Fiscal Cliff Predictions

Damn, I didn't even read Durden's header the first time around. He's right though.

"What is generally known is that the Senate bill boils down to the following: $620 billion in tax hikes over the next decade offset by $15 billion in spending cuts now. Hardly "fair and balanced." Anyone who, therefore, thinks this bill is a slam dunk in the House is a brave gambling man.

The said, the "good news" is that 99% of Americans will see no change in their taxes, as was the idea all along. And the evil 1% will get their just deserts, which was the whole purpose of this relentless soap opera

The bad news is that starting today millions of wage earners, will see a smaller paycheck as a result of the lapse in the 2% payroll-tax cut, enacted in 2010, which lowered the employee portion of the Social Security tax from 6.2% to 4.2%. The direct cost of the payroll tax expiration will be $125 billion per year, or nearly a full percentage point of GDP, and in practical terms, an individual earnings the maximum cap of $113,700 (for 2013), will see their paycheck drop by $200/month.

That's just the beginning. The WSJ details the various other implications of the expiration of the payroll tax cut:"

http://www.zerohedge.com/news/2013-01-01/new-definition-rich-620-billion-tax-hike-offset-15-billion-spending-cuts-and-much-mo

"In other words: congratulations America, you have a Fiscal Cliff deal. Oh sorry, no you don't. But it does make for even better political grandstanding and melodramatic theater.

And now, we look forward to late February, early March, when as we said all along, the real showdown will take place, one which the market will no longer be able to avoid."

I forget. What spending cuts were put in initially to offset the Bush tax cuts that lead to large deficits?

this ignores the $125 billion payroll tax increase.

and durden surely knows that the deficit is misleadingly large (for purposes of medium term deficit reduction purposes) at the moment because our economy is still recovering.

all this talk is really rather silly. The problem is medicare and Medicaid, along with defense spending. and even after this deal we need to increase taxes up to about 20 or 21 percent of GDP.

neither side seems willing to admit that defense spending is bloated and both sides have demonstrated that they will attack the other for proposing or enacting mild Medicare or Medicaid cuts.

X-Runner wrote:

The latest bi-partisan deal passed by the Senate extends rate cuts to individuals making under 400 and families under 450 and do not expire.

Let's see what Boehner and the House boys do and if they pass it.

The House is having some issues with the bill.

We're not done yet.

thus setting the table for house republicans to kill the deal. It will likely pass w/ bipartisan house support if Boehner allows a straight up or down vote. Will he? Gut check time.

X-Runner wrote:

The House is having some issues with the bill.

We're not done yet.

we're in sad, sad shape if we can blame tax cuts - & the idea that we actually don't give the bozos in DC enough trillions of $$ to squander like buffoons - for the mess we're in. Look at fed tax revenue under GWB. What - it wasn't enough? Who was prez while the deficit shot up $6T in only 4 years - even with the so called 'peace dividend'?

It's just delusional, insane to tell DC they really need more of our money - they just don't have enough to get it done. How can we not demand a budget? How can we not demand some semblance of control over the growth & scope of govt? How can we not demand tax cuts?

WTH is wrong with you people?

how is it that we believe increasing taxes will result in increased revenue? Do you really believe a 2% increase in taxes results in a corresponding increase in revenue? How can we be so ignorant of basic economics?

And even if increasing taxes would result in more revenue, do you really believe 1 nickel would go to reducing the debt??

Assuming we somehow weather this crisis & aren't $20T+ in the hole by 2016 - while will be miraculous - the next thing that'll happen is politicians will start counting domestic oil/gas production chickens - from the projected production boom - before they hatch & we'll spend away all the projected revenue increase before we even see it.

And of course the GOP & 'the rich' will be blamed & you people will nod your heads, slack jawed & glassy eyed, as your big govt politicians roll out the next round of 'solutions'..

My name is Lance wrote:

we're in sad, sad shape if we can blame tax cuts - & the idea that we actually don't give the bozos in DC enough trillions of $$ to squander like buffoons - for the mess we're in. Look at fed tax revenue under GWB. What - it wasn't enough? Who was prez while the deficit shot up $6T in only 4 years - even with the so called 'peace dividend'?

It's just delusional, insane to tell DC they really need more of our money - they just don't have enough to get it done. How can we not demand a budget? How can we not demand some semblance of control over the growth & scope of govt? How can we not demand tax cuts?

WTH is wrong with you people?

your level of ignorance is sincerely disturbing.

allow me to pose a few questions to get a better sense of what it is that you believe.

a) what new spending has occurred during obama's administration that has caused the $6t of additional debt (not deficit)?

b) why weren't the annual deficits during the W bush administration - during a period of economic growth - not a concern to you?

c) how would tax cuts help to reduce the deficit?

d) what significant government spending would you suggest be cut (that is, you can't say "foreign aid" and "welfare", which are not substantial items of federal spending)? and if medicare and defense spending is part of your answer, and it really must be if you are being serious, then did you support romney's ads which attacked obama for trimming the growth of projected medicare spending? did you support romney's (ridiculous it must be said) attacks on the number of ships in the navy and his plan to increase spending on said ships?

your answers will tell us whether you are just another partisan or if you have actually thought about why you care about the federal government running a deficit. your comments in the above post are strongly suggesting that you are just another partisan.

