View Full Version : What are your thoughts on the fiscal cliff?
gimmethesimplelife
12-9-12, 9:21pm
With the White House recently saying they are OK with the US going over the cliff - I was so hoping things would not get to this point and still think there may be an eleventh hour compromise at the very last possible moment - what are your thoughts on the US going over the cliff? Good bit of strong medicine or bad news for most everyone, or somewhere in between? This one I may surprise some with - I am 50/50 on this. My take is that eventually all this spending is going to catch up with us - OTOH, take away the government spending, what is left to prop up the US economy? So I can see good and bad in both choices - cliff or avert the cliff. I'm still optimally hoping for a compromise that cuts some spending and does not raise taxes overnight to such a degree. Any thoughts out there? Rob
My take is that eventually all this spending is going to catch up with us - OTOH, take away the government spending, what is left to prop up the US economy? Government spending is only possible by taking money out of the economy in order to put some of it back in specific areas. We are now putting much more back than we're taking in with the hope that we'll somehow be able to either pay back the loans at a later date or, more likely, inflate it away and drive up the cost of living.
It seems fairly obvious to me that the majority of our elected officials are more than willing to push us off the cliff in order to achieve other goals, with the major one being placing blame on the opposition. The days of electing statesmen are over, the good of the country comes second to the good of the party.
Government spending is only possible by taking money out of the economy in order to put some of it back in specific areas. We are now putting much more back than we're taking in with the hope that we'll somehow be able to either pay back the loans at a later date or, more likely, inflate it away and drive up the cost of living.
It seems fairly obvious to me that the majority of our elected officials are more than willing to push us off the cliff in order to achieve other goals, with the major one being placing blame on the opposition. The days of electing statesmen are over, the good of the country comes second to the good of the party.
I agree with Alan.
And I am one of those who believes there will be a last-minute miracle of some sort (of the chest-beating, "we did it" sort)
But it's sad no matter.
gimmethesimplelife
12-9-12, 11:05pm
Government spending is only possible by taking money out of the economy in order to put some of it back in specific areas. We are now putting much more back than we're taking in with the hope that we'll somehow be able to either pay back the loans at a later date or, more likely, inflate it away and drive up the cost of living.
It seems fairly obvious to me that the majority of our elected officials are more than willing to push us off the cliff in order to achieve other goals, with the major one being placing blame on the opposition. The days of electing statesmen are over, the good of the country comes second to the good of the party.I agree with you that the days of electing statesmen are over.....Don't be shocked here but I am a mite disgusted with the Obama administration for his sudden willingness to let the US go over cliff.....As you say, Alan, for the good of the party (and all those who might suffer, oh well, they'll just blame the Republicans). This one does not work for me. Rob
gimmethesimplelife
12-9-12, 11:08pm
I agree with Alan.
And I am one of those who believes there will be a last-minute miracle of some sort (of the chest-beating, "we did it" sort)
But it's sad no matter.Yep, I am thinking it is very sad too. I agree there will likely be a last minute compromise but not without childish drama leading up to it (and hopefully not another credit downgrade for the lack of faith in US elected officials being able to reach a compromise). And on this one, I think both parties are to blame - they both need to get a grip and bring some willingness to negotiate to the table. Rob
And I am one of those who believes there will be a last-minute miracle of some sort (of the chest-beating, "we did it" sort)
Call me a cynic but I'm expecting the President to veto anything the House proposes in the unlikely event it could make it through the Senate, forcing tax hikes and spending cuts in January.
Then, in February, the President will propose a minor (temporary) tax cut for anyone not designated as 'rich', as well as a proposal to resume higher spending based upon the projected increase of revenues, and our national debt will continue to increase beyond any chance of paying back, all the while knowing the great collective 'we' will applaud his strength and resolve against those evil Republicans who hate women and minorities.
.....Don't be shocked here....
