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Guest Phailadelphia

Fiscal Cliff -O- Rama!!

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Guest Phailadelphia

Now that the election cycle is completed, we can turn our attention towards the future. And the immediate future is the "fiscal cliff" facing Congress in the coming weeks.

 

The May 2012 study on results of the fiscal cliff by the CBO can be found here: www.cbo.gov/sites/default/files/cbofiles/.../FiscalRestraint_0.pdf

 

For those who don't know what the fiscal cliff or what the implications of action, no action, or a compromise will be, that report is a good place to start. The report is only a few pages long.

 

I'll have more stuff to post in here through the weekend, including economic and political analyses. I'm going to attempt to post things as unbiased and unpartisan as possible so as to generate a better debate in here. This is a significant issue facing the country right now.

 

Anyway....discuss!

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Now that the election cycle is completed, we can turn our attention towards the future. And the immediate future is the "fiscal cliff" facing Congress in the coming weeks.

 

The May 2012 study on results of the fiscal cliff by the CBO can be found here: www.cbo.gov/sites/default/files/cbofiles/.../FiscalRestraint_0.pdf

 

For those who don't know what the fiscal cliff or what the implications of action, no action, or a compromise will be, that report is a good place to start. The report is only a few pages long.

 

I'll have more stuff to post in here through the weekend, including economic and political analyses. I'm going to attempt to post things as unbiased and unpartisan as possible so as to generate a better debate in here. This is a significant issue facing the country right now.

 

Anyway....discuss!

 

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:(

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I read about it the other day and it seems like no matter what, we are fucked. There seems to be no solution in which things would be tough unless of course there could be a compromise from both sides which hasn't and won't happen.

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I have been studying this a bit recently and one major question that I have come up with is, how do we divert away from it? Like what does the law that was passed say we must do to avoid the cliff? Does it say that if we pass a balanced budget, then the regulations won't go into effect?

 

On top of that, if we do pass a balanced budget, isn't that literally just doing what the cliff does since it would come with either massive cuts, massive tax increases, or a combination of both? So what is the difference?

Edited by WindyCitySports

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I have been studying this a bit recently and one major question that I have come up with is, how do we divert away from it? Like what does the law that was passed say we must do to avoid the cliff? Does it say that if we pass a balanced budget, then the regulations won't go into effect?

 

On top of that, if we do pass a balanced budget, isn't that literally just doing what the cliff does since it would come with either massive cuts, massive tax increases, or a combination of both? So what is the difference?

My thoughts exactly. The best they can do now is delay it but again it's just delaying the inevitable.

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Yeah, at this point, it seems like the only way to avoid the "cliff" is to continue our out-of-control spending and run up the national debt, which would lead to its own crisis. So yeah, this may be the lesser of two evils, and perhaps a blessing in disguise if this is what it takes to get us toward a balanced budget.

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Guest Phailadelphia

I have been studying this a bit recently and one major question that I have come up with is, how do we divert away from it? Like what does the law that was passed say we must do to avoid the cliff? Does it say that if we pass a balanced budget, then the regulations won't go into effect?

 

On top of that, if we do pass a balanced budget, isn't that literally just doing what the cliff does since it would come with either massive cuts, massive tax increases, or a combination of both? So what is the difference?

 

Read the CBO report posted. ;)

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I have been studying this a bit recently and one major question that I have come up with is, how do we divert away from it? Like what does the law that was passed say we must do to avoid the cliff? Does it say that if we pass a balanced budget, then the regulations won't go into effect?

 

On top of that, if we do pass a balanced budget, isn't that literally just doing what the cliff does since it would come with either massive cuts, massive tax increases, or a combination of both? So what is the difference?

 

To avoid the so-called "fiscal cliff", Congress would have to pass legislation regarding the automatic spending cuts on discretionary and defense spending that would total roughly $1 trillion in total taking immediate effect on Jan 1 2013, the Bush tax cuts from 2001 and 2003, and then I think there's some stuff involving unemployment benefits and stuff like that. So most likely a broad framework will be agreed upon regarding the overall budget and all aspects of federal government spending before the deadline, and then hashed out in detail within like 6 months or something like that after into 2013. Hopefully that this is a compromise solution, which I think will happen because all members of Congress are probably refreshed from not doing to much this year or last year!

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Guest Phailadelphia

 

Pay careful attention when he says he is "in favor of more revenue from economic growth." You're probably going to hear that a lot from the GOP establishment in Congress over the next couple of months and it's the biggest bunch of bullshit they're going to feed you in the post-election cycle. Every bit of evidence points to the contrary: that tax cuts decrease revenue to the government. Anyone who says otherwise is a liar or doesn't know what the hell he's talking about.

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Guest Phailadelphia

Updates:

-Mitch McConnell allegedly burst out laughing at the Obama Administration's fiscal cliff proposal last week, but still refused to present their own plan.

 

-Boehner says in an interview over the weekend that it "doesn't matter" whether the tax breaks are for the middle of upper class. While that's wrong in every meaning of the word, he also appears to have accidentally admitted tax breaks for the wealthy aren't anymore responsible for creating jobs than are tax breaks for the middle class. He also openly endorsed continuing tax breaks for the wealthy while letting the middle-class tax cuts expire. Oops.

 

-Republicans finally released their own plan today though it contains a sore lack of specifics. It calls for an increased SS age and cuts to Medicare. Boehner tells Obama and Dems that Republicans will absolutely refuse to accept any deal that includes new tax increases. This is absurd because if no deal is reached, far worse tax hikes than are included in the Obama plan go into effect automatically as they go over the fiscal cliff. Boehner is essentially trying to negotiate with absolutely no leverage.