My name is Lance wrote:

how is it that we believe increasing taxes will result in increased revenue?

do you honestly believe that modestly increasing tax rates, from their 12/31/2012 rates, will not increase revenue?

you can't really believe that, can you?

classic example of exactly what I'm talking about. Idiots like you suffer from what I call 'confident ignorance'. It's bad enough that you're ignorant of basic economics - worse that you're so smugly sure you know what you're talking about.

I'm not even going to address a). The premise of the question - that perhaps spending under barry's regime hasn't been an issue - is ridiculously stupid

Please point out where I indicated annual budget deficits undder W - or any prez - weren't of concern to me?

Tax cuts have historically been the greatest economic stimulator in the history of man. But like any economic stimulus, they're ineffective if the tax revenue gained is simply squandered, as it was after the Reagan & Bush years.

I don't give a sh&t whether you believe me a 'partisan' - whatever the hell that is. I'm a conservative & I believe in limited govt and stict adherence to the Constitution. I share a deep distrust of powerful central govts with those who founded this nation & I abhor the arrogance that folks like you display when they bow down to narcississtic sociopaths like barry sotero & scoff at the wisdom of the founders of this Republic, who tried like hell to ensure we wouldn't arrive at a time when we simply looted the treasury and allowed ourselves to be pawns in emabarrassingly corrupt vote buying schemes which are now all the rage.

My name is Lance FTW!!

kaitainen, if you aren't a troll.. you are an all too common example of what a lifetime of propaganda can do to one's reasoning skills. From the instantaneous perspective increasing tax rates will nearly always increase immediate revenues, but in the long-term (what actually matters in economics) increasing tax rates will only increase revenues to a certain point. Obviously tax rates directly impact the bottom line. It takes the market time to react to new operating conditions (higher taxes), but if the people(companies) can no longer operate at acceptable levels of profitability they will certainly stop doing business. Couple with this the fact that higher taxation breeds resentment and causes people who would otherwise pay taxes to seek more creative means of deducting or even evade paying altogether. It should be obvious to anyone with sound economic intuition that our country's tax structure is completely flawed and our bureaucracy is beyond bloated. Increasing tax rates currently would absolutely decrease revenues. What is necessary is tax reform... i.e. firing the 80bajillion people employed by taking your money and "administrating" your government privileges. how about 35% flat rate for every dollar earned over 100,000$ (or set the threshold as some small percentage of total state taxable income) annually. That's how much the government gets every year....no more ever. That might actually work. Although haha if we actually lived in a free world we would probably already have this

Lance's point by point response distilled:a) can't answer - perhaps you could rephrase the question - debt (not deficit)? huh?b) W's deficits weren't an issue because Fox didn't say they were an issue. Besides, we were at war. 9/11 anyone? Hello? c) Sigh. tax cuts pay for themselves. Always have. Greatest stimulus in the history of the history of mankind. Ever, forever times infinity. I win.d) question too long. punthyperbole - commie ni$$er Sotero, birth certificate, whah!

My name is Lance wrote:

I'm not even going to address a). The premise of the question - that perhaps spending under barry's regime hasn't been an issue - is ridiculously stupid

Please point out where I indicated annual budget deficits undder W - or any prez - weren't of concern to me?

Tax cuts have historically been the greatest economic stimulator in the history of man. But like any economic stimulus, they're ineffective if the tax revenue gained is simply squandered, as it was after the Reagan & Bush years.

a) nice response to my first question.

b) you wrote: "Look at fed tax revenue under GWB. What - it wasn't enough?" which suggests that you were ok with the budget under w.

c) how many hundreds of billions of dollars of tax cuts were enacted during obamas first term? we can even agree to exclude the two year extension of the bush tax cuts if you'd like to.

d) why didn't the economy boom during, say, years 5-8 of the w bush administration after historically massive tax cuts had been in place for a couple of years?

thank you.

I am particularly unsurprised by the failure to address what of substance should be cut. No doubt he thinks we can cut "bureaucracy" and pork and the like and then be able to cut taxes and balance the budget.

I wouldn't worry about the fiscal cliff. Just focus on taking care of your loved ones and yourself.

a) & b) aren't worth a reply.

c) sure, pal. barry spent every nickel of revenue during his 1st term + another $6T, but he was really quite the fiscal hawk. I concede in the face of your corrective logic..

d) hmmm...why pick years 5-8 of W's regime, vice years 1-4? Would you like to discuss the housing bubble & the Community Reinvestment Act - neither of which are tied to W's policies? How is it that we don't blame barry for any poor economic results since 2008 - in fact we credit him for saving us! - but we have no problem blaming W. for the housing bubble bursting on his watch, and in fact continue to blame W for any poor economic results 4 years after he left office?