Are you surprised by the resolution of the ‘fiscal cliff’?
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Legislation to negate a fiscal cliff of across-the-board tax increases and sweeping spending cuts to the Pentagon and other government agencies is headed to the GOP-dominated House after bipartisan, middle-of-the-night approval in the Senate capped a New Year’s Eve drama unlike any other in the annals of Congress.
The House vote could come as early as 1 p.m. Tuesday.
The measure cleared the Senate on an 89-8 vote early Tuesday, hours after Vice President Joe Biden and Senate Republican Leader Mitch McConnell of Kentucky sealed a deal.
It would prevent middle-class taxes from going up but would raise rates on higher incomes. It would also block spending cuts for two months, extend unemployment benefits for the long-term jobless, prevent a 27 percent cut in fees for doctors who treat Medicare patients and prevent a spike in milk prices.
The measure ensures that lawmakers will have to revisit difficult budget questions in just a few weeks, as relief from painful spending cuts expires and the government requires an increase in its borrowing cap.
Are you surprised by the resolution of the “fiscal cliff” crisis? Do you think the compromise is in the country’s best interests overall?
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I’m I surpised that the Democrats lied? Never, as predictable as sunrise on New Years Day.
The promise was a balanced approach. Tax increases are immediate and sequestration kicked down the road two months. Not even cuts in the amount of budget increases.
The nation has a spending problem, We will look like Greece in a short while.
Comparing the USA to Greece is like comparing Donald Trump to an average person who has had his home foreclosed: Trump has declared bankruptcy several times but has always bounced back bigger than ever, mainly due to his reputation as a innovative moneymaker. Most private citizens who go bust find it very difficult to “bounce back”.
Same analogy applies to the USA and Greece- USA has a population which is around 35 times larger than that of Greece (Greece is only about 4X the population of little old Iowa). The USA remains the best nation in the world to invest in, even given its budgetary issues. Not so Greece- its major “national resource” is tourism, which hardly has high-growth prospects.
“The USA remains the best nation in the world to invest in, even given its budgetary issues.”
Some day you may learn that a cow only gives so much milk.
So what’s your point? Do you disagree that the USA is the best nation in the world to invest in? Can you name another that is superior on a return basis and safety of investment?
“Can you name another that is superior on a return basis and safety of investment?”
Panama, Ecuador, Belize, Uraguay, Canada, and Australia. Hope that helps ya!
(I assume you are talking about sovereign debt, Ahart.) What is your rating source. Here is one per Standard and Poor’s.
http://www.ritholtz.com/blog/2011/07/sovereign-debt-ratings-by-country/
Here’s another that provides 3 rating sources (Fitch, Moody, & S & P0). http://en.wikipedia.org/wiki/List_of_countries_by_credit_rating
Cedric: That’s a good one! Standard and Poors! Boy we can all believe that. And no……FYI I’m not referring to “sovereign debt” per that very poor source. The biggest business in the world? Oil? Gold? Nope. Converting U.S. dollars to non dollar assests is by far the biggest business trumping all others combined. You will have to find out the hard way. Good luck.
Jack … you missed the point.
Ahart: You’re not referring to sovereign debt? Then why did you refer to S & P in this context — sovereign debt is exactly what the links are rating? What are you referring to, public debt, the stock market, what ?
The last time I checked, Ellis, the country I live in was not a cow.
You know what the trouble with conservatives is? It’s how small they think.This country was built on big ideas and the courage and the ability to put those ideas into play. Or at least try. But what do we get from conservatives? We can’t have big ideas, we can’t do big things. Costs too much money. The cow has gone dry.
And conservatives can’t figure out how they managed to lose the last election.
Well Roberta: That’s no secret how conservatives lost the last election! We have 29 million combined state and federal workers chomping on the milk pie and another 50 million welfare recipients licking the tin dry. We didn’t have an election. We had a “purchase” with tax payers money and now the well is dry! Get that straight for once.
“You know what the trouble with conservatives is?”
The problem with liberals is they only think of themselves, never pay for anything and think more bad government will fix their every wish.
Consevatives didn’t lose the last election. The uninformed simply outnumber the informed.
Ellis, Ahart,
As near as I can figure out what both of you are saying is that when people don’t vote the way you want them to vote, that’s voter fraud.
Calling millions of people corrupt and stupid is no way to get them to listen to you much less vote your way.
