The U.S. Careens Over the Fiscal Cliff, Reaching Only Half of a Deal

New submitter Jetra wrote with word that the House of Representatives failed to vote on the "fiscal cliff" deal before midnight, technically sending the U.S. over the fiscal cliff. The White House and Senate, however, reached an agreement at the last minute to allow for some tax increases, and a House vote approving it is expected in the next day or two: "The agreement came together after negotiators cleared two final hurdles involving the estate tax and automatic spending cuts set to hit the Pentagon and other federal agencies later this week. Republicans gave ground on the spending cuts, known as the sequester, by agreeing to a two-month delay paid for in part with fresh tax revenue, a condition they had resisted. White House officials yielded to GOP wishes on how to handle estate taxes, aides said." The battle over required spending cuts has predictably been delayed for another day, making the deal far from complete.

Comments

First Time

[Jetra]

I need to learn to submit good submissions.

Re:First Time

[Anonymous Coward]

If you wrote it, it was ok, if your original write up was hacked to pieces it happens. I've had about ten submissions posted and I don't even care to login
-zeroum

Re:First Time

[crafty.munchkin]

interesting... the article I read about this (as an external observer) indicated that a deal was reached... but this article seems to indicate the opposite.

Re:First Time

[Jetra]

Page not found....I could be wrong. I posted this before I found out that a deal was "within sight" if I remember reading.

Re:First Time

[jamstar7]

Hey, you tried. Points to you, and congrats on your first submission.

Re:First Time

[crafty.munchkin]

Oops... seems my trying to put target="_blank" at the end of my link stuffed up. This is the correct link.

Re:First Time

[Jetra]

Thanks!

Re:First Time

[Runaway1956]

Careens over the cliff? I thought it was a rather graceful slide, myself.

Ehhh, that "fiscal cliff" thing was very over rated. The best thing they can possibly do, is to allow all those things to just kick in. Our government can never be out of debt, so long as they are paying bankers to administer our currency for their own profit. But, still, the best thing we can do is to raise taxes, and cut the many "entitlements". Starting, of course, with the very special entitlements for the rich.

A balanced budget amendment is what we need, more than anything else. The onl y sensible thing to do, is to ensure that our debt shrinks a little bit every year. GROWING the debt is just plain suicide.

Re:First Time

[Roachie]

Isn't that where the whole thing goes ape-shit, cutting corporate welfare?

Re:First Time

[Runaway1956]

The beneficiaries of corporate welfare would have you think so. In reality, when a mother hog's teats dry up, the little swine start fending for themselves. All those pigs are pigs, for certain, but they are mammalian, so they will just do what mammals have always done.

Re:First Time

[afidel]

No, a balanced budget is the last freaking thing we or any country needs. National budgets aren't like your personal checkbook, hell they're not even like a companies balance sheet (btw almost no profitable companies have zero debt (a balanced budget) because a certain level of debt is positive as long as it's being spent on things that will increase profitability and/or revenue). No, a national budget is a much more interesting beast, and when you're in the enviable position that the US is currently in it's even more interesting. You'll note that the ratings agencies downgraded US debt and a few months later the markets actually drove the dividend on the t-note negative (yep, people paid the treasury money to buy our debt), what company or individual gets paid to issue debt?

No, what we need is to start electing adults to the House and Senate again that will stop doing things like cutting taxes for the hell of it while authorizing two unfunded wars during a time of plenty. We need to increase our R&D spending so that we can continue to be the center of innovation that we've been for the last century or so. Finally we need to start spending on useful infrastructure projects and stop building bridges to nowhere just because it brings temporary jobs to one district. In other words we need to be smart about how we spend our dollars, not slash the dollars spent.

Finally we as a society need to realize that as we increase our average lifespan we need to on average delay retirement while still allowing a safetynet for those unable to continue working.

None of those things would be solved by a balanced budget amendment.

Re:First Time

[93 Escort Wagon]

If you wrote it, it was ok, if your original write up was hacked to pieces it happens.

Wait... Are you implying Slashdot editors actually edit!? Haha, you had me going there for a minute!

Re:First Time

[fsterman]

Ironically, The Guardian has the best coverage. The problem is getting things through congress, the Senate and SCOTUS agreed to a general compromise and a 2 month delay, but it has to get through the House.

Re:First Time

[jcr]

No, a balanced budget is the last freaking thing we or any country needs.

I am stunned at the depth of your denial.

-jcr

Re:First Time

[Anonymous Coward]

IF you assume that the economy will almost always increase year over year by at least X%, with exceptions within certain thresholds, AND the current debt to economy size ratio has not gone too high, THEN a balanced budget is suboptimal compared to a continuous deficit, since you can continuously increase your borrowings every year for an infinite amount of time while keeping the debt as a percent of the budget constant, thus increasing the cash available for every year in perpetuity.

Re:First Time

[martin-boundary]

Quibble: The US has only been at the center of innovation for about 70 years, around the beginning of WWII.

Re:First Time

[Anonymous Coward]

Yet companies are willing to give your rolls of toilet paper for ... dollars. I don't think you know what "in reality" means.

The parent has very valid points. You must have some debt to properly leverage your assets toward healthy growth. Yes, too much debt is bad, very bad. But no debt or too little is ripe for acquisitions and mergers.

Re:First Time

[sg_oneill]

I saw an interview with a fairly serious economist who said , when asked about the budget deficit , "Deficit is something that politicians worry about, not economists. The problem only really occurs when politicians make bad decisions based on a countrys deficit like what we are seeing in europe". His point is, that the european boondoggle is a problem caused by politicians freaking out about debt, rather than forces in the economy which are largely unaffected by deficit. The important thing is that money flows in an economy simulating trade and productive activity. You do not achieve this by austerity, which is why cutting government budgets have pretty much never actually helped an ailing economy.

