopefully we can grow our way out of the rest of this economic cravas.

But if we cut the defense budget we'll get destroyed by some middle eastern country! And if we raise taxes a little bit, the job creators won't create jobs!

Oh wait. Everything you just said makes absolute perfect sense. I'll just add that we should close those tax loopholes so that the rich are actually paying taxes.

---------- Post added July-17th-2012 at 11:08 AM ----------

You must never have been to TN...

Besides you missed the point. Nice.

I'd kinda like to to know what the point is. Because I think I missed it too.

---------- Post added July-17th-2012 at 11:11 AM ----------

Why again is everyone so okay with taxing the upper class. "**** the upper class, we just care about ourselves!" I just don't get it. It's not my money, it's not my place to say what happens to it. Where does all this hatred for the upper class spawn from!? Yeah, there are rich douchebags out there. Hell, I've met plenty of poor people that were more stuck up. There are also GOOD MEN that have money that got there from working their asses off. If the Dems are for robbing the rich and giving to the poor, why are all the rich, douchebag actors DEMS!? The richest, most overpaid people in this country are Dems. Hell, Romney himself could run for the Dems if he wanted to.

I just don't buy, or even remotely understand all this class warfare crap, just seems like an illusion to keep us all distracted to me. We're all on the same team, it's a chain...and the more rich people there are, the better off we all are. It's called opportunity. If you're in sales, don't you want ridiculously rich people coming in your store to blow money left and right and get you your commission!? Or we could just spend all day coveting what they have and punishing success. When did capitalism become the bad guy? Okay, rant over, my bad. Didn't realize it was happening.

Anyway, how in the hell are the politicians we elected using us as the hostages? Aren't we supposed to be ruled by the people? Guess these are all rhetorical questions. Whatever. No matter how you slice it or what side you're on, this is bull****. The people need to take back this country. Listen to more Rage Against the Machine or something, I don't know what to tell you

It's that them having so much money actually hurts the infamous "99%." There's a great graph out there, and I'll try and find it for you, that shows when we started lowering taxes on the rich in about 1980 (under Reagan) the top 1% began to (and still does) get richer well everyone else gets much poorer.

In addition, a lot of it has to do that being wealthy enables you to have off shore tax havens, because you can buy them, that allow you to ship your money overseas so it's not taxable.

[gbear]

I worry about deflation. There, I said it.

We all worry about our debt. Some have taken the logical (to me) stance the absolute value of our debt is less important than the ration of debt to GDP. There is a concern we may come to have so much outstanding debt, our money becomes less valuable. Perhaps...

but what about the opposite effect? Some are quick to say the tax hike of 4 to 5% on those making less than 250k will be horrible, and I agree in the short term. I think in the medium to long term the rich get screwed more. You know the apartments which rent now for 1.5k a month? Well, there would suddenly be less demand for them. Whole Foods versus Giant and Safeway would have a new price point. Some of our gas prices sky rocket has been damped by fall in demand, at first due to sticker shock then the emergence of more efficient cars. If gas, rental and food prices drop in relative value over a period of a few years, we will be in for a world of economic hurt. If you think we have unemployment issues now...imagine an economy where companies ar encouraged not to spend. We are already have companies sitting on record or almost record reserves of cash.

I think the expiration of the tax cuts on the bottom half could very well be worse, even for the top 1%, than the impact of the inflation which might have happened with the debt ceiling. I don't have numbers for this, but it has seemed to me the impact of deflation is worse than inflation. Thus, I worry more about it than the debt ceiling debacle.

[JMS]

. I'll just add that we should close those tax loopholes so that the rich are actually paying taxes.[COLOR="Gold"]

You can have an honest debate whether the rich should pay a higher percentage of their income than the middle class. I believe they certainly should, as they benifit more from the countries infrastructure than a middle class man does... But I recognise their is an honest difference of opinioin here..

There is no honest argument which can be made for the wealthiest amonst us to be taxes at 1/3 of our top tax rate which applies to folks who earn 100 or 1000 times less than these super earners. None.

