Fiscal clif could be good!

[rickt300]

But I doubt it. It will reduce the size of government around 6%.

[BUGEYE]

There's only one way out.   bankruptcy

[gypsyman]

Kinda like an enema before a colonoscopy!! gypsyman

[Gary G]

The fiscal cliff is a temporary roadblock. The real cliff is when the bond vigilantes attack bond market because of an unpayable debt.


The so called fiscal cliff was a result of tea party members who did not want to see the debt limit raised without some spending concessions. Now that the time is here, most want to kick the can further down the road to avoid any unpleasantness such as a downturn in the economy, which is currently at stall speed and falling. Who knows what they will do.


Here are the economic facts:


A. A rise in taxes will hurt the economy because it takes investment capital away from the economy and gives it to the government which will not use it as wisely.


B. Cuts is government spending will help the economy because government will not be wasting resources that could be used in the private economy. Now the Keynesian thinks that a cut in spending will hurt the economy, but they are wrong. An economy grows when investment capital is available for expanding capital equipment and resources. All government spending is consumption. If a farmer consumes all that he produces, he will be hurting next planting season.


We will just have to wait and see what they do. If capital gains and dividend taxes are raised very much, many will be selling stocks and taking profits in December before the new taxes take effect. If corporate taxes are raised, more companies will be moving out of the country to escape as we already have the highest corporate tax rate in the world.

[rickt300]

The fiscal cliff is a temporary roadblock. The real cliff is when the bond vigilantes attack bond market because of an unpayable debt.


The so called fiscal cliff was a result of tea party members who did not want to see the debt limit raised without some spending concessions. Now that the time is here, most want to kick the can further down the road to avoid any unpleasantness such as a downturn in the economy, which is currently at stall speed and falling. Who knows what they will do.

Well I find it hard to blame the Tea party for not wanting to see the debt limit raised. I do blame those who refuse to cut spending though. What I am seeing is that neither party can pull their heads out of their......... The rest of this post is spot on.

[gcrank1]

2012 tax season is soon to be upon us. Once most get the bad news and see where we really are and what the implications for the years beyond I predict stunned disbelief, then anger.
Too late.
Too bad a whole bunch of you who voted the Democrat Socialists back in arent going to be able to retire in comfort, some not at all.
Suck it up, you wanted this.

[rickt300]

The first move to civil disobedience would be to not pay outrageous taxes. I already pay plenty and they spend too much. Stop giving them money to waste.

[scootrd]

I agree with OP ..but not for same reasons.

1.) allowing the  Bush era cuts to expire will not affect the majority of small business as drive by media would like all to believe.
2.) it would allow republicans to be free of Norquist ridiculous pledge. and return in early Jan and vote tax cuts to 100% of Americans making below 250k (or any negotiated number).
3.)In a weak economy business needs more middle class with more $$ in their pockets. So in Jan they will reinstate tax cuts quickly that greatly affect positively 98% of Americans.
4.) It would disallow top 2% a disproportional massive tax cut. 

Here is a Center for Budget Policy Priorities that spells it out quite well.

http://www.cbpp.org/cms/index.cfm?fa=view&id=3806

[gcrank1]

Taxes simplified:
1) The 'masses' pay most of the bill because there are more of us than anybody else; its mathematical
2) We always have and we always will, no matter what words they use to convince us its not so (refer to #1)
3) The definition of insanity is doing the same thing over and over and expecting different results

[mcwoodduck]

I agree with OP ..but not for same reasons.

1.) allowing the  Bush era cuts to expire will not affect the majority of small business as drive by media would like all to believe.
2.) it would allow republicans to be free of Norquist ridiculous pledge. and return in early Jan and vote tax cuts to 100% of Americans making below 250k (or any negotiated number).
3.)In a weak economy business needs more middle class with more $$ in their pockets. So in Jan they will reinstate tax cuts quickly that greatly affect positively 98% of Americans.
4.) It would disallow top 2% a disproportional massive tax cut. 