Theres a reason why economists largely treat the austrian school of "surplus at all costs" as cranky.

Re:First Time

[Mindcontrolled]

Pretty much so. You only mentioned half the cause of the European boondoggle, though. The other half stems from the fact that hugely disparate economies have been bound together, come hell or high water, by the Euro, which must not be devalued at any cost. Even if you have to destroy the village to save it. Without the Euro, Greece, Spain, Portugal, Italy all would by now simply have devalued their currencies and adjusted their debt and would just go on, as they have done countless times before. The whole "OMG DEBT DEBT AUSTERITY!!!" crowd just exacerbates the problem.

Re:First Time

[roman_mir]

No, a balanced budget is the last freaking thing we or any country needs.

- USA used to be a large borrower, but it used to borrow in order to build up production capacity. The borrowing was private, not government, not public.

Eventually over the 19th century so much production was built up that USA became largest manufacturer and exporter and that's why it was able to pay its debts and become largest creditor, and it was creditor even up to Reagan era, when it finally turned around and became a debtor nation. It took almost a century to squander its wealth, that's what it means. It means that USA wealth that was built up during the 19th century was truly staggering, but everything ends, even staggering amounts of wealth.

spent on things that will increase profitability and/or revenue

- aha, but that's not what is happening at all. Private borrowing that leads to increase in productive capacity is basically stopped, it's all government borrowing, which is only done in order to keep consuming.

Half of the money that USA government spends is borrowed money, but this has nothing to do with productivity, it only has to do with consumption. SS, Medicare, Wars and other spending, it's all consumption, there is no 'increase in profitability'.

Nobody is growing profitability in USA except for some energy miners, and they are paying taxes to the uncle Sam through the nose.

Your next few statements show how you completely misunderstand the problem, you think taxes must be high and so must safety net. Here is the thing: safety net must not exist and taxes must not exist either, that's how you get growth, not by stealing from people who can produce (and they can produce anywhere else, which they have conclusively shown) and you can't subsidise people for not working with money you steal from those who produce and call that 'trade'.

That's not trade. If person A produces and person B doesn't, there can be no trade between them. They are not trading anything, if person B consumes on credit the question is: can he produce enough in the future to offset the debt? If we doubt that then why would we give them the credit?

Of-course what is actually happening in USA (and Greece and all these other socialist countries) is that person A is taxed through the nose and person B votes for politicians who promise to take from person A and give to person B.

Then they have the gull to tell people that consumption by person B with money that was stolen from person A to redistribute products that person A created to person B constitutes a working economic model.

---

None of those things would be solved by a balanced budget amendment.

- you are CORRECT on this one, not for the reasons that you think but for other reasons. Balanced budget amendment doesn't mean anything at all if to 'balance the budget' you decide to tax people even more.

No, the only true way to fix the problem is to cut government, cut government spending, reduce government at the minimum by 50% (which is how much of government today is paid for with borrowing, almost 50% of all money that gov't spends it borrows, so at the minimum 50% of gov't must be cut).

Re:First Time

[shentino]

If by apeshit you mean the corporate sector throwing a tantrum.

Re:First Time

[shentino]

The main thing is that the corporate welfare beneficiaries also have a lot of influence in DC.

Which means that threatening their gravy train is going to derail a lot more than corporate welfare.

The rich threatening to throw a hissy fit if the budget is balanced are the only ones making it not a slam dunk.

Re:First Time

[eugene ts wong]

Or you can just save your money and spend more as the economy increases. Instead of spending on interest, just spend it on things that we care about.

Re:First Time

[shentino]

Balanced budgets are good things.

So, however, is capital investment. If you can make more money later by getting into debt now, you can come out ahead later even if you get behind now. The trick is to run the numbers and only use debt when it will beat the interest charges in return on investment.

If the economy is in the toilet it's quite profitable for a government to cut taxes and raise spending to prime the pumps.

Once the fields of the market get watered and the economy starts growing, the feds can harvest a bumper crop in tax revenues later without causing a famine from harvesting it too early.

Government spending to improve the economy is a capital investment just like someone spending money now on better equipment to make more money later. Governments earn their taxes taking care of their citizens just like companies earn their revenues providing products.

Staring only at the balance sheet for one year at a time is short term thinking.

Re:First Time

[SomeKDEUser]

The only time in the history of Humanity where the medium of exchange had its own value was when some guy exchanged an arrowhead for a piece of lether string.

Money is nothing magical. You do some work, I do some, those things never intersect but are both necessary in society.Thus some mode of accounting is necessary that you and I exchange, within the confines of society, the product of our labour.

We call this accounting method momey, and it is just a convention that little counters serve as markers of how desirable our work is to others at large. There is no reason -- in fact it would be terrible -- that the counters themselves have value. If you think fiat money is a scam, you are an idiot who missed the train some 4000 years ago.

Re:First Time

[anagama]

While I tend to agree with you that taxes need to rise and spending needs to fall, but there were some real consequences (or still are actually) if the deal doesn't go through. The Alternative Minimum Tax, which was once upon a time designed to make sure the wealthiest Americans would pay at least some taxes, is not indexed for inflation and has to be reset manually every year. If it doesn't get reset right now, couples who earned $45k per year in __2012__ (this means this coming tax bill, not next years (there is not a whole year to fix it)) will get hit with the AMT. That's $33750 for you slashdotters (filing single).

http://online.wsj.com/article/SB10001424127887324731304578191863373273492.html

You also don't get use your standard deduction or other deductions when calculating your income subject to the AMT. Plus, if you're expecting a refund to pay for Christmas, you might not even be able to file your taxes till March because the IRS has to mess around with its computers.