---------- Post added July-17th-2012 at 01:08 PM ----------

Agree. It is a simple matter of math and the math doesn't work without devestating consequences (i.e major across the board cuts or major tax hikes)

Simply gotta prevent the deficit from rising any higher on a GDP % and yea hope that we are able to grow out of it. It will be tough without some major technological innovation though

Frankly our Debt is not the real issue. It is the deficit. I don't think it requires "dramatic" changes. It requires reasonable tax policy.....

The United States is in the same fiscal cravas as California. It's fundementally not that the economy can't support government spending; it's that California with the 8th largest economy in the world is systematically starving it's state government of revenue.

[Mad Mike]

The real title for this story should be "Idiot dems point gun at own head."

[twa]

The real title for this story should be "Idiot dems point gun at own head."

desperation calls for creativeness

[JMS]

The real title for this story should be "Idiot dems point gun at own head."

I think when faced with an advisary who plays hard ball, you have to play hard ball too. It should come to a head and the voters should be made to decide....

Only then will we really answer the question whether we should continue to progress, or regress as a power and society. If regression is the answer, then I'll be interested in what the voters say for the next election cycle.

[Tulane Skins Fan]

I think when faced with an advisary who plays hard ball, you have to play hard ball too. It should come to a head and the voters should be made to decide....

Only then will we really answer the question whether we should continue to progress, or regress as a power and society. If regression is the answer, then I'll be interested in what the voters say for the next election cycle.

I think this is basically right. What will happen is that the dems can let the tax cuts expire, and then turn around and propose the tax cuts that they want, and only those they want. Then the GOP will have to vote for these tax cuts or else they will be violating their promise to never vote against a tax cut or for a tax increase.

[gbear]

I hope that is the game plan. I do wish it wasn't a "game" plan, but when you have been gamed repeatedly, perhaps game theory has a place.

[Kilmer17]

That plan only works if you can convince the majority that we are progressing and not regressing currently.

That will be the deciding factor in the race.

[Larry]

I think this is basically right. What will happen is that the dems can let the tax cuts expire, and then turn around and propose the tax cuts that they want, and only those they want. Then the GOP will have to vote for these tax cuts or else they will be violating their promise to never vote against a tax cut or for a tax increase.

Problem with your theory:

I'm absolutely certain that the Democrats are already proposing tax cuts for the "lower 95%". And to extend the payroll tax cuts.

No, I don't have a link or whatnot. But, it only takes one member of Congress to propose something, so there are only two possibilities:

1. Those proposals have been made.
2. Not one single Democrat, in either chamber, has proposed them.

And, frankly, I don't think #2 is possible.

Those proposals have been made. And the GOP is successfully preventing them from coming to a vote.

I see no reason at all to assume that they won't continue to prevent them from being voted on, in January.

[pointyfootball]

That plan only works if you can convince the majority that we are progressing and not regressing currently.

That will be the deciding factor in the race.

I agree, and hence the reason I would think Obama/Dems would want to turn spotlight away from the economy because at best consumer confidence is stagnant.

[Tulane Skins Fan]

Problem with your theory:

I'm absolutely certain that the Democrats are already proposing tax cuts for the "lower 95%". And to extend the payroll tax cuts.

No, I don't have a link or whatnot. But, it only takes one member of Congress to propose something, so there are only two possibilities:

1. Those proposals have been made.
2. Not one single Democrat, in either chamber, has proposed them.

And, frankly, I don't think #2 is possible.

Those proposals have been made. And the GOP is successfully preventing them from coming to a vote.

I see no reason at all to assume that they won't continue to prevent them from being voted on, in January.

What you're missing is that if nothing gets passed, then the Bush tax cuts expire. Second, nothing will pass with the democrat held Senate.

I guess what I'm saying is that if the GOP thinks that all taxes are bad, the dems can hold out for what they want if they are truly willing to let all the tax cuts expire. Just let them expire for one day, and then some GOP member will crack and try to get tax cuts for the middle class, identical to what the dems want.

---------- Post added July-17th-2012 at 03:39 PM ----------

That plan only works if you can convince the majority that we are progressing and not regressing currently.

That will be the deciding factor in the race.

I don't understand what you mean be progressing and regressing?