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The Fiscal Cliff For The Rest Of Us
  • 53 Replies sorted by
  • svartsvart

    So austerity, cutting programs that cost money that the government doesn't have, is a bad thing? How? If you don't have money, how can you pay for things? Go into debt? But if you didn't have money to pay for things in the first place, how are you expected to pay for the debt with the additional interest? Interest is compounding you know.. That's the credit trap.

    It's unpopular. It's unfair to those who actually earned their pensions and such, but it's hardly a bad thing. It's a reset of the natural order of work-for-compensation. There is no longer unfounded entitlements that are popular but ultimately being paid for entirely by debt, even if the debt is at the risk of robbing the original workers of their pensions. It's entirely a cycle of greed and gimme stuff now in spite of the knowledge of future destitution.

  • smsjrsmsjr

    No offense guys, but if we had the "real" solutions we would be active in politics, not filmmaking (unless combining the two of course). Quite often I see things being broken down in such simplistic terms, when in reality fixing these problems is complex, requires cooperation from both sides of the aisle, etc. I don't pretend to have any well prepared plans either, but I know it will take some really smart, ambitious folks to get this thing moving in the right direction again. And if the two parties continue to want to outsmart each other, and get stuck in their tunnel vision this mess could go on for quite a while. Hopefully people come to their senses sooner rather than later, because the longer this goes on, the less cooperation we see from our politicians the greater the chances for a huge collapse. I don't want to see that day.

  • jrdjrd

    @bwhitz

    most people are poor and have shitty jobs, because most people are average or below in terms of intelligence and capabilities.

    I don't know your own background, and what kind of adversity you've overcome to achieve your current level of satisfaction with the status quo, but consider that for most Americans, income has been stagnant or declining, for more than 30 years -- reversing a very powerful trend, of income growth from the end of WWII to around 1970. So extreme is this trend, that the standard of living which an industrious high school grad could expect to achieve 50 years ago, is wholly out of reach today even when both adults work and there are no kids to support.

    Has this happened because Americans have become lazy and stupid? Or is it due to conscious policy decisions promoted by very wealthy people who have far more influence over government policy than your average high school grad? For example, anti-union legislation; low tax rates for capital gains and high income; defunding the school system; incentives to ship jobs abroad?

    And before you tell me that these trends are irreversible, that's it's the global economy, you might want to explain why it is that the U.S. is at rock bottom for social mobility today -- meaning you have better chances of improving your lot in Britain or France or Japan, and dozens of other countries, than you do in the grand U.S. of A.

  • stoneystoney

    I'm more interested in consequences of austerity measures instead of measuring economic prosperity. What are the real changes? Details... that's important.

  • stoneystoney

    @bwhitz sound like a true sweatshop owner as usual!

  • jrdjrd

    @stonebat

    The consequences of austerity are no mystery. Have a look a Ireland, Spain or Greece. Mass unemployment. Increasing public debt (yes, you read that right). Prolonged recession, or worse. The U.S. is about the only growing economy in the West at the moment, because it's the only country which didn't pursue a determined austerity program, inadequate though the Obama stimulus was.

  • stoneystoney

    Yes I know that. But what's coming after that? Who gains power? What focus? etc. What are the underlying fundamental changes?

  • Vitaliy_KiselevVitaliy_Kiselev

    @stonebat

    Remember that it can be not horrible end, but endless horror.

    @jrd

    The U.S. is about the only growing economy in the West at the moment, because it's the only country which didn't pursue a determined austerity program, inadequate though the Obama stimulus was.

    Difference is not because of this. It is because of dollar, big number of economic colonies and military. Remove any of this triad, and it'll fall.

    As for growing, thing that you refer is GDP, remove goverment stimulus, cuts, and other parts going to GDP, make statistics independent, and it'll be other pictures.

  • jrdjrd

    Who gains power? What focus?

    Who clamors the loudest for austerity? Ordinary people? Or CEOs?

    Note that we've been told for years now by business interests, and the Republican party generally (as well as many Democrats and establishment economists), that deficit spending is the greatest evil of mankind and hyperinflation is coming any day now. We'll turn into Greece, if we don't cut spending right now! It's our children's future we're concerned about!

    Well, when these same people are offered a chance for a radical cut in the deficit and government spending -- in the form of the so-called "fiscal cliff" -- what do they do? Suddenly, they don't want austerity! Now they're instant Keynesians, insisting that if the government cuts spending, there will be a loss of jobs!

    So, first of all, the call for "austerity" is a fraud, at least in the U.S. What these people really want is to cut their own taxes and cut social spending. They have no interest in deficit reduction if it involves an increase of their taxes, or cuts to programs they favor and from which they benefit financially, either through direct investment or campaign contributions. And the "fiscal cliff" raises their own taxes and cuts programs they're in love with. So no good.