So, kind of a big deal.

Re:First Time

[mwvdlee]

I've got a mortgage (debt), yet my budget is balanced. It's economics 101. If you have a debt, it means you have to use money to pay off the debt. Debts are time-shifted expenses at an additional cost; it's not free money, you still have to pay what you spend.

Re:First Time

[a_hanso]

a national budget is a much more interesting beast

When I read that, I thought you were going to explain why it is an interesting beast in the next paragraph and tell us exactly what you mean by "interesting".

Simpleminded folk like myself think that spending more than you have is a bad idea, and spending more than you will have is an even worse idea (i.e. ballooning debt). I would love to know if I'm wrong. However, your paragraph #2 is about taxes, R&D, infrastructure and retirement age. Now I'm confused.

Re:First Time

[Runaway1956]

I would quibble that "beginning of WWII" thing. Remember, we did some wholesale kidnapping immediately after WWII, just as the Soviet did. We did some innovative stuff during the war, then after the war, but prior to the war, we were battling one helluva depression, like all the rest of the world. In fact, without that depression, Hitler likely would never have gained the support and the power that he did - but that's another discussion.

Re:First Time

[riverat1]

SCOTUS? I think you must have meant POTUS.

Re:First Time

[TFAFalcon]

There was a deal, but it was reached in the senate. Now the house has to approve it. In a way it would actually be better if no deal is reached on the whole package. Since that would mean an automatic tax raise/spending cut, any further laws would all be easier for the Republicans to swallow - no need for them to go against their promises not to raise taxes.

Re:First Time

[TFAFalcon]

But saving that money may stunt the growth of your economy, or even drive it into a recession. Let's say the government stops spending so much on defense. That may cause a few companies to lose their only customer, pushing them into bankruptcy. Those companies had workers, which are now out of a job. The local supermarket now has customers with no cash, so it has to scale down operations, laying off even more people. This chain reaction can cause the economy to shrink by a lot more then the government spending cuts, especially if the cuts are fast - the companies don't have the time to adapt and find new customers.

The end result could be that decreasing spending leads to increased debt (through lower tax revenue).

Re:First Time

[Quantum gravity]

In Keynesian economic theory it is acceptable with relatively high levels of public debt in meager times, in order to pay for public investments which when good times follow (hopefully) can be paid back.

Re:First Time

[Cederic]

Gold standard? What the fuck's that all about?

In 1975 did you walk around with gold in your pocket? Or did you walk around with arbitrary tokens that you could exchange for gold?

Because right now you can take arbitrary tokens out of your pocket and exchange them for gold. Or platinum. Or titanium. Or food, toys, services.

What's so fucking special about gold anyway? Ooh, it's shiny. Oooh, I can have more than him because I'm rich. How are you rich? Because you have more lumps of metal than he does? Hey, those are called 'coins'. You can still get them.

Anyway, there's a limited amount of gold. What happens when there's more cash than gold that you can buy with it? Does the amount of gold you can buy for each $100 bill fall, or does the government fail to meet its obligations? One negates the gold standard, turning gold back into a mere commodity, the other shatters it.

Now, speaking of idiots - we're the ones who auctioned off all of our gold, remember? When the shit hits the fan, we have nothing to fall back on.

Really? You have oil reserves. You have a hell of a lot of land. You have a good supply of skilled labour. You have strong research and development capability. You have an extensive manufacturing base. You have stocks of multiple commodities.

I come back to, what's so fucking special about gold? What are you going to do with it anyway, when you have to fall back on it? Sell it? Shit, you've already had to do that because you're in so much debt.

Please, tell me, because I'm confused as hell, just what's so fucking special about gold.

Re:First Time

[TFAFalcon]

Now I agree with you that government spending is out of control, but why do you consider SS and Medicare as stealing? Aren't they more like repayment of a loan? The people who receive them paid into SS their entire working lives. Now they are getting some of that money back. What makes this any different then interest paid by the government?
Also, how would you fund the 50% of the government you want to keep without taxes (since you want to abolish those)? Donations?

Re:First Time

[Drakonblayde]

I'd like to say I'm amazed at the gross level of absurdity, but unfortunately you're hardly the only one to float this kind of nonsense.

Keynsian economics is horrible. You cannot deficit spend your way to prosperity, and the lie that debt is good is the greatest trick ever perpetuated on our society.

The only reason why we can continue to get away with the gross overspending that we've become accustomed to is because we have a good bit of the world over the barrel. Directly or indirectly, there are quite a few nations who've hitched their star to us. You're living in a dreamland if you think our gluttonous state can last indefinitely. If we weren't one of the biggest powers in the world, the free market economy would have punished us for our gross negligence long ago.

Instead, we're in a position where there appears to be no real consequences for leveraging ourselves to the hilt, and even that isn't enough - the government has decided it needs more of *my* money in order to continue spending on programs I don't approve of, all because I have the privilege to live in the world they've created.

Such hubris rarely goes unpunished.

Re:First Time

[Runaway1956]

You're confused as hell, Bubba. Google for "gold standard". Theoretically, a nation on a gold standard has gold in a vault somewhere that is equal in value to all the currency it has in circulation.

A standard, whether it be gold, silver, titanium, of even wheat, bases your money on SOMETHING.

Of course, that's not the end-all and be-all in national currencies. A fiat money has it's downsides, and upsides. But - fiat money SHOULD BELONG TO THE GOVERNMENT. In such a case, no interest is paid to private banking, as we see today in almost all nations.

