We're going over the fiscal cliff.

General General Discussion
1

Q: What is the fiscal cliff?
A: The simultaneous expiration of Bush era personal income tax cuts, automatic cuts in government spending, and discontinuation of extended unemployment benefits.

Q: Why should I care about the fiscal cliff?
A: We will be thrown into another recession.

The Economy = Consumer Spending + Business Investments + Government Spending + Net Exports.

Following this simple math:

If tax cuts expire, folks will have less money to spend on stuff, so Consumer Spending goes down.

With automatic spending cuts (sequestration), Government Spending goes down.

Therefore The Economy goes down, holding everything else constant. That’s the definition of a recession.

As an aside, the defense companies and related service companies are going to get hit very hard and very suddenly. Not good news for contractors.

Mods, sorry don’t have a link for this story, it’s off my Bloomberg terminal.

Bowles Says U.S. Fiscal Cliff Deal Unlikely by End of This Year

2012-11-28 14:50:55.753 GMT

By Heidi Przybyla

 Nov. 28 (Bloomberg) -- The co-chairman of President Barack Obama’s 2010 fiscal commission said it’s unlikely the president and Congress will reach a deal by the end of this year to avert the so-called fiscal cliff.

 Erskine Bowles, co-chairman of the fiscal panel and a former chief of staff to President Bill Clinton, estimated there is a one-third probability the sides will strike a deal by the end of this year.

Speaking today at a breakfast in Washington sponsored by the Christian Science Monitor, he said there’s another one-third chance that all sides will reach a deal early in 2013.

 Bowles isn’t involved in the budget negotiations, though he said he met with Obama yesterday. He also plans to join a group of company leaders in a meeting with House Republicans today.

Bowles didn’t describe his conversation with the president.

 The “sticking points” on a budget deal are the president’s call for $1.6 trillion in new tax revenue and the fact that “there’ve been no serious discussions” so far over changes to entitlement programs, Bowles said.

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–Editors: Laurie Asseo, Jodi Schneider

To contact the reporter on this story:

Heidi Przybyla in Washington at +1-202-624-1955 or hprzybyla@bloomberg.net

To contact the editor responsible for this story:

Jodi Schneider at +1-202-654-7362 or
jschneider50@bloomberg.net

2

I suspect you’re right.

Democrats are intransigent about entitlement reform. Republicans are intransigent about taxes. Stalemate.

Frankly, I think it’s another contrived deadline created to get everybody riled up. It’s the SOS. The big dogs know the score and aren’t going to be persuaded by band-aids at this point. And that’s all these humps are capable of doing at this point–taping a band-aid on a hemorrhaging stump.

IF we go over the “cliff,” Republicans will have some cover to adjust tax rates while technically “lowering” taxes for a large number of people.

And Democrats can claim they “restored” entitlement programs.

The fact that tax rates will be higher and entitlement benefits are lower than they are currently will be drowned out in all the noise.

3

It is absolutely contrived and artificially imposed. No other country in the world has anything mechanically similar.

In other countries, the assumption is that if additional borrowing is needed to cover deficit spending, the executive branch has the power to lift the debt ceiling.

Not so here.

4

We all know they will not fix any of this until our country is literally on the verge of coming apart, and by then it will be too late.

All of this fiscal cliff stuff is just drama. The monetization of the debt, the massive layoffs due to the election results and the implementation of Obamacare, a possible looming war in the Mid East: all of these things are going to cause a recession in 2013. The fiscal cliff will just be more misery.

5

This is what I cant stand. No one has the maturity to put it all on the block and chop it. They’d rather roost around and complain about how the other side is destroying america and point the finger, convinced their side is the “correct” one. Things like cutting defense spending and drilling for oil shouldnt require compromise or a % strangle hold on the house or senate.

sent from mah gun,using my sights

6

Lets see… A depression is three consecutive quarters of negative economic growth, right? We’ve had negative economic growth since the days of Bill Clinton.

Can anyone say “AUSTERITY MEASURES”?

7

Wow this group is slooooowwwwwwwww…

8

While I highly doubt there are many here like me who will read this in its entirety, I suggest all read enough to get the gist of MMT as it is the ‘why’ behind dominate policy winds. If you’re like me there will be some things that you fundamentally disagree with. However, it is important to understand the motivation behind policy.

http://neweconomicperspectives.org/p/modern-monetary-theory-primer.html

The super nutshell - there is not such thing as too much debt / we have weak employment b/c we have not spent enough money / fiat money is legitimized by taxes - thus taxes (and at a stiff rate) are good / the issuance of gov bonds is a courtesy and is not necessary to the financial operation of gov nor the setting of interest rates / soveriegns that issue their own fiat, tax in their own fiat, and allow the value of the fiat to float - can never go broke.