 

-As the week progresses Dems have announced they intend to file a discharge petition to separate the middle class tax cut that is set to expire January 1st from the fiscal cliff drama.

 

It appears we're going to ride off the fiscal cliff folks. Hold on to your hats.

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The Republicans need to realize that the President is going to veto any attempt to extend the Bush era tax cuts for $200,000+ individuals and $250,000+ families--and they'd need divine intervention to pass it through the Senate in the first place. Just stop dicking around and extend the cuts for the middle class. These assholes are making me nervous.

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Guest Phailadelphia

The GOP is pretty much guaranteed to cave at some point. They hold no leverage and a compromise is better for them politically than going off the cliff.

But since they have no leverage in the fiscal cliff negotiations, they've taken their fight to the debt limit...again. Last time they held it hostage because of too many spending increases, the deficit getting out of control, etc. The fiscal cliff deal will dramatically reduce government spending and help shore up the deficit, so I'm looking into what they're using as talking points this time around.

 

It should be noted, however, that the US received a credit downgrade last time this happened because it creates a serious risk of default. The credit downgrade drove interest rates up and further hurt the economy. That's something to keep in mind as the negotiations progress. Is the fate of the economy preferable over political means?

 

With all this going on I really wish I could sit in on the Fed's FOMC meetings or private conversations. I imagine they're fuming.

Edited by Phailadelphia

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This might be my bias against the Republicans in the House speaking, but I honestly can't put equal blame on the Democrats here. People always say, "Well, the Dems are just as bad!" Frankly, the Dems are at least trying to negotiate here.

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Guest Phailadelphia

You're right to an extent. As far as I know the only item Democrats aren't willing to negotiate is a deal that doesn't raise tax rates on the top 2% of earners.

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What are the figures for the top 2%? I've been reading that Obama proposed tax increases on all revenue over $250,000 (rates on the income below $250,000 will remain the same). That just seems odds, because my economics teacher was saying that Obama was talking about increasing taxes on the billionaires of America.

 

Also, I tried watching Maddow on MSNBC because she was talking about the fiscal cliff. Being the first time I watched a major news outlet outside of the election and the debates, I was not impressed and was actually kind of turned off by how she was conveying her point.

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The top 2% of earners are like half the economy and half of the income tax to begin with. Yay making them carry even more of the weight. I am sure they will respond so positively.

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The top 2% of earners are like half the economy and half of the income tax to begin with. Yay making them carry even more of the weight. I am sure they will respond so positively.

You mean they'll only be banking 50 mill a year instead of 60? My god how will they survive.

 

Maybe I just don't understand economics but the rich should be paying significantly more in taxes than us normal people.

Edited by BradyFan81

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You mean they'll only be banking 50 mill a year instead of 60? My god how will they survive.

 

That is so far from the point that it really doesn't dignify a real response.

 

If you want to talk real policy, real implications, etc, I am all for it. If you want to argue semantics and go back and forth with these piddly squat one-liners, you can talk to yourself.

 

For the other, more capable individuals in this thread. I would much rather target those who get away without paying any income tax then the ones who already pay the most.

 

Budget needs balancing. Massive cuts need to take place. That will help much more than asking the deep pockets to bail us out.

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This is how I see it: the rich can handle a 3-4% rate increase and still be able to spend as much as they like; however, if you dock this 3-4% rate increase on the middle class, their spending is hampered and their lifestyles are drastically changed. Even though the progressive system has its flaws, it is far superior to the regressive tax system and flat tax system.

Edited by Vikingfan465

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The democrats and republicans both have their heads far up their asses. We need widespread tax increases, and reductions in spending. Yeah it's gonna suck but its what we have to do.

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For the other, more capable individuals in this thread. I would much rather target those who get away without paying any income tax then the ones who already pay the most.

 

Why? That's just putting the burden on people that will hurt even more. Like I said, the wealthy can handle a tax increase much better than the middle or lower class can. Unless, of course, you talking about the Fair Tax System. (I'm still learning about that, so I'll have an opinion on it soon.)

 

Budget needs balancing. Massive cuts need to take place. That will help much more than asking the deep pockets to bail us out.

 

Cutting now is going to balloon the unemployment. So if/when we do cut government spending and the unemployment figures go up, you have no room to blame Obama for those losses.

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Guest Phailadelphia

The top 2% of earners are like half the economy and half of the income tax to begin with. Yay making them carry even more of the weight. I am sure they will respond so positively.

 

They were OK with the Clinton era tax rates and that's where the Obama administration wants to return them to.

 

For the other, more capable individuals in this thread. I would much rather target those who get away without paying any income tax then the ones who already pay the most.

 

Budget needs balancing. Massive cuts need to take place. That will help much more than asking the deep pockets to bail us out.

 

What exactly is the logic behind increasing taxes on people who can't afford to pay them rather than people sitting on big chunks of change? And if we're going to increase taxes on those who already spend almost 100% of their income, would that not have a more negative impact on the demand side of the economy rather than taxing the upper class that just sits on its money?

Edited by Phailadelphia

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You mean they'll only be banking 50 mill a year instead of 60? My god how will they survive.

 

The problem with this assumption is that taxes aren't just going up for the super rich. There are a lot of small businesses making around $300,000 who file their taxes as individuals, not as corporations. Considering how the economy's been the last few years, I don't think it's unreasonable to assume the tax hikes are going to hit them hard.

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The problem with this assumption is that taxes aren't just going up for the super rich. There are a lot of small businesses making around $300,000 who file their taxes as individuals, not as corporations. Considering how the economy's been the last few years, I don't think it's unreasonable to assume the tax hikes are going to hit them hard.

 

This is also why I think that the tax hikes should be on higher amounts of income. $250,000 seems way too close to the middle class for it to be just taxing the super rich.

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