If we weren't paying private banking for the privilege of using their fiat money, the government wouldn't be in debt.

No one wins with our current system, EXCEPT THE BANKERS.

Oil reserves? A consumable commodity? We might as well use wheat, that I mentioned above. Land? When the "owner" comes to collect, he can't just pick up a parcel of land, and carry it home, now can he? Labor? We're going to offer slaves to our creditors? Our manufacturing base is being eroded every year, and not being replaced, but how in hell do we use that as capital to pay off creditors? Pack up a plant or six, and carry the machinery home?

A gold standard has it's own strengths, one of which, you can remove some from your pocket, or your vault, and give it to a creditor, who can carry it home with him. Standards. Today, we have none.

Re:First Time

[TapeCutter]

Gold or paper the value of either is nothing unless someone will trade it for something you can use such as food. Whether you like it or not investors view US treasury bonds as more secure than gold. You can stamp your feet and insist that gold is better but it won't change a damned thing, political capital and military superiority simply trumps all other forms of financial security, period. Gold, paper, clay stamps, sea shells, they are just tokens that represent goods, trust is how money works and it is how it has worked for "4,000yrs", ( actually it's 11000 since cows were first used as a standard denomination of wealth ).

Re:First Time

[eugene ts wong]

The guy that I was responding to insisted on perpetual debt. If you want to spend borrowed money on a fantastic opportunity that is time limited, then go for it. However maintaining a perpetual debt on purpose is a waste.

Regarding your argument of job losses, yes I understand, but people quit their jobs all the time. As they quit, spending could be reduced, to discourage hiring.

Shuttering the military industrial complex sounds nice to me. I don't believe that government and CEOs should be in the position to maintain employment by hiring people to make things for killing. In that specific situation, their manufacturing would be no more productive than just sitting around doing nothing. I suppose that they might as well make ammo for target practise, but that's not the point of this discussion.

For your job loss concern, the money would be better spent giving financial rewards to those who build and sell environmentally friendly products. I realize that you weren't speaking against such a suggestion, but my point is that reduced spending, plus shuttering manufacturing of a certain thing, and maintaining a surplus can be a good thing.

I'm not saying that we have to have a surplus, even if it shocks the economy. I'm saying that having a surplus is a good thing, and that we can't speak out against it, just because it's a surplus.

If we're really concerned about job losses, then the government could have the same effect by closing off the borders, and requiring more domestic manufacturing, and finding ways to direct our personal spending.

Re:First Time

[Runaway1956]

Uh-huh. And, our present perch in political capital AND military superiority is precarious at best.

Care to guess where the next soon-to-be super power is located? They are wielding their 'Assassin's Mace' quite effectively.

Re:First Time

[smittyoneeach]

Among the overarching ironies of all this is that the people whinging on about "corporate welfare" fail to support any of the Tea Party effort to restore anything akin to representative democracy in the U.S.
Where is the "72 hour" rule in any of this? We've had two months of Fiscal Cliff drumbeat, and it comes down to a Yet Another Congressional Drive-by.

-Push all Entitlements back to the states.
-Rescind the 16th&17th Amendments.
-Remove Bernanke's anti-Constitutional power to inflate the currency.
-Move the House closer to its original apportionment per the 1787 Constitution.
-Adopt something like Randy Barnette's Bill of Federalism.

In summary, confining our Federal Government to federal tasks will see us relatively less fed up.

Re:First Time

[Cederic]

What you've described is the way in which countries can mitigate getting into debt. It's still better to balance the books. The costs go up with inflation too.

Shit, run a small surplus. You can then see through any 'bad' years without incurring debt. You can fund capital investments without incurring debt.

Anyway, your plan is flawed.
Year 0, borrow X at fixed interest rate Y for term Z.
Assume Y is the rate of inflation and that it never changes. (Without that predictability your plan is flawed anyway).

Each year, borrow X+inflation (to keep real spending the same, so it's compounded) at the same rate Y for the same term Z.
Even though you're borrowing the same amount (in real terms) because you're now having to use some of that money to pay the interest payments on the previous borrowings, your spending power isn't go up with inflation at all.

E.g. with Z at 40 years and Y at 2%, the year before you pay off the first gilt your spending power with the borrowed money (i.e. how much you can buy with what's left after paying interest) is half of what it was in year 0. The year after (and each subsequent year) your spending power is 0. You're now using the whole of the new debt to pay the interest of all previous loans, and the principle of the oldest one.
With Z at 40 years and Y at 5%, you're down to 15% the year before paying off the first gilt, and again at 0 forever after.

Actually, now I've done the maths, Z is irrelevant. Unless you adopt a strategy of recycling your debt: At year Z, borrow an additional X to pay off the original principle. That strategy yields an increase in spending power at year Z, but at year Z*2 you start paying more in interest than you're borrowing. (That amount tends towards zero over a long period).

Of course, there's a massively flawed assumption in my calculations: Y is very rarely going to be both the interest rate, and the rate of inflation. Occasionally the interest rate will be below inflation (e.g. in the UK at the moment) but often it will be higher.

Unless I misread the numbers (which is very possible, I'm not an economist) the Bank of England shows yields higher than inflation for 14 of the last 15 years. (It also shows yields lower than inflation for the next 7ish, then higher again for the subsequent 13ish - they only forecast 20 years).

As soon as the interest rate rises above inflation, you start losing money on your borrowings.

In short: Practice fiscal prudence. Don't go into debt (except as a demonstration of your financial health - don't even ask me how that one works). Balance your books and don't rely on inflation to mitigate your old debts.