Jack, sometimes you still surprise me. The major difference between the US and Greece is the dollar. We can print more dollars and buy our own debt, Greece doesn’t have that same luxury. Although, I’m not sure if you actually go to the store to buy groceries, but the prices are rising due to the devaluation of the dollar. (we’re producing more dollars which means it buys less) I won’t even go into your assertion on Greece’s major industry. (tourism? really?)
We don’t “print dollars and buy our own debt”. To do so would cause rampant inflation. Last time I checked inflation was still very low. What we DO do is sell treasury bonds to whoever will buy them- US citizens, foreign private investors, and foreign governments. This creates national debt but does not somehow “buy it back” as you seem to have suggested. This is what Bush used to finance his two wars and the massive tax cut, and it is what Obama is using for more or less the same purposes (although we are down to one foreign war at the present).
BTW, Greece’s main industries are tourism, shipping, industrial products, food and tobacco processing, textiles, chemicals, metal products, mining and petroleum (by order of contribution).
“We don’t print dollars and buy our own debt”
Hey Lorenz: I really hoped and prayed that people like you would come out of that financial coma but I know that will never happen but it’s too late. How long do you think the FED is going to print money and buy our debt?
http://www.moneynews.com/Headline/fed-debt-Treasury/2012/03/28/id/434106
Yes, Greece by no longer using the Drachma but rather the Euro cannot increase the currency in circulation via the printing press.
As far a your comment on tourism in Greece I’ve had problems finding a list of factors in the Greek GDP, but did find tourism was about 16% of GDP in 2011 — certainly significant! I also found that that shipping listed as a “major industry” in Greece but only comprises about 4.5% of GDP. I suspect tourism is the single most significant industry. (BTW, I recently visited Greece and in spite of all the tourists the economy “ain’t pretty”.)
The United States is about to pass through the eye of the fiscal hurricane of what will become the biggest and nastiest financial storm of all time … and the back wall of that hurricane will hit in 2013. There was no “resolution” to the fiscal cliff. Shorter-term Treasuries, corporate bonds, municipals, and junk bonds will tank. No countries will be buying, or financing, our debt as before. The current Fed debt buy backs guarantee exponential inflation. The Liberal addiction to entitlement spending will not stop. Say goodbye to dollar.
Any chance you could cite a credible source for your claims?
Greer: Americans have 2 years or less to get their act together but that will never happen. Research for yourself and if you really want to know the real deal get your wallet out like me and “pay for it”. It’s not on Fox or MSNBC. I’ll be nice today and throw you a small bone: Google Former US Congressman Robert “Bob” Baumen, or the Sovereign Society Investor, or International Living just to name of few. Dig deep! In the mean time enjoy this: http://www.shadowstats.com/
Dave,
The Mayan Calendar thingy has come and gone. Did you find another one?
As for Congressman Bob Baumen, he lost his bid for re-election in 1981 when he was caught with a 16 year old male prostitute. The Sovereign Society is a group dedicated to offshore banking and investment. While I can overlook a thirty-two year old scandal, I’m not sure I want to trust a claque of people dedicated to stashing their money in the Caymen Islands on what’s good for America
Historically, federal government revenue and spending has been around 20% of the GDP. In Bush’s last year, FY 2009, revenue was down to 15% of GDP and spending was up to 25%. Spending has been coming down steadily to about 23% for FY 2013. Revenue has not been going up and remains at about 15% of GDP. It should be obvious to anyone that we need more revenue (i.e. tax increases).
Yet, we still hear the silly cliché, “we don’t have a taxing problem, we have a spending problem”. These people never cite credible or relevant facts.
“These people never cite credible or relevant facts.”
The relevant facts are:
- High unemployment and a annual federal deficits of a trillion dollars
- Government grows, jobs in the private sector shrink – that’s a formula to turn the US into a very large Greece with people protesting in the streets because the cows milk has run dry.
“Government grows”??? The way you phrased this implies that government jobs have grown causing an offsetting reduction in the number of private sector jobs.
The facts do not bear that out. Of course, you and people like you never let facts get in the way of what you want to say.
http://www.opm.gov/feddata/historicaltables/totalgovernmentsince1962.asp
“The way you phrased this implies that government jobs have grown causing an offsetting reduction in the number of private sector jobs.”
That is exactly what is happening. Private sector jobs are created by business profits. When government sucks profits away from business with taxes to create more government jobs and transfer payments the private scetor shrinks in relation to government. Macro Econ 101.
So, you obviously did not reference the link I provided. The number of federal government jobs is down. Of course, I know you have a problem with facts.
