The Fiscal Cliff thread.

[thebluefood]

I've been wondering: could this fiscal cliff be a blessing in disguise? Yes, it could mean a double dip recession (which is the last thing I need since I'm graduating from college in December), but we're all going to have to take our medicine sooner or later. Maybe this for the best for all of us in the long term. Maybe this is the wake up call we need and we'll finally learn that fiscal responsibility, both in spending and revenue, is the only way we can ensure America's survival as a nation.

Of course, I might be completely wrong and we could all be screwed.

[Larry]

While back, I ran a poll, asking people which tax cuts, if any, they thought should expire.

I was rather surprised. My vote for "all of them" was echoed by a majority.

But since then, I've changed my mind.

I think that having all of the things hit, at once, in an economy as fragile as this one, would be a disaster. And a disaster on top of the economy we've already got? Really bad.

I also don;t see anything good coming from it, politically, either.

I think that having all of those things happen at once, would drive the economy down so much that it would cause revenues to drop. Which I absolutely guarantee would lead to a vast increase in the cries of "look! raising taxes made revenues fall! Tax cuts make revenues go up!"

(People have been pushing that myth for decades, when the actual history says otherwise. And people have been buying it, anyway. I hate to think what would happen if they actually had something that kind-of supports their myth.)

I've revised my opinion, to say that maybe we can let some of the tax cuts expire, and not "kill the patient". But that all of them at once is too much.

I think that, if I were in Congress, my vote, now days, would be to extend the Bush tax cuts for the lower 98%. But let then expire for the top 2%. And let the payroll tax cut expire.

That would result in almost everybody, rich and poor, get hit with a tax hike of around 2%. To me, that's a small enough tax hike that it shouldn't be too hard on the economy. And it might be politically do-able.

[Park City Skins]

Yahoo: Huge tax increase looms at year-end 'fiscal cliff'



Funny.

Seems we can spend 6 pages arguing about whether every single public opinion poll in the world is conspiring to promote Obama. Several pages arguing whether reporting on a chant of "Ryan! Ryan!", which apparently was said by some people at an event, put not by all, represents a clear and ominous case of deliberate liberal media fraud.

But the possibility of the government forcing the country into another Great Recession?

Seems I'm the only one posting in the thread.

More at the link, if anybody feels like reading.

It's been a topic of conversation here in the household today. We fall in to that yearly income category as well as many others. Last thing we need is that particular increase.

[Larry]

It's been a topic of conversation here in the household today. We fall in to that yearly income category as well as many others. Last thing we need is that particular increase.

Well, the way things are, if all the tax cuts expire, I suspect that there are very few households that don't see an increase.

(My parents might well be one of the exceptions. Neither has a job, so the payroll tax increase won't get them. And, while they do have rather good income, they also have tons of deductions, for medical bills. So they have almost zero taxable income.)

But if they all expire, then, well, for example, the payroll tax hike will be a 2% pay cut for every person with a job.

The income tax increases will likewise hit almost everybody. (But the rich, it will hit more.)

(But not the super rich. If all the tax cuts expire, it probably won't cost Mitt Romney a dime. Capital Gains, don't you know.)

(Although, while it wouldn't affect Mitt's taxes one bit, there is a teensy chance that the economic collapse might reduce the value of his portfolio a tad.)

[Fergasun]

Everything will depend on who gets elected and whether the GOP takes the Senate. If Obama is elected I think the GOP will have to relent and give up their protection of higher income tax rates, of course if they get control of the Senate, I don't know what happens. Neither party will have a strong majority on the Senate... so it's not like they can push through something. If Romney is elected the Democrats will have to relent and give up on raising taxes for the rich. I don't think the Democrats can get the House, but I see GOP losing a strong majority.

Incidentally, this dichotimy between our household finances (I don't want a tax increase either) and government finances (ZOMG! $16T debt how are we going to repay that!) is why we are $16T in debt. Since no one is willing to step up and pay for that debt, politically speaking, that's why its so high. If the GOP really care so much about the national debt they should tax the rich, let all the tax cuts expire, and go through with the sequestration deal.

My analogy would be this: think of the economy as an airplane, and government spending like the engine. RIght now our engines are red-lined (over $1T in debt) but our economy is stalled (airplane ain't gaining altitude, is barely flying). It's stupid to think that our economy won't crash once you throttle back the engines. At the same time, there is some fear our engines will break down, but we've had no problems pushing them further. Maybe you think the plane can glide down safely.... but I tend to think most folks think the plane will nose-dive when we remove those engines.

Unfortunately our politicians have been playing a game of chicken over this for far too long.

[ncr2h]

My analogy would be this: think of the economy as an airplane, and government spending like the engine.

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[Wrong Direction]

Here's a few statements that just about everyone should agree with:

The politicians have promised to give too much and take too little. The correction cannot happen with minor tweaks. It will be painful; for millions. Most will handle it well enough, but for some this correction will be tragic.

Sorry, but it's true.

[Larry]

Actually, about all it would take, to get back to the kind of deficits we had for most of Bush, is for the economy to get better.

(Yeah, I know. "Gee, is that all it would take?").

And, if we could get to that point, then reducing the deficit further wouldn't be the huge sacrifice, either.

Yeah, there are things that need to be done. Particularly involving the long term problems of SS and Medicare. But even those problems do not require grand, massive, suffering.

[thebluefood]

Actually, about all it would take, to get back to the kind of deficits we had for most of Bush, is for the economy to get better.

(Yeah, I know. "Gee, is that all it would take?").

And, if we could get to that point, then reducing the deficit further wouldn't be the huge sacrifice, either.

Yeah, there are things that need to be done. Particularly involving the long term problems of SS and Medicare. But even those problems do not require grand, massive, suffering.

Unfortunately, it looks like that's exactly what we're all going to get. It doesn't seem like Democrats and Republicans are at all willing to work with each other on anything. They're going to let a double dip recession happen out of stubbornness.

[twa]

Why isn't the economy getting better??
It is possible we are already in another recession bluefood

[Fergasun]

Bush Tax Refunds: $152B (2008)
TARP (bank bailout): $452B (2008-09)
Obama Economic Stimulus: $787B (2009-10)
Payrol Tax Holiday: $220B* (2011-12)

*based on my estimate

People are just like corporations (well they are apparently "people" too under some instances of the law). We like getting money from the government.

[Hubbs]

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Government spending makes the world go 'round, dot'cha know.

[Fergasun]

Government spending makes the world go 'round, dot'cha know.

Go ahead and pretend that government spending isn't helping, or is hurting the economy. There's a reason the politicians on both parties don't mind continuing the deficit spending, so long as they can convince you the other guy is the reason for it. I didn't include the doc fix and other tax extenders in my tally as well... and that's barely the tip of the ice berg.

How's all that austerity working for Europe?

[Hubbs]

How's all that austerity working for Europe?

I like how people continue to call what Europe's doing "austerity." But anyway, that's not really what I found interesting about that post. More the idea that government spending is the "engine" of the economy.

[SnyderShrugged]

Go ahead and pretend that government spending isn't helping, or is hurting the economy. There's a reason the politicians on both parties don't mind continuing the deficit spending, so long as they can convince you the other guy is the reason for it. I didn't include the doc fix and other tax extenders in my tally as well... and that's barely the tip of the ice berg.

How's all that austerity working for Europe?

This is sarcasm, correct?

---------- Post added October-5th-2012 at 07:47 AM ----------