Modern democracies go into debt because governments spend money that they don't have to try and get re-elected.

Re:First Time

[Cederic]

Given you replied to my post, I'll respond. I'm sure Bubba will reply if he has anything to say too.

Theoretically, a nation on a gold standard has gold in a vault somewhere that is equal in value to all the currency it has in circulation.

The US would have to buy around 45% of the gold ever mined to cover its issued currency at current prices. Forgive me for finding that laughable.

If we weren't paying private banking for the privilege of using their fiat money, the government wouldn't be in debt.

When the UK came off the gold standard, it's because they couldn't borrow enough money to buy the gold needed to meet the demands of people wanting the gold.

Governments borrow money. They don't have to borrow it from banks, they could borrow it from other countries. This is one reason you have sovereign wealth funds.

Not to mention that the fiat money merely exists, it doesn't belong to bankers any more than it belongs to you or me (specific quantities aside). The government doesn't have to pay the bankers a penny to use it, although they may deem the bankers' services to be valuable, in which case payment is the traditional mechanism for acquiring those services.

A gold standard has it's own strengths, one of which, you can remove some from your pocket, or your vault, and give it to a creditor, who can carry it home with him. Standards. Today, we have none.

I still don't understand. Why gold? Why not platinum? Why not pieces of slate? I like slate, I'd rather have a slate bed to my snooker table than a gold one.

Why not whatever commodity you happen to have hanging around at the time? Where minerals, elements (including but not limited to gold), labour (yes, labour) and frankly anything that can be sold and re-sold can be a commodity.

And why not a piece of paper that can be used to acquire those commodities? Why not an electronic record that allows instantaneous, convenient and efficient exchange of value?

Please, I'm still confused. What's so fucking special about gold?

Re:First Time

[dreamchaser]

I don't disagree with some of your points, but you're dead wrong about the debt. Right now they are basically printing money. We're going to wind up with some seriously high inflation if they do not stop spending more than is taken in. You're seriously misguided if you think that government debt isn't a problem.

Re:First Time

[gmack]

Speaking as someone who has actually spent a considerable amount of time watching the European crisis unfold, that economist is full of it. Europes problem is that many countries were deficit spending during the good times and are now borrowing even more to cover the bad times and investors (the people who buy debt) are getting scared. The crisis started when the cost of borrowing went up for Greece to the point where they could not afford to borrow money to continue keeping their government functional. What we have right now is Germany borrowing money on behalf of Greece while Greece, Spain and Italy rush to cut their budgets before Germany loses the ability to help them.

Austerity sucks but hitting the end of their ability to borrow money would cause immediate budget cuts of multiple times worse than the current cuts.

Re:First Time

[sinterklahaas]

And despite being at the center of innovation, the US has been running a trade deficit since the late sixties.

Re:First Time

[Runaway1956]

Any standard is better than a standard that belongs to the banks. That's my point.

Remember greenbacks? They were issued BY THE GOVERNMENT. They were printed by government employees, on government equipment, and distributed by the government, to the banks. They were backed by gold, but let's say that we still had greenback money that had been unhooked from the gold standard. Everything in history stays the same, we drop the gold standard in 1975 just like we did.

If that fiat money belonged to the government, and not to the banks, we could go about playing the same sort of banking games that the Federal Reserve does today, without paying the Federal Reserve for doing it.

And, one more time - the money you barter with BELONGS TO the federal reserve, not to the government. We pay interest on every single dollar. The all-important "faith" in the dollar is not faith in our government, but faith in the ability of the central bank to back those bills up with something. And, they have nothing. All they have are imaginary numbers representing imaginary currency, which is all valueless.

Worse? The Federal Reserve engages in fractional lending to it's member banks, then the member banks engage in fractional lending. The Fed lends ten million dollars for every million it prints, then each member bank lends ten more million for every million that they receive.

Tell me that isn't a pyramid scheme. The government actively pursues and imprisons pyramid schemers, but they collude with a private bank to run that bank's pyramid scheme.

Inflation is the result. Now, before you argue about inflation - take a look at this chart.
http://www.macrotrends.org/1380/gold-to-oil-ratio-historical-chart

The value of oil vs the value of gold has stayed pretty stable since before I was born. The value of the dollar? Take a look here:
http://www.macrotrends.org/1335/us-dollar-index-gold-and-oil-chart-last-five-years

The dollar has no value. Gold has value. Oil has value. Oil and gold are stable, the dollar is not. Collecting dollars is a fool's mission, but we're all forced to do it.

Re:First Time

[makomk]

You're confused as hell, Bubba. Google for "gold standard". Theoretically, a nation on a gold standard has gold in a vault somewhere that is equal in value to all the currency it has in circulation.

Well yes, that's the problem. There is absolutely no reason why the total value of the economy should have any particular relationship with the total value of all of the gold in existence, which leads to all kinds of fun when the economy expands and you have to somehow convice everyone that gold is now worth more not because it's actually more useful for anything (it isn't) but because we need it to be worth more in order to have enough currency in circulation to support the actual value of the parts of the economy that are genuinely worth more.

Re:First Time

[CrimsonAvenger]

No, a balanced budget is the last freaking thing we or any country needs. National budgets aren't like your personal checkbook, hell they're not even like a companies balance sheet (btw almost no profitable companies have zero debt (a balanced budget)

"Balanced budget" and "no debt" are NOT synonymous.

They're not even related terms.

You, a business, or a government may be $1000 trillion in debt, and still have a balanced budget, so long as your income == outgo.

Or you may have NO debt whatsoever (right this minute) and NOT have a balanced budget, if your income is zero and your outgo is non-zero.