Okay Rich, here’s an example boiled down to what you might be able to get a grasp on. As of 1/1/12: income $21,700, spending $38,200, increase in credit card debt $16,500. There, does that resonate with you? Unless you know of a way to add $16K to the income there’s no real way to balance anything without lowering the $38K. It’s just that simple.
Yes, there is a way to raise the revenue number. I propose returning both the revenue number and the spending number to their historic norms, about 20% of the GDP. What is wrong with that?
Your comment illustrates that rather than a tax or spending problem we have a spending-versus-revenue problem. The “silly cliche” is a product of the childish myth that if we simply cut spending and keep taxes low (or lower further) we will magically somehow “grow” our way out of the problem. We need to determine what kind a nation we will be satisfied with (one extreme: unchallengeable militarily and otherwise empoverished) and fund it in a sustainable manner.
“During the height of the progressive movement, including FDR’s New Deal, federal spending never exceeded the 1934 level of 10.7 percent. And even though as World War II raged and spending shot to 43.6 percent of GDP, four years later it had fallen to 11.6 percent. For 130 years of our existence, federal spending averaged around 2.5 percent of GDP, says Kalahar”.
http://bdtonline.com/columns/x964861121/National-debt-Lawmakers-should-return-to-pre-1930s-spending-level
I’d like to see what the budget projections are with this “compromise” in place. I suspect that very little has been achieved: not enough spending cuts and not enough new tax revenue. In short, was this a Significant Deal or not? What will our projected annual budget shortfall (which must be closed by sellling T-bills) be under this Deal?
If it was not a Significant Deal, there is very little prospect for working through the remaining tough budget/revenue issues. Republicans will continue to balk at shrinking the size of the defense budget and Democrats will want to continue subsidies for the chronically unemployed and Medicaid recipients.
Congress has demonstrated that, as a body, it is incapable of acting in the best interests of the nation with respect to budgeting. Both the GOP and Democrats share the blame for this, the Dems having created a “social safety net” that has been allowed to figuratively rot over the years; and the Republicans with their penchant for expensive military operations. These are competing visions and cannot co-exist under the present tax schedule.
“Congress has demonstrated that, as a body, it is incapable of acting in the best interests of the nation with respect to budgeting. Both the GOP and Democrats share the blame for this”
I agree with this but would add it sure would be nice to have a President who could do something besides campaign. The legislation in question provides no solutions to national fiscal or economic problems.
“I’d like to see what the budget projections”
Good luck, the Senate hasn’t passed a budget in over 1,000 days.
“I’d like to see what the budget projections are with this “compromise” in place”
Obama has not had a budget in four years and likely will not have one for the next four years. His budget is “spend as much as I can”.
Am I surprised. Not at all.
I think the tipping point was milk going to $8 a gallon if something wasn’t done. That’s real. And although it’s nice that milk is not going to $8 a gallon, it sure would be interesting if the price of milk and cheese and yogurt and ice cream and all the rest of those dairy products that are such a large part of the American diet suddenly went way of of reach for the 99% of us that Republicans have made very clear they don’t much care about.
I don’t know what Republlicans think they can cut without doing a lot of damage to people who would be verging on homeless and starving without programs like Social Security and Food Stamps. We’re in a bad way. We’ve been so paniced by debt and deficit (how can Republicans be serious about debt and deficit when they insist on cutting taxes and declaring war at every opportunity?) that we have not taken care of immediate business for a long long time.
We’re like those crazy people who don’t keep up with maintenence on their house and then wonder why the roof is leaking.
Resolved?! This reminds me of the little Dutch boy sticking his finger in a hole in the crumbling levee. Besides the fact that the House has yet to vote, I’m reading that the 2008 “farm” bill, which has not been acted upon because it is viewed as a fiscal cliff spending cut tool, will be extended another year. Resolved in my mind won’t occur until spending cuts are addressed!!
Ok Curt, what do you want to cut?
Don’t say “waste and fraud” That doesn’t mean anything
And don’t point to Social Security. It’s a self funded program independent of the budget and is maintaining enough reserve to fund itself at least 10 years in advance. Which is what it’s been doing for the last 70 years.
Or are you one of those people who thinks we can balance the budget by killing Big Bird
Actually, and more to the point, perhaps it is time to refer, yet again, to Rex Nutting’s article in the Wall Street Journal, Market Watch “Obama spending binge never happened” 5/22/2012.
And there’s also another article, “Despite being warned, Right-Wing media buy into the ‘BS’ claims about Obama’s spending record”, Marcus Feldman, Media Matters 5/24/2012
Federal spending has increased under Obama at the slowest rate since the end of WW II.