Here is a Center for Budget Policy Priorities that spells it out quite well.

http://www.cbpp.org/cms/index.cfm?fa=view&id=3806

Not sure what you are thinking but any new taxes are going to do three things no matter who those taxes are on.
1) raise prices -  Taxes are built into the price of the goods or services that you buy.  So as taxes are raised on everyone making 250 a year or more it will drive up prices and make everything more expensive.  Limiting everyones disposable incomes and killing thier economic potential to drive the economy for wanted goods and services rather then needed.
2) as Prices rise, fewer of those goods are demanded and fewer workers will be needed to make, distribute, or sell those goods or services.
3) Since the Rich will be effected most by the tax cuts being allowed to be die then those rich will be forced to cut back on their spending that will only hurt the poor by not spending. 

[gcrank1]

Good points, those MCWD
FWIW, before the crash of '08 I remember that we were told that 85-90% of this economy was consumer spending, a couple years ago I heard 80% and last week 70%.
What changed?
It is that consumers (remember, they, us, drive this economy) arent spending as much! Hows 'recovery' been?  Until consumers CAN spend again on consumer goods, not just food, housing and fuel, this economy will not, can not recover. No need for new jobs in manufacturing or much of anything else if people cant buy.
I see, according to Ben B., 'we' are still going to be spending (no, really borrowing to spend) some 40BILLION dollars a month buying our own debt in the housing fiasco (including FannyMae & FreddieMac) 'because the expected increase in jobs hasnt occured' (clue, Ben, it ain't going to that way)
And the POTUS has asked for more extended unemployment benefits (that should be giving us all a clue that the approach of past 4yrs hasnt worked).
It doesnt matter any more 'which party' got us here (it was both). What matters is, when you realize you are lost, that you figure out how to go from where you are at to where you want to be. I'd choose a vibrant, creative, productive culture allowed to keep the fruits of our labors and (oh, shudder) even make some profit to expand or spend frivolously over where we are headed.
Silly Boy, what am I thinking?

[joeinwv]

Merry sequestration and a Happy fiscal new year!

[BUGEYE]

My wife and I no longer buy large taxable items new.  paying cash to a private party saves $$$$

[jimster]

Fiscal cliff, many of us here were talking about already being over this fiscal cliff a couple years ago, nothing new, we are already off the cliff, how far you want to drop is really the question. Bankrupt. Being bankrupt is already here, it's a question of when you finally admit it, and decide to not pay your debt.
Politics is when one party blames another party for letting the Bush tax cuts run out, when in reality the party doing the blaming wrote it that way in the legislation in the first place. Don't let them fool you, they could sit down at 8:00 AM and write anything they want, fix anything they want, in a half a day, and pass it in the afternoon.  If they wanted to change the legislation in place they could. You all know this.
In other words, if they can ram a health care package 2500 pages deep without reading it, and bribing each other to get it passeed, they can fix any tax problems overnight. They could stop spending and pass a budget if they wanted too. They could shrink like most bankrupt businesses should...if they wanted to.
The president is lying about some important things as well. He says he's copying Clinton...he is nowhere near what Clinton and the republican congress did back then. Clinton cut capital gains in the second term...the republicans in congress passed a budget, government shrunk, welfare reforms....the exact opposite of what Obama is proposing. He must either be a liar, or I am smarter than him....I'm not so sure anymore which it is...he seems very uneducated to me, although he speaks and reads well. 

[BUGEYE]

He must either be a liar, or I am smarter than him....

no question about it, you're smarter than he is.

[Dixie Dude]

The fiscal cliff isn't what is happening now.  When we reach $20 trillion in debt which will be in about 3-4 years, the taxes the government takes in will not even pay for the interest on the debt we owe to China, Japan, and others.  That is the real fiscal cliff.  Just raising taxes kicks the can down the road beyond Obama's second term.  Cutting the budget with some tax increases will kick the can a few years further, and if the economy ever improves, maybe even further. 
 