That said, a Balanced Budgtet Amendment is meaningless. It would have to have an emergency clause (to deal with times of war or other calamity), and Congress would dutifully invoke that emergency clause every year to do as they liked.

Re:First Time

[Electricity Likes Me]

Because rahrah he's pretty sure he'll never get sick, old or have any kind of misfortune.

Because he doesn't think "government" jobs are "real" jobs. There are apparently hundreds of thousands of people employed doing nothing. You heard it. Processing tax forms? Not valuable. Issuing driver's licenses? Not valuable. Updating signage, repairing roads, manning 911 call centres? Not valuable.

Queue long-winded post about how beurocrats don't "create value" that ignores the existence of necessary beurocracy in every enterprise, public or private.

Re:First Time

[Runaway1956]

http://communities.washingtontimes.com/neighborhood/energy-harnassed/2012/jul/17/does-gold-set-price-oil/

In effect, the central bank establishes what we are paying for oil, or anything else for that matter.

Re:First Time

[Thantik]

Slate, Minerals, and other common elements are too common. Gold doesn't corrode, it's "rare", it can't just be had willy-nilly by anyone walking around their yard. If everyone had slate money, you could just make money out of the rocks around your house.

Re:First Time

[DarkOx]

The problem is that is does not get paid back. Even the Keynesian purists would not hold that the money supply should forever increase faster than the economy actually grows. I think Keynesian economics is a whole lots snake oil myself but I will concede we don't have a good test lab for it. Our economy as its been engineered today makes it structurally impossible to actually pay down the debt even in good times.

A budget surplus is only run during the most spectacular booms, and only than by accident when the Congress critters are caught flat footed and failed to ratchet down tax rates and or create new spending in anticipation of it. When it does happen as it ( debatably did - depends on your accounting methods ) during the Clinton years its almost looked as a problem. Why?

The root of all inflation really is government debt. The money supply is the FEDs balance sheet by and large and Treasury debt makes up the credit side. Paying off debt means you collect taxes and don't reinvest those dollars back into the economy. People are in practice okay with paying taxes when they feel they are getting something for it. They get angry when the perceive the government taking a whole bunch of money and not doing anything for them. That is why we have a T.E.A Party.

I don't think most citizens have thought much about it but there is a subconscious reason government deficits and inflation don't bother them as much as many of us Slashdoters think it should. Hint: Its good for them. No they don't like it when the groceries and gasoline gets more expensive but historically what comes of their front pocket leaves more in their rear in real terms. How?

The times when our government actually paid off the national debt were before a time when most of the middle class tied up all of their savings in an asset, their home, while using a debt instrument structured to take what may be their entire working life time to pay, for which they ultimately pay back between two and four time the original borrowed amount. Although stair stepped so they lose the advantage of compounding their wages typically get some cost of living growth meanwhile the interest rate paid on the debt and the principle remain the same. So with inflation a traditional 'fixed' rate mortgage actually behaves as if the interest rate declined over the life of the loan. This is why the flat wage growth over the past decade has been so hard on the middle working age middle class. Its transferred some of the cost of the borrowing from banks and rich folks with equity in banks back onto them. They'd probably be all for that except in practice other forces have many of these borrowers stretched so thin and the prior greed of lenders in pushing them to over borrow in the first place means that lack of inflation or deflation actually breaks many of these borrowers resulting in defaults and further money supply destruction, compounding the problem. Hence the almost manic fear of deflation from these folks, even though ordinarily it would be beneficent for dollar holders.

So there it is the bulks of people who reliably vote stand to gain from inflation, they like "gifts" from the government and they don't really want to pay taxes even if they may be willing. By extension no real motivation exists in Washington to address the national debt, the reality is the public demands more of it, even if they don't know it. The trouble is and what I think may be what causes the music to stop at some point is that as the number keep getting bigger events that might have made for little ripples in the past create tsunamis. It creates perverse opportunities to arbitrage billions of security instruments for tiny changes in individual valuations you see flash crashes. You have situations where a few bad economic turns lead to really destructive positive feedback ala the mortgage crisis. In the end it won't work

Re:First Time

[Cederic]

If that fiat money belonged to the government, and not to the banks, we could go about playing the same sort of banking games that the Federal Reserve does today, without paying the Federal Reserve for doing it.

You do realise that any profit it makes goes to the US Treasury anyway. Hardly ripping off the government.

Note that's not the only central bank model. The Bank of England is an independent institution, but it's wholly owned by the British treasury.

The all-important "faith" in the dollar is not faith in our government, but faith in the ability of the central bank to back those bills up with something. And, they have nothing.

The central bank wouldn't have gold either. It can't afford it.

The fed acts on behalf of the government, with a degree of autonomy deemed necessary across the world. Faith in the dollar is indeed faith in the US, including its government.

And I still can't see how gold is worth more than a US Dollar. If China decided it didn't want US gold then a gold standard based dollar would be worthless in China. If China wanted US goods and services then it can pay in US dollars whether there's a gold standard or not.

Worse? The Federal Reserve engages in fractional lending to it's member banks, then the member banks engage in fractional lending. The Fed lends ten million dollars for every million it prints, then each member bank lends ten more million for every million that they receive.

Oh dear. This may take a while.
Central banks do not engage in fractional lending. The federal reserve may increase the money supply, but it's also beholden to provide any money it adds to the economy.
The Fed may lend ten million dollars for every million it prints, but physical currency isn't the entire money supply. A central bank can for instance increase the amount of money in existence by buying bonds on the market. It doesn't have to hand over a suitcase full of cash to do this, it merely alters the central balance of the financial institution holding the funds for whoever sold the bonds.
Other banks do engage in fractional reserve banking, but you haven't explained why this is a bad thing. Do please share, and also offer viable alternatives that provide the same capabilities. I'm not sure I want to revert back to bartering for donkeys.