Reagan 1st term 8.7%
Reagan 2nd term 4.9%
Bush I 5.4%
Clinton 1st term 3.2%
Clinton 2nd term 3.9%
Bush II 1st term 7.3%
Bush II 2nd term 8.1%
Obama 1.4%
The argument isn’t over spending. It’s over the function of government, what we expect government to do, and how do we pay for it.
Republicans, for the most part, have preferred to spend lots and lots and lots of money on war
Democrats, for the most part, have preferred to spend lots and lots and lots of money on New Deal style social programs and Eisenhower style infrastructure programs.
It isn’t a matter of cutting spending. It’s a matter of what do you want the world you live in to be.
Now can you answer that one
Don’t know where you got your numbers BUT the Federal debt has increased by $6 Trillion since Obama came into office and his budget forecasts more than that over his next term. If you use real numbers it will be even larger.
Bell’s post doesn’t really address the Federal Debt but rather spending — the word “debt” isn’t even mentioned unless I missed it. It’s about spending. But since you did, what did you expect with the Bush tax cuts, the economy being in recession part of the time, and the economy never fully recovered, the failure of Congress to really get serious about spending and increasing revenue ?
Ellis,
The numbers are from “Despite being warned, Right-Wing media buy into the ‘BS’ claims about Obama’s spending record”, Marcus Feldman, Media Matters 5/24/2012. That data is from OMB, CBO & Haver Analytics.
The topic at hand is increases in spending during Obama’s term in office vs increases during the terms of Reagan, Bush, Clinton, Bush.
Federal spending increased less when Democrats were president than when Republicans were president.
Since 1980 the federal debt has increased to mind numbing levels. We had Republican presidents for two thirds of those thirty years. These Republicans cut taxes, increased military spending, got us directly involved in three wars, indirectly in a fourth, and covertly involved in another in Central America that included smuggling cocain in order to fund that one. Or have you forgotten Iran/Contra.
Clinton actually managed to balance the budget his second term and handed his successor a surplus. Obama, in spite of Bush leaving him to deal with two wars, a major recession, and unsustainable tax cuts has managed to rachet the deficit down
Fiscal Year 2009 $1.4 Trilllion
Fiscal Year 2010 $1.3 Trillion
Fiscal Year 2011 $1.3 Trillion
Fiscal Year 2012 $1.1 Trillion
Fiscal Year 2013 (projected) $901 Billion
usgovernmentspending.com 01/02/2013
Roberta, In my reference to the farm bill, it should be noted that farm organizations have told Congress that their farmer members no longer want direct payments. In light of the fact that Congress stands ready to send money anyway, I conclude that Congress has a spending problem.
Your numbers are interesting, but increased spending will, unless the deficit is a snowjob, require a monumental taxing of the rich. With taxing the middle class supposedly off limits, we will have to find a way of Robin Hooding 16 trillion from the rich to resolve the deficit. Looking at what high taxes have done to Illinois and California I would have to worry about the affect of the astronomical taxes I just eluded to.
The deficit started before Obama, so comparing him to the other failures simply means that he is slghtly less of a failure – but a failure all the same! Waiting until after he was re-elected to address the fiscal cliff demonstrates to me his lack of courage and leadership.
Curt,
The Farm Bill covers more territory than just direct payment to farmers.
As for savings, according to the GAO (Government Accountability Office), direct payments (starting in 1996) cost about $5.75 billion per year. The GAO did a study this past summer and recommended that they be eliminated
The fact that they were not as per GAO recommendation has more to do with the Farm Bill getting bogged down in an argument over SNAP than in any desire on the part of the government to spend money just for the sake of spending money.
You’ve got $5.75 Billion in cuts that you like. Only $994 Billion to go.
As for taxing the filthy rich doing lots and lots of damage to the economy, there’s no data to support such a claim. With regard to California and Illinois, are you saying that the filthy rich are way way overtaxed in those states and that’s why they have problems?
As for Obama being a coward for waiting, dealing with this mess during the election would have been impossible and you know it.
Resolved is a stretch of your imagination. Another delay of a decision. Typical of Washington. For every $1 in cuts there is a $41 tax increase. The only thing accomplished yesterday was the executive Order of a 4% pay increase for Congress. A pay raise for incompetence. That is not the real world. But then again Washington does not know what the real world is.
“Are you surprised by the resolution of the “fiscal cliff” crisis?”