    Austerity is a political program to further shift wealth from the poor and the middle-class to the wealthy, continuing a 30+year trend in the U.S. It has no basis in economics.

  • stoneystoney

    CEOs, taxes, profits, bailout, austerity, fiscal cliff... yeah we know it. Everyone knows it :)

    What's the common goal among them?

  • Vitaliy_KiselevVitaliy_Kiselev

    CEOs, taxes, profits, bailout, austerity, fiscal cliff... yeah we know it. Everyone knows it :) What's the common goal among them?

    You found same weed that @shian is smoking lately?

  • stoneystoney

    LoL. I don't believe in some conspiracy theory. But I believe things could happen by chance. Each group is acting on their own best interests, but eventually they'd discover common goals. That's when things really start changing. I'm not seeing it yet. Maybe it's too early to tell.

  • brianlucebrianluce

    You found same weed that @shian is smoking lately?

    If anyone has some of shian's stuff that they want to sell, text me.

  • jrdjrd

    LoL. I don't believe in some conspiracy theory.

    And the hundreds of millions these people spend lobbying politicians every year is for entertainment purposes only? Or it just happened by chance? The money blew out of their bank accounts and just happened to find the right pockets to get their favored legislation and government policy?

    Sounds more like you're on sleeping pills, than weed.

  • stoneystoney

    You sound like you know something for sure. Not used to deal with uncertainties? That saying "Things could happen by chance" sounds as uncertain as any other conspiracy theories you can imagine.

  • Vitaliy_KiselevVitaliy_Kiselev

    @stonebat

    It is not some uncertainity.
    It is fundamental capitalism problem.

    Look at the "wrong" countries list that suddenly must be "democratic" (tm). What are common? Not only location or resources.
    But simple fact that this countries was independent, you could not bring them on their knees by just demanding debt they have.

    It also clearly show current main principle in Europe - divide and conquer.
    Make one idiots belive that Germany is to blame, and make Germany belive that it is in their interest to part with others. After this follows big life level drop in country thrown our of EU, it induce next round of problems in remaining countries. Go to start.

  • BuellerBueller

    Can somebody explain to me how lowering taxes on the rich results in significantly more jobs.

  • sam_sticklandsam_stickland

    @Bueller I believe the theory is that if you don't tax them they will invest the money instead and the company will use that money to expand and employ more people

  • jrdjrd

    That's the theory all right, but unfortunately it doesn't work -- and we have tons of proof that it doesn't work, the latest study on just that claim having been released by a non-partisan arm of Congress just a few weeks ago.

    It's also worth noting that the income of the very rich today is rarely dependent on job creation. Mitt Romney is the perfect example. He didn't make or produce anything, to get fabulously wealthy. Great contacts from Daddy, the best accountants and lawyers money can buy, government-subsidized debt and off-shore accounts was all he needed, and at no personal financial risk to him. No new ideas, no inventions, no jobs.

  • Vitaliy_KiselevVitaliy_Kiselev

    @sam_stickland

    Issue that you do not look deep. Ignore mass media. Thing that you see is capitalism issue multiplied with credit issue. And used money printing never helped in such situation, but not using money printing will make things worse, and quick.
    And big change involve either big war or complete change of elites (and owners, I must add).

  • sam_sticklandsam_stickland

    @Vitaliy_Kiselev I didn't say I believed the theory ;) perhaps I should had said "justification".

  • svartsvart

    From http://old.nationalreview.com/kudlow/kudlow200406100915.asp

    "Between the late 1960s and 1980, the U.S. inflation rate rose from 2 percent to 14 percent, while the unemployment rate gradually drifted higher, from 4 percent to almost 10 percent. It was a period of decline for the country. Americans were demoralized.

    As stagflation became more deeply embedded in the U.S. economy, Soviet adventurism in Central and South America, Asia, and elsewhere around the world became more pronounced. The Soviets saw the U.S. cut and run from Vietnam. Our Cold War adversary saw nothing but weakness emanating from the U.S.

    Ronald Reagan changed all that. From the moment of his swearing-in in Jan¬ uary 1981, with his extraordinarily strong character and deep and abiding faith in God, Reagan acted relentlessly to revive the nation.

    More than any modern president, Reagan understood the link between economic growth at home and American strength overseas. It was the Gipper’s most brilliant insight. He acted swiftly to show our enemies that we would produce the necessary economic resources to do whatever it would take, for however long was necessary, to triumph over the Communist menace.