Actually, just tell me how a bank works if it doesn't engage in fractional reserve banking. A bank is an intermediary between someone that has money, and someone that needs money. If I start a bank and put $100 of my own money into it, the bank can't lend you $100 if it has to keep in its vaults all $100 of my money. That's not a bank, that's a vault.

If I put in $100 and the bank lends you $200, it hasn't magically made $200 come from nowhere. It's loaned you $80 of my money and $120 of someone else's money that it's had to borrow.

Tell me that isn't a pyramid scheme.

That isn't a pyramid scheme. A pyramid scheme forces late joiners to lose out, as their equity is distributed among earlier joiners. Central banking and fractional reserve banking are nothing like that. If I put $100 into a bank, I can get $100 back out.

The dollar has no value. Gold has value. Oil has value. Oil and gold are stable, the dollar is not. Collecting dollars is a fool's mission, but we're all forced to do it.

I'm not sure how the relative values of gold and oil matter, and I don't think gold prices are stable at all, given the annual fluctuations in price of up to 180%. That's more volatile than the US dollar.

(btw, comparing figures for 75 years to figures for 5 years is fairly pointless)

But, back to my point. If gold has value, what do you buy it with? Collecting gold is a fool's mission, it's fucking hard to store and piss easy to steal. Gold has no inherent value. Gold is merely a fucking metal.

I still don't understand what's so fucking special

Re:First Time

[Cederic]

British bank notes are even rarer. While gold has many useful properties, its rarity isn't a reasonable basis for currency.

Not to mention that its rarity is time limited at best. You can already create gold artificially, and we haven't even started off-planet mining.

If everyone had slate money, you could just make money out of the rocks around your house.

Sadly not where I live, but Wales would become incredibly wealthy :)

Re:First Time

[Teckla]

Finally we as a society need to realize that as we increase our average lifespan we need to on average delay retirement while still allowing a safetynet for those unable to continue working.

I agree with most of what you're saying, but I get the impression you don't have any "blue collar friends". I do, and ideas like raising the retirement age to 69 is obnoxious and laughable. Some of my "blue collar friends" will be lucky to make it to 65 before their bodies completely give out. My retirement age is 67, and as a "white collar guy", that already scares me enough, especially with the rampant ageism in software development. If the answer to our economic challenges is to place most of the burden on the ailing backs of the elderly, perhaps we should just consider mandatory euthanasia at 65 years old. It would probably be less cruel.

Re:First Time

[hibiki_r]

What? Spain was running a surplus during the good years. Then the real estate crisis happened, which sent tax receipts tumbling down and unemployment way up. A very bad thing for a country that has its own currency, but deadly to one that doesn't.

The Euro without a fiscal union doesn't make any sense, and no austerity will solve this.

Re:First Time

[shentino]

Your post is what government does. Mine is about what it's supposed to do.

Re:First Time

[TheLink]

yep the young and future generations will pay for it.

Re:First Time

[nedlohs]

Stunting growth is the entire idea. Keynesian economics is all about smoothing out the boom bust cycle. The government uses deficit spending in bust years to reduce the magnitude of the downswing. The government uses a budget surplus to in the boom years to reduce the magnitude of the boom (and also to save the money it'll need for deficit spending later).

Running a deficit at all times is terrible under Keynesian economics. It's terrible under every school of economics except the fairy land one the US seems to be trying out.

These cuts were not fast, they have been on the books for a long time. Everybody knew this was coming. Though of course the government has built a reputation for bailing everyone out at the last minute and hence, surprise surprise, businesses run with that expectation in mind and don't plan for such things and take more risks in general.

If we were in a short term dip, then sure put it off a little. I don't think we are though (that's opinion of course, many economists disagree - of course they also thought everything was doing just great in 2005...) and putting it off will just mean it has to be done when the economy is in even worse shape.

Re:First Time

[Rockoon]

The beneficiaries of corporate welfare would have you think so.

,br> It isnt just corporate welfare. Its basically any and all special-interest groups and here is why:

By definition a special interest group is a small fraction of the people, but when they lobby government they lobby for large benefits to themselves. Because these large benefits are only a small expense to any individual there is never any organized competing interest to lobby against the policies put forth by the special interests.

Its not just corporations. Its unions, foundations, non-profits, universities, ethnic groups, religions, ..., and even the government itself...

As Milton Friedman put it, its "The Tyranny of the Status Quo" -- and its only possible because the Federal government stole the power from the States, greatly reducing the influence of individuals.

Re:First Time

[Anonymous Coward]

If 'you' is the government, the last thing the citizens need the government to do in a down economy is to 'save money and spend more as the economy increases'. Ideally in a capitalist society, government spending is lowest and taxation highest when the economy is strongest. The government should operate on a budget surplus during rich times and put at least a significant portion of that toward debt reduction. That's one thing our government fails to do.

When economy is down (read: the private sector is freezing up) the government's job is to do whatever it can to 'force' money through the system. If government gets as apprehensive about spending as every other participant in the economy, an ever-worsening economy becomes a sort of sellf fulfilling prophecy.

Re:First Time

[nedlohs]

You've made the assumption that the additional government spending made possible by borrowing doesn't cause the economy to grow (and hence increase government revenue in future years). That can more than cover the interest - it's a similar concept to a business going into debt to buy some factory machine which increases their production/reduces their costs and generates more additional revenue than the loan payments.

Not that I actually think the US is in that situation at the moment - given the magnitude of government spending and the state of the economy government spending isn't having that effect.