No. We have an inept, partisan President who is incapable of governing and the electorate apparently has no concept of the fiscal and economic problems. They are focused only on their version of candy and drive their choice of politicians in that direction. Few are looking out for the Nation or other people. Another immoral action.
“Do you think the compromise is in the country’s best interests overall?”
Definitely NOT. The legislation fails on all fronts:
#1 – There are no spending cuts in the bill. The Federal government continues to be a glutton, eating peoples wealth and stealing liberty from a once free people and encouraging dependency over personal responsibility.
#2 – This tax policy kills economic and job growth.
#3 – It addresses a short term issue while ignorning all the real problems. Its not even a bandaid – its a new wound to prosperity.
All of these maladies will again be on the front page in the coming weeks because the next battle will be over raising the debt ceiling.
I am sure both houses of congress (both democrats and republicans) really do not care about the general public, but are only interested in getting enough votes to be re-elected so they can do nothing and get a nice reward(pay increase). YThe measure will surely not pass.
They certainly do not deserve a pay increase. Would be nice to give the federal workers a pay raise and exclude the congress personnel.
Tedesco,
Article I Section 6 of the Constitution gives Congress, not the President, the power to determine what they are paid. Pay for members of Congress has been on automatic cost of living increase since 1989.
The automatic increase got tangled up with the fiscal cliff stuff and an executive order that freed up already agreed upon COLA increases for federal employees and, as it turns out, members of Congress. It has absolutely nothing to do with whether or not these people are greedy
So where is the balenced approach? Why do the Dems lie so?
On the surface there is $1 in spending cuts for every $14 in tax increases.
http://www.businessweek.com/news/2013-01-01/senate-passed-deal-means-higher-tax-on-77-percent-of-households
And as usually is the case, while the Dems are waving the flag of sticking to the rich, SS taxes are going up on the poorest among us. Enjoy your new taxes everyone, you voted for them.
So I guess that we dont have a spending problem and Democrats will not need to raise the debt ceiling in 30days. Right??
“SS taxes are going up on the poorest among us”?
No, Mr Williamson, it’s payroll taxes. And they didn’t go up. The temporary reduction as part of the Stimulus came to an end.
Also, you have to have a job to be subject to payroll taxes. So it’s not the poorest among us. They mostly don’t have jobs.
As for sticking it to the rich, the increase in rates is not going to reduce them to utter destitution. Their rates are going back to what they were in 2000. They were ok back then. They’ll be ok now.
Why do the demos lie so??? Please explain?
What “balanced approach” did the Republicans come up with and how much “balanced approach” talk have you heard out of them ? “. . . sticking it to the rich. . . ” Oh those poor rich, they’ve been the stuckees for so long ! Soon we’ll see them at intersections, “will work for yacht payments”.
“Enjoy your new taxes . . . you voted for them.” How did we vote for them?
“. . . Democrats . . . raise the debt ceiling. . . “? Democrats AND Republicans will have to raise the debt ceiling. That clarified, with about $.43 out of every $ spent by the US Government in 2011 what is the alternative, shut down the US military perhaps ? That would be great for the unemployment rate and economy wouldn’t it? But it would cut spending at least in the short run — perhaps makes sense to some of the T-bagger mentality.
Cedric, Obama can always call together a bipartisan commission to offer a balanced approach.
Oh, wait Obama already did that and the recommendations are already in hand. Except that Obama has not followed a single bipartisan recommendation.
And taxing the rich is not going to solve the problem Republicans should have walked away unless every $ of new revenue was matched by reduced spending.
Yes, the bipartisan commission came up with recommendations and essentially nobody seems serious about following them.
No, increasing taxes on the rich will not solve the problem but it will help. Even if the spending cuts to match new revenue were to be implemented there wouldn’t have been time to sort them out, in a careful and intelligent manner, before the end of the year. What Washington does in the manner of spending cuts remains to be seen. I expect the lobbyists are forming-up their army of warriors.
And oh yes, regarding the Republicans should have walked away if they didn’t get $1 in spending cuts for every $1 in revenue statement. Do you recall the Republican debate when not one would consider $1 in revenue for every $10 in spending cuts ?
From Ms Bell
“Ellis, Ahart,
As near as I can figure out what both of you are saying is that when people don’t vote the way you want them to vote, that’s voter fraud.
Calling millions of people corrupt and stupid is no way to get them to listen to you much less vote your way.”
Which is just fine except the accusations by Ms Bell………are a lie. Nobody said the things she claims. So goes a ‘discussion’ with a low information voter.
Which specific accusations can be documented as lies ? What does “……….” mean ?