Everyone is pointing fingers, but both parties are guilty of spending too much.  Both parties are guilty of letting our manufacturing base go overseas.  Dem's are guilty of raising taxes too much. 
 
Two main things caused our financial meltdown in 2008.  One was the free trade agreements back in the 90's sending our industry overseas which took away jobs providing health care to their workers.  The second was relaxing the home loan mortgage industry, which gave loans to people that otherwise wouldn't be able to get them.  Republicans are more to blame on the free trade agreements, dems are more to blame on the mortgage fiasco which started in 1998. 
 
Only way to get the economy back on track is to lower corporate taxes on manufacturers to bring them home and free up the energy sector to allow more drilling, pipeline construction, and mining.  Both these sectors provide jobs for the middle class. 

[gcrank1]

The USA ceased to be a 'manufacturing country' long ago, so the idea of bringing manufacturing 'back' is unlikely; others are doing it all now. Even if we passed laws or excessive tariffs now and began retooling for manufacturing here it will take how many years to be up and running while real unemployment (the ration of work force to jobs) increases . For crying out loud, we've been getting 400,000 WEEKLY first time claims for UC for how many weeks/months/years now, and they stop counting you when you run out of benefits whether or not you actually found work! Meanwhile, through the doubling of the money supply and infusing it into the economy via the 'quantitative easing' (stimulus) they devalued the purchase power of our dollars in half (inflation, just another form of tax). Prices thus double, as we are watching now, so if we had more manufacturing here who could afford the goods? We became essentially a 'service and paper shuffling' economy a long time ago, and even jobs of those type are becoming fewer and new graduates entering the work force are not finding work at an ever increasing rate. The only sector that is increasing in any substantial numbers is the public sector, and, though they pay taxes, those tax dollars, along with all their wages and benefits, all come from bleeding the private sector through ,you guessed it, taxes (so our incomes are paying not only our taxes but theirs as well; more 'redistribution of wealth).
Remember when one wage earner in America could raise a family, save up and get ahead? Remember when that changed and the wife/mother had to go to work too; now you almost have to have the kids working if you want that life.
I lived through the devaluing of the dollar in the early seventies and watched my earnings and savings cut in half; now Im living through it again. Im ready to let it crash and burn (heck, its going to crash and burn whether Im ready or not) and let the 'hope & changers' get what they thought they wanted. Maybe the pain will finally make some positive impression upon them, Lord knows common sense conversation hasnt).
BTW, we are already 'Greece', already bankrupt, already dead in the water and dont seem to know it; all the rearranging of the deck chairs didnt keep the Titanic from sinking.

[blind ear]

The only effective way out of this situation with the economy and the government that we have seated now is falling off of that cliff. . All the moves that the government has taken to prevent running off the edge have been socilistic in nature. The only things that they propose won't stop this ship from sinking unless we move completely into socialism, or worse. These actions are by the "congress" Democrat and Republican.
-
Running off the clif, crash and depression, is the only occurence that "might" kick the population into takeing action. That is the only change that has ever worked reguardless of ecconomic model or governmet type. It comes with awful concequences but it is all that has historicaly  worked to get common people back into the mix. It is the only thing that will give our children a chance at the future of freedom that this country has preached that "we" offer. It would definitely be harsh and sad to get through, with ecconomic blood, political blood and maybe the blood of patriouts. ear

[mechanic]

If we take 100% from ALL 88 million tax payers, (out of over 330 mil), it will not cover government expenditures.
 
Let it bust.  The sooner it does the sooner we deal with it realistically, instead of one or the other party trying to "one up" without regard for the country's welfare.
 
Ben

[scootrd]

The fiscal cliff isn't what is happening now.  When we reach $20 trillion in debt which will be in about 3-4 years, the taxes the government takes in will not even pay for the interest on the debt we owe to China, Japan, and others. 