    Immediately upon assuming office, he reversed the economic policy of the decline years. He brought down marginal tax rates, restoring the incentives necessary for economic growth. He gave Federal Reserve chairman Paul Volcker the strong ground to stand on, allowing him to harden the value of the dollar and slay inflation.

    At bottom, what became known as Reaganomics was a new pro-growth policy mix of tax incentives at the margin and stable money. But there was more. The Californian launched a massive military buildup totaling about $1.5 trillion. He deregulated oil prices, proving the conventional wisdom wrong as energy became much cheaper. He launched U.S.-Canadian free trade. He was unyielding in his opposition to the air-traffic controllers’ strike, firing thousands of these government workers and ending the anti-growth union stranglehold on private industry. He created individual retirement accounts and 401(k)s, giving birth to the investor class. He also slashed social spending by reducing domestic program levels (excluding Social Security and health care) by nearly $50 billion in 1981. That amount would come to about $90 billion today.

    By 1986, Reagan’s tax-reform plan left two marginal rates of 28 percent and 15 percent, a long stone’s throw from the 70 percent top rate he had inherited. His plan also cut about 2,000 pages from the tax code.

    Ideas matter. Results quickly followed for Reagan. Between 1982 and 1989, the economy grew, adjusting for inflation, by 35 percent: more than 4.5 percent per year. As growth was restored, tax revenues came flowing in. Income-tax revenues grew by 50 percent during this period even as tax rates dropped. By 1986, the inflation rate had fallen to 1 percent. By the end of his term, unemployment had dropped to 5.5 percent. Interest rates had plunged. The stock market had soared.

    From July 1982 through the end of 1988, the S&P 500 averaged a near 21 percent annual gain. Brand-new industries arose in computing, software, communications, and the Internet — original endeavors that completely streamlined and transformed the American economy for the decades to come. In effect, Reaganomics launched a 20-year boom, the longest prosperity period in the 20th century."

    So tell me again why cutting taxes isn't the way to go? Before Reagan, Carter increased taxes (very similar to what Obama wants to do) and taxes topped out at 70% and jobs started leaving this country in droves. Reagan came in and he brought those down and people invested and jobs were created AS WELL as closing loopholes and deductions/credits.. The real fix would be to reduce tax rates but make everyone pay their percentage without loopholes or tax shelters, etc. Flat tax or federal sales tax would be a good alternate.

    http://online.wsj.com/article/SB10001424052702304911104576443893352153776.html http://www.cato.org/publications/commentary/why-70-tax-rates-wont-work http://www.freerepublic.com/focus/bloggers/2957581/posts?page=7 http://money.cnn.com/2010/09/08/news/economy/reagan_years_taxes/index.htm

  • sam_sticklandsam_stickland

    Reagan understood the link between economic growth at home and American strength overseas.

    Imagine the chaos if every country tried this tactic!

  • Vitaliy_KiselevVitaliy_Kiselev

    @art

    Discussinf tax policy to cure current problem is like discussing urine amount required to be consumed to cure cancer.

    As for Reagan, he was puppet when guys went to final credit expansion to get more time (the end will be in early 90s if not few traitors).

  • jrdjrd

    @svart

    Where to begin? You'll remember that Bill Clinton raised taxes in 1993 -- without a single Republican vote, and with dire warnings from Republicans (and the National Review, which you quote at great length) that he was going to destroy the economy and induce a national depression (like Obama, Clinton came into office in the course of economic downturn, though of course a much milder one).

    Here's a comparison of income gains under three presidencies -- two supply-siders (GWB and Reagan) and the still right-wing but more moderate policies of Bill Clinton. The results of the GWB presidency are, of course, pathetic (negative income growth, despite his enormous tax cuts), but you really want to compare Reagan with Clinton, with growth under Clinton much higher than Reagan -- more than twice as high, at the low income level. (As for the Carter presidency -- that's a hardly a useful comparison. The Arab oil embargo, world-wide inflation, etc., had consequences which far exceeded the multiplier effect of income tax rates.)

    And if you believe the stock market is a good measure of the health of the economy, you better start voting Democratic, because the markets have traditionally done far better under Democratic presidents than Republicans.

    Note also that deficits (which you claim to hate?) went through the roof under Reagan and declined sharply under Clinton. And please don't argue that Reagan had to deal with a Democratic Congress. He never submitted anything resembling a balanced budget.

    While I agree with V.K. that, to a certain extent, these debates are beside the point, as they obscure what's really going on, if these are the terms of the debate, the chart below may prove useful. (If there's a way to make it bigger, without clicking on it, somebody explain to me how and I'll do it.)

    clintonbushreaganincome.png
    451 x 289 - 21K
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