:0! Too late!
awakenedsoul
12-9-12, 11:31pm
I'm re-reading Think and Grow Rich by Napolean Hill. It's so inspiring! I love it because it's all about the qualities you need to develop to create wealth. I'm doing all I can on a personal level, in spite of our government spending. There are some incredible financial opportunities in real estate out there right now. I want to make the most of them, and focus on what I can control. I have greatly reduced my personal expenses, and that savings is adding up over time.
gimmethesimplelife
12-9-12, 11:42pm
:0! Too late!LOL Rob
gimmethesimplelife
12-9-12, 11:47pm
I'm re-reading Think and Grow Rich by Napolean Hill. It's so inspiring! I love it because it's all about the qualities you need to develop to create wealth. I'm doing all I can on a personal level, in spite of our government spending. There are some incredible financial opportunities in real estate out there right now. I want to make the most of them, and focus on what I can control. I have greatly reduced my personal expenses, and that savings is adding up over time.I think this is a good idea.....True we can't control what goes on in DC but I can control whether or not I buy the paper every day and if I buy soda vs water with some lime juice squeezed in and choices such as that that sure do add up over time. Rob
ApatheticNoMore
12-9-12, 11:51pm
I'm not convinced any compromise won't be worse than going over the cliff. Honestly are we any clearer than we ever were on what the compromise will consist of? Oh the discussions are secret. Now *that* is disgusting.
And all we know are not exactly actual proposals but more random stuff that gets floated, raise the Medicare age to 67 (um is any health insurer actually going to offer medical insurance to 65 year olds and at what cost? won't this just drive up everyone's rates, because of older people being in the insurance pool? really is this supposed to be a serious proposal?), raise the Social Security age (um Social Security isn't even part of the budget deficit). If they reach a compriomise what happens to cuts to the military? Or do they go off the table, and only entitlements can be cut? Wait a second .... that doesn't sound like a good deal .... We literally seem to have no idea what our government's plans are ... we can only expect we will get screwed I guess.
I know they constantly want to scare us about the cliff, but meh, they created the cliff in the first place. But going over the cliff would hurt the economy? Only if it's permanent and they don't negotiate anything afterward. But really any cutbacks at this point will hurt the economy. No I will NOT gladly trade you the long term destruction of Social Security and Medicare for a hamburger today, I mean for a negotiation before January.
ApatheticNoMore
12-10-12, 12:14am
I think this is a good idea.....True we can't control what goes on in DC but I can control whether or not I buy the paper every day
Buy the paper. Then while you might not be able to control what goes on in DC you'll at least have a better idea what it is :). Probably want to supplement with alternative media of course.
In my mind the elephant in the room is the global economy. The IMF chief is on the record stating that the markets will react swiftly to any deal that is only temporary in nature, much less to an actual dive over the cliff. That type of swift reaction is never in a positive direction. I'm one of those that does not believe the economists who say the recession ended three years ago. From what I can see the global economy still seems fragile. Greece and Spain are still a mess and no one can be sure the EU will stay together, Syria and the Israeli/Hamas conflict have the middle east all stirred up, China's growth has slowed considerably, food prices are on the rise due to the drought in the US farming regions, etc. It makes you wonder how many straws the camel can carry.
I don't think the name "cliff" is especially accurate. If the tax cuts are allowed to expire they can come back early next year and reinstate parts of the tax cut after the panic on Wall Street. I think the two parties are playing a game of chicken seeing who will swerve off course, but have doubts that when it comes down to it they will do something that could cause an economic disaster.
I support Obama on holding the line on tax cuts for the rich. It seems like a "balanced" approach to me. I actually also liked the caps on deductions that were a part of "raising revenue" plan the conservatives proposed. But the news I listened to said this would spill over into tax increases for the middle class. Maybe a compromise would be some caps on deductions and some increases in taxes for the ultra rich. Polls show most people support tax increases as part of the budget solution.
As far as spending cuts go, I would like to see use of the term "entitlements" changed to social security and medicare. These are the real items on the chopping block and I've not heard an option that I like and that will not eventually impact the elderly lower and middle classes. I actually haven't heard much about other budget cuts.
Gardenarian
12-10-12, 3:27pm
"What are your thoughts on the fiscal cliff?"
Some friends of mine have been playing a fiscal cliff drinking game - whenever the phrase is mentioned, take a shot.
"What are your thoughts on the fiscal cliff?"
Some friends of mine have been playing a fiscal cliff drinking game - whenever the phrase is mentioned, take a shot.
I wouldn't make it through the Today Show...
gimmethesimplelife
12-10-12, 8:58pm
"What are your thoughts on the fiscal cliff?"