In several corners of the web where Econ and Finance are discussed, Modern Monetary Theory (MMT) is euphemisticly known as Magic Money Tree

Second and most importanly - we need to stop paying attention to media contrived bullshit. As a Nation lets dispense with the trivial (like the fiscal cliff that we went over more than a decade ago - 1998 total public & private debt was 257% of GDP; today it is 350%) and get to the root of the issues - fractional reserve lending, the FED, pervasive corruption and cronyism.

Right / Left paradigm - two sides of the same coin. EVERYONE in the Nation needs to clue in - NOW.

Good luck

9

I will make some predictions, as I did on the Mars news:

  1. We will have a deal on the “fiscal cliff” by December 23rd, including higher taxes
  2. Obama has seen the projected economic numbers for fourth quarter and it will show growth (mostly in housing and energy)
  3. The growth will be used in 2013 to validate the higher tax rates

bc

10

One side will cave in and a deal will be reached, no doubt about it. It already sounds like the Republicans are thinking about letting some stuff go to get a deal and then fight on other issues after the fiscal cliff is only a memory. I wouldn’t mind seeing what happens if a stalemate is reached. Some hard truth will be more visible, thats for sure.

11

Spending needs to be cut drastically. I don’t really care how they do it at this point. I’m not in favor of raising anyone’s taxes because it won’t bring in the kind of revenue they’ll need, among other reasons. They need to cut spending by about 40%.

Allow me to repost an old post here?:

12

From his grave, Andrew Jackson is laughing at us all… :frowning:

13

Good. We have a false economy when we are reliant on our government spending 1.2-1.5 TRILLION in deficit spending a year. Time to come back down to reality, and we need to start paying higher taxes to pay for the government we elected.

If you look at a ‘socialist’ country like Germany their deficit this year, per capita, is about 1/12th what ours is.

Or did you guys think spending well over a trillion a year in new debt could just keep going on forever?

14

So is TJ, JM, GW, PH, SA, etc

15

I’ve been thinking this way for the last 5 months or so.

16

While our road to collapse was paved in 1913 with the Fed, and boosted on the way in the 1930s with FDR socialism, it seems to me that the 2008 TARP was really the point we went over the precipice. Never before in the history of mankind has so much wealth been transferred from the citizens of a country to a private cartel with no accountability or hope of return and done so quickly. Both parties proved they are mere puppets on the global stage and have long abandoned any pretense of representing “the people.”

Since TARP we have had multiple “stimulus”, govt confiscation of companies, redistribution to cronies, lack of prosecution for gross violations of SEC and banking laws, and the debt just keeps piling up faster. We now have something like $80 TRILLION in unfunded liabilities.

No amount of tax increase could possibly hope to make even a dent in the “on the record” debt so it is ridiculous to even debate tax rate changes. Taxes are not the problem in terms of the debt. As SMETNA points out it is a SPENDING problem and only a 40% or greater IMMEDIATE CUT will just get to a balanced budget or slight pay down on the debt, i.e, tread water. Of course no one will support such drastic cuts although that would be about the same as the 2003 budget. We can’t even bear going back just nine years to achieve a balanced budget?!!!

We are so freaking doomed!! :smiley:

Before we get angry with pitchforks and tar, just remember who brought this on. Those who are hiding beyond the politicians and even on other shores. When we hit bottom and feel like burning something down, let’s not forget the Fed and its hidden manipulators. As much fun as it might be to tar and feather your Representative or Senator and light them up, they are just hapless, immoral puppets. Let’s not let the real manipulators who profited by the stimulus, TARP, and taxpayer backed derivatives (wild ass gambling bets) stay smugly safe in their estates enjoying the show of the rabble burning their own neighborhood so to speak. I would really like to see a list of just who those parties are and where they reside. For educational purposes only.

17

And it always hurts . . .

18

A majority of Americans went for this.

It’s going to take a majority to step back from it.

That majority will not exist anytime soon. Not until millions upon millions have a “come to Jesus” moment and admit they made their country worse. The ability to humble oneself and admit error is not a popular one.

19

It’s not who cast’s the votes it’s who counts the votes…
Planned many years ago as well.

20

Who is John Galt?

http://www.telegraph.co.uk/news/politics/9707029/Two-thirds-of-millionaires-left-Britain-to-avoid-50p-tax-rate.html

bc