The US OWNS APPROX 2/3  (68%) of it's own national debt .
China and Japan together only equals about 15%

US institutions (mutual funds, INS co etc.. OWN APPROX 42%
US military Retirement about 2.4%
US civil service retirement about 5%
Social Security Trust about  16%

[blind ear]

The fiscal cliff isn't what is happening now.  When we reach $20 trillion in debt which will be in about 3-4 years, the taxes the government takes in will not even pay for the interest on the debt we owe to China, Japan, and others. 

The US OWNS APPROX 2/3  (68%) of it's own national debt .
China and Japan together only equals about 15%

US institutions (mutual funds, INS co etc.. OWN APPROX 42%
US military Retirement about 2.4%
US civil service retirement about 5%
Social Security Trust about  16%

-
All the debt "owned", money owed to someone, has to back down to a value of some real asset in the end. The inflated values of the assets is the base problem. Until value of real property returns to real worth of the asset the market and the economy will remain artificial. The too big to fail should have been allowed to fall. The banking deregulation, which began with the banking deregulation of the Regan era, is also a major step toward world banks and world government. 
-
The value of real property has historically been equal to the "profit" the property would produce over 10 years. Banking and service businesses must back up to a product production at some point. Much of their value growth is speculative or reflects the increase in real asset value.   The values attached to today's assets are inflated by speculation in the markets of real estate which drove the investment banking  and derivatives. Laws were made against such transactions after the leveraged investment crash of the 29 depression but as usual the name was changed and money lenders were allowed to do the whole thing over again. ear

[gcrank1]

Wish I could write myself an IOU to buy a 'bond' to 'own' my personal debt......... .
Immoral
Unethical
Illegal
Ear, I think a good example of what you say may be this; some years back we bought a house here in WI. The taxes kept rising even though we did little to 'improve' the property. Seems the State has to keep inflating the value of the property within the borders in order to 'increase' the value of the state to be able to borrow more money. One year they increase the 'value' of the RE, the next its the 'improvements (house, etc.) and leap-frog us into this place being 'valued' at far more than its worth. Desperate people are selling houses here, for way less than those assessments, but because homes are 'selling' it looks like the housing market is improving. This is just our state, a 'mini' version' of what the Feds do with the country.
If this was the 1930s Al Capone wouldnt be in the booze business, he'd be a politician.

[blind ear]

gcrank1, Amen! You and your comrads could soak up the intrest earned while people that sweat to earn a living pay the bill. ear

[Dixie Dude]

So when we reach $20 trillion, we have hyper inflation to pay back the debt with worthless dollars.  They have kept the interest rates artificially low for several years so the government can pay debt at a lower interest rate, and to try to keep down inflation.  We have inflation anyway and the government is lying about how much because they do not include fuel costs or food costs because they are to "volitile".  Well, most everyone has to drive to work, and everyone has to eat.  Inflation is really running about 10-12% the last 4 years based on 1980 methods.  It will run about 25% when we reach $20 trillion in debt.  That alone will be the tipping point to make us like Greece or Argentina a few years ago.  Only drastically cutting the federal spending, and raising some taxes will fix that.  Dems don't want to cut, GOP don't want to raise taxes. 

[blind ear]

So when we reach $20 trillion, we have hyper inflation to pay back the debt with worthless dollars.  They have kept the interest rates artificially low for several years so the government can pay debt at a lower interest rate, and to try to keep down inflation.  We have inflation anyway and the government is lying about how much because they do not include fuel costs or food costs because they are to "volitile".  Well, most everyone has to drive to work, and everyone has to eat.  Inflation is really running about 10-12% the last 4 years based on 1980 methods.  It will run about 25% when we reach $20 trillion in debt.  That alone will be the tipping point to make us like Greece or Argentina a few years ago.  Only drastically cutting the federal spending, and raising some taxes will fix that.  Dems don't want to cut, GOP don't want to raise taxes.