Some friends of mine have been playing a fiscal cliff drinking game - whenever the phrase is mentioned, take a shot.Kind of like when I was in college back in the 80's and we would watch Bob Newhart reruns and when anyone said "Hi Bob" everyone in the room had to take a shot of whatever was cheap that week at Long's Drugs.....Cheapest place back then to buy liqour in Flagstaff, Arizona. Rob
Wildflower
12-11-12, 12:27am
"What are your thoughts on the fiscal cliff?"
Some friends of mine have been playing a fiscal cliff drinking game - whenever the phrase is mentioned, take a shot.
I've heard fiscal cliff said so many times today that I would be thoroughly drunk by now and sleeping it off. ;)
Roger makes a good point. The news people should stop calling cuts to Social Security and Medicare entitlement cuts. Call them what they are cuts to social security and medicare. I also don't think they should be called entitlements. Workers and their employer's pay into both programs all of their working lives. So in reality they are an earned benefit. Yes we may not have paid enough into the programs but we do have skin in the game.
At the coffee time after church yesterday I was setting with the old conservative men table. I was the only liberal. They had no idea that when Republicans talk about cutting entitlements they were talking about SS and Medicare. They thought entitlements were welfare programs.
Pew poll on "Fiscal cliff"
http://www.npr.org/blogs/thetwo-way/2012/12/13/167159547/on-fiscal-cliff-majority-of-public-sides-with-democrats-pew-poll-says?utm_source=NPR&utm_medium=facebook&utm_campaign=20121213
Pew poll on "Fiscal cliff"
http://www.npr.org/blogs/thetwo-way/2012/12/13/167159547/on-fiscal-cliff-majority-of-public-sides-with-democrats-pew-poll-says?utm_source=NPR&utm_medium=facebook&utm_campaign=20121213
"When it comes to the reaching an agreement to avoid the fiscal cliff, 55% say Obama is making a serious effort to work with Republicans. But just 32% say Republican leaders are making a serious effort to work with Obama on a deficit deal."
$1.4T in tax increases (revenue increases will not do, it must be rate increases), $60B in new stimulus spending and carte blanche authority to raise the debt limit without congressional approval, in return for spending cuts to be named later. 55% of us must be out of our minds.
$1.4T in tax increases (revenue increases will not do, it must be rate increases).
Yes, indeed, it must!
ApatheticNoMore
12-14-12, 2:47am
Didn't we just pass a massive defense spending bill, yes I thought so, out of our minds indeed, you would think it would be the first thing to be cut, but out of our minds again.
Yes, indeed, it must!Why?
If you possess two methods to achieve a goal, why choose the one that is the most economically counterproductive?
Yes, indeed, it must!
I'm also curious as to why a rate increase is seen as necessary. I personally lean more in the direction of a flat tax mostly because there is no penalty for anyone who wants to do more than maintain the status quo. The whole "success penalty" argument gets completely blown out of proportion (by both sides) every time the term is used, but the idea is not without merit. There are generations of studies out there that show peak revenue generation happens when more people are doing well and paying a lower rate than when a few are doing very well and paying a high rate. Revenue is, in the end, what we need to right the ship. Shouldn't we be trying to create an environment in which that happens?
One of the things I don't get is that Boehner says he wants deeper spending cuts as one of his bones of contention. Then he says he can't approve Obama's tax hikes because it will cost American jobs. Well...what are spending cuts going to do to jobs?
I am not normally a Pelosi fan, but I had to laugh when she said increasing medicare ineligibly age to 67 (apparently one of the conservative's "in the running" suggestions) is like scalping the elderly while leaving the hair on the nation's most wealthy untouched.
I actually think "raising revenue" vs. increasing taxes on the wealthy could potentially get to the same exact place or close, and that it is stubborn partisan bickering that has this one stalled out.
ApatheticNoMore
12-18-12, 3:46am
Well it seems the latest is cuts in Social Security (via changes in how they calculate inflation), so the cost of living adjustments seniors get will be reduced. If the new inflation method understates things enough of course this means decreasing benefits, and in a decade or two of mismeasurement the cumulative (and it is of course cumulative) effect in what seniors get in social security benefits could be massive. It's the power of compound interest IN REVERSE. The whole program could be effectively made almost irrelevant eventually if the measurement method is bad enough. In addition to this there will also be Medicare cuts.
Social Security is not part of the deficit and wasn't even included in the Fiscal Cliff itself, and yet in bargaining they put it on the table, they just couldn't wait to gut the near 80 year old program I guess. If this got the news coverage of Sandy Hook it could be stopped, these are very popular programs even across parties, but instead whatever exists that might oppose this is busy arguing about guns, a culture war that is unlikely to be resolved anytime real soon.
One of the things I don't get is that Boehner says he wants deeper spending cuts as one of his bones of contention. Then he says he can't approve Obama's tax hikes because it will cost American jobs. Well...what are spending cuts going to do to jobs?
If people were economically rational, I think they would get the signal that unless the cuts to Social Security and Medicare are stopped that their future retirement looks much bleaker (and plenty bleaker than their parents) and that they should save (not spend, not stimulate the economy) much more of their income. Of course there's always the people are not rational option in which case very few do anything different to prepare for thier old age and elderly fill the prison population in a few decades caught stealing catfood so they could eat. And while that's a bit of poetic license, overall it is the more likely scenario, most Americans are in no position to reach their old age without these programs, so it is not going to be pretty. And that's not even going into the increasing effect on those who are already current beneficiaries, they will definitely cut back spending if their payments don't keep up with inflation.
Well it seems the latest is cuts in Social Security (via changes in how they calculate inflation), so the cost of living adjustments seniors get will be reduced. If the new inflation method understates things enough of course this means decreasing benefits, and in a decade or two of mismeasurement the cumulative (and it is of course cumulative) effect in what seniors get in social security benefits could be massive. It's the power of compound interest IN REVERSE. The whole program could be effectively made almost irrelevant eventually if the measurement method is bad enough. In addition to this there will also be Medicare cuts.
Social Security is not part of the deficit and wasn't even included in the Fiscal Cliff itself, and yet in bargaining they put it on the table, they just couldn't wait to gut the near 80 year old program I guess. If this got the news coverage of Sandy Hook it could be stopped, these are very popular programs even across parties, but instead whatever exists that might oppose this is busy arguing about guns, a culture war that is unlikely to be resolved anytime real soon.
If people were economically rational, I think they would get the signal that unless the cuts to Social Security and Medicare are stopped that their future retirement looks much bleaker (and plenty bleaker than their parents) and that they should save (not spend, not stimulate the economy) much more of their income. Of course there's always the people are not rational option in which case very few do anything different to prepare for thier old age and elderly fill the prison population in a few decades caught stealing catfood so they could eat. And while that's a bit of poetic license, overall it is the more likely scenario, most Americans are in no position to reach their old age without these programs, so it is not going to be pretty. And that's not even going into the increasing effect on those who are already current beneficiaries, they will definitely cut back spending if their payments don't keep up with inflation.
+1
This puts things into a much better perspective as to the present economic situation.
U.S. Tax revenue: $2,170,000,000,000
Fed budget: $3,820,000,000,000
New debt: $1,650,000,000,000
National debt: $14,271,000,000,000
Recent budget cuts: $38,500,000,000
Let's now remove 8 zeros and pretend it's a household budget:
Annual family income: $21,700
Money the family spent: $38,200
New debt on the credit card: $16,500
Outstanding balance on the credit card: $142,710
Total budget cuts so far: $385
--------------------------------------
from The Daily Pfennig, a free currency newsletter.
This puts things into a much better perspective as to the present economic situation.
U.S. Tax revenue: $2,170,000,000,000
Fed budget: $3,820,000,000,000
New debt: $1,650,000,000,000
National debt: $14,271,000,000,000
Recent budget cuts: $38,500,000,000
Let's now remove 8 zeros and pretend it's a household budget:
Annual family income: $21,700
Money the family spent: $38,200
New debt on the credit card: $16,500
Outstanding balance on the credit card: $142,710
Total budget cuts so far: $385
--------------------------------------
from The Daily Pfennig, a free currency newsletter.
Good perspective!
Well it seems the latest is cuts in Social Security (via changes in how they calculate inflation), so the cost of living adjustments seniors get will be reduced. If the new inflation method understates things enough of course this means decreasing benefits, and in a decade or two of mismeasurement the cumulative (and it is of course cumulative) effect in what seniors get in social security benefits could be massive. It's the power of compound interest IN REVERSE. The whole program could be effectively made almost irrelevant eventually if the measurement method is bad enough. In addition to this there will also be Medicare cuts.
It does sounds like a method of phasing out SS over time.
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