-
And the world won't bail us out like we have had to bailed them out. If you don't think that is true where do you think the rest of the world would be if we wern't artificially holding our econemy together? The whole world econemy and governments would be returning to real values. We would ALL be busted but on the road back to reality. ear

[bilmac]

The worst part about sequestration is that our already hard pressed military will see BIG cuts. Typical political thinking. Whenever tax money gets short, you cut what is necessary, yea even about the only thing the Constitution tells the Federal government to support, the common defense. But cut the new socialist style health care programs,,,, NO WAY.

[gcrank1]

Dixie, a lot of what you characterize there is true, but we dont have to reach the 20T mark, its right now. If you have kept track of your grocery bills over the last year I think you will see we have about 20-25% higher right now in one year. The whole thing really hit me when they doubled the money supply. I knew it devalued every dollar to half its value (and geesh, a dollar was only worth 2c compared to the early 1800's anyway), but I didnt know how they were going to 'introduce it' into the economy. The QE programs were part of it, and easy by sending stimulus money to state/local governments to stay afloat (after all, that distribution system was already in place). The 'buying our own debt', ie, the Federal Reserve buying Treasuries and the buying into (essentially 'laundering' money) the stock markets to keep them from crashing (still continues, notice how the markets drop, then 'magically' reboot with no good reason for it) all are the smoke and mirrors to keep most from having any idea what's going on.
Now, to their credit, this is, and always has been, a confidence game, and they are desperately trying to keep confidence up (though, have you tried lately to pull even $1000 in cash from your bank account? Go do it asap and see what they say) and hope, beyond reason, that 'somehow' this is going to turn around.
Too Late
Mathematically impossible
Not impossible sometime in the future, but right now (regardless of who won the last election). Maybe the best thing about the election results is that it will be more of a 'pull the bandaid off quick' scenario.

[yellowtail3]

[size=78%]The US OWNS APPROX 2/3  (68%) of it's own national debt . [/size]
China and Japan together only equals about 15%

US institutions (mutual funds, INS co etc.. OWN APPROX 42%
US military Retirement about 2.4%
US civil service retirement about 5%
Social Security Trust about  16%
.... ... ...

thanks for posting. I'm thinking Obama is looking at these 'negotiations' as a way of locking in gov't size/roll/reach. I'm with him on the higher end taxes - won't affect me, right? - but they need to shrink gov't expenditures A LOT and roll back gov't reach. A lot.


I just don't know where.

[BUGEYE]

get a fireproof safe and bolt it down, or use your gun safe, and start buying gold, silver, and ammo.
we started in early 2010 and are in good shape and getting better.

[mannyrock]

 
    Having read with interests all of the posts, I find that I agree the most with Gcrank.  It's over, it's done.
 
    Not much mention here as to how all of the actual cash has been stolen out of the Social Security Trust Fund by your Congressmen.
 
    Did anybody see the movie Dumb and Dumber?  The two comical idiots find a suitcase with over a million dollars of cash in it.  They decide to take a cross country trip, to Colorado, to return the suitcase to its rightful owner.  Of course, they need expense money, and new clothes, and new cars to make the trip.   And of course they need to pay for their private ski lessons, luxerious meals, and other entertainment as well.
 
   At the end of the movie, the suitcase is returned to the owner, who upon opening it, finds it filled with nothing more than hundreds of little  handwritten notes.  He is outraged.  "What in the hell is this?" he asks.  "Where is all of my cash?"    One of the idiots shushes him.  "What's in that suitcase is better than cash," he says.  "Those are our personal IOUs!"
 
  Your Congressmen, of both parties, have for the past 25 years stolen (they say "borrowed") all of the cash out of the Social Securty Trust Fund, and replaced it with IOUs (being U.S. treasury notes, promising to pay it back.)
 
   If anyone working for a corporation, bank or other private institution ever did this with a private trust fund, he would be held guilty of embezzlement and fraud, and imprisoned for at least 25 years. 
 
   And on top of that, your federal income tax payments are being used to pay the interest, on the IOUs, for the cash that Congress stole from you out of the Social Security Trust Fund, to pay for its other wasteful projects.
 
   I think you can now see, why I think that it is already over.
 
Mannyrock