Of course built that entire theory is that either businesses aren't competing for financing with the government or that businesses won't make better investment choices than the government. The first half of that is probably partly true, I have serious doubts about the second though.

Re:First Time

[Kjella]

No doubt about that, the only question is if they're choking the economy they're trying to save so hard that it actually ends up being a bigger rescue operation than necessary. It doesn't matter how bad off you are, if further cuts make the economy collapse even more then the net effect is just sinking even deeper into the pit. Either Germany has to really drag them up and take the cost of it, or let them choke. Right now they're holding them just high enough that the nose is free and they're both getting tired of it.

Re:First Time

[nedlohs]

Yeah it's more during and after WWII. That every other significant industrialized nation had had it's factories bombed into oblivion couldn't possibly be part of why the essentially untouched US found itself in an economic boom.

Re:First Time

[ronpaulisanidiot]

Government isn't authorised to run a highway system

You don't know much about the interstate highway system, do you? The federal government does little to run it. They dole out the money to the states, who are free to do what they want with it within rather broad confines. The federal government suggests speed limits but doesn't actually force them to be at their suggested levels.

Obviously driving licenses are a private matter between private road operators and the drivers

And you are free to drive on private land as much as you like, provided you have permission from the land owner. Government has no say on that matter.

Actually nobody needs to be forced to own a license

And nobody is "forced to own a license". If you don't want to drive on public roads, you don't need a driver's license. Amazing how that works, isn't it?

government is not supposed to be able to use it as identification either

The federal government does not recognize a driver's license as identification as they are issued by states. States have the freedom to use them for what they want.

Actually 911 shouldn't be federal issue at all

The only thing federal about 911 is the number itself. If you would prefer that every state or county have its own emergency number, you can make that argument, but the federal government doesn't do squat with the 911 system.

There is plenty of business opportunity there as well.

You mean like the large number of private ambulance companies in this country? Indeed lots of people are making money off of 911. There are also companies like ADT and lifeline that are making money by sending automated requests to 911.

Re:First Time

[nedlohs]

Keynsian economics is horrible. You cannot deficit spend your way to prosperity, and the lie that debt is good is the greatest trick ever perpetuated on our society.

Keynesian economics doesn't claim any such thing, so nice straw man.

Keynesian economics boils down to running a deficit during down years and running a surplus during up years. There is no ballooning of debt, there is not "debt is good", there is not "spend your way to prosperity". It's simply reducing magnitudes by running the budget counter to the cycle with the bonus that if there's almost any sort of welfare system in place it happens on autopilot.

Deficit spending at all times is not Keynesian economics. It's fantasy land American economics. It worked for a little while, we're going to find out how it works over a longer term soon enough.

Re:First Time

[Anonymous Coward]

One, a gold standard is infeasible to keep accurate. You have reserve notes that disappear from circulation, and there's no way to know if it's stuffed in a mattress, destroyed in a fire, lost down a sewer, etc. You either accept the loss (which in means the usable notes increase in value since some amount of your 'gold' is taken out of circulation) or you estimate those loses and issue new notes which might be overestimated, decreasing the value since some of that 'gold' is overbooked. At the scale of the American economy today, a gold standard as a theory is pretty well nonsense, there is no way an accurate 1:1 mapping between currency and backing standard can be maintained.

Gold is just yet another abitrary 'thing'. Look at the CPI versus the price of gold. Sure, the CPI has shown some change indicative of the fluctuating value of a dollar, but Gold has been far more volatile than *anything* else. Being that disconnected from CPI shows that Gold is as subject to crazy human nature as anything else. Gold has bubbles and has had crashes, and there's little regulatory agencies could do to manage it. If our fates were tied to gold, then a scenario like the value crash of the early 70s would be great-depression time rather than little more than a large inconvenience to a number of investors.

Re:First Time

[ultranova]

I am stunned at the depth of your denial.

I wish I were shocked that a post saying nothing more than "I disagree" got modded Insightful, but I'm not.

Re:First Time

[Marxdot]

Yes of course a Friedmanite would try to shift the focus away from large corporations. No, let's not focus on corporate welfare, it's those bastard unions, non-profits, etc. that are the real problem.

Re:First Time

[Above]

The Tea Party means well, but I don't think any of the things listed start to solve the problem. They are an attempt to return to an earlier time that does not match the modern world. They might as well add to their plan banning the automobile and returning to the horse and buggy since it would end our dependance on oil. We don't live in a world where pushing entitlements like Social Security to the states makes any sense. Grow up and work in New York, and retire to Florida and all the sudden you get different benefits? No way, no how. Doesn't work for those administering such programs, or receiving the benefits.

The real problems here are much simpler, and sadly the Tea Party is part of the problem. The number 1 problem is gerrymandered districts, particularly in the house. When representatives don't have to fear electoral challenges they are free to be beholden to the corporations. Many of the Tea Party folks were only able to get elected because of these gerrymandered districts, otherwise they would have had no chance. The number 2 problem is career politicians. If you're looking to a 30, 40, or 50 year career there will be many elections, costing a lot of money. Fundraising is hard, and takes a lot of time. The siren song of corporate dollars is too hard to pass up. There is no way to ever get the money out of politics, but with term limits it is possible to prevent long term corrupting relationships from setting in. Two terms and out works for the president, it should be the standard for the house and senate as well.

Re:First Time

[tibit]

Wait a minute, you have the gall to call US's economics "a fairy land one"? And who the heck was buying all the junk securities, I ask? Well, a lot of it was being bought by Germany, some also by country-hedgefund once called Iceland. I'd say US financiers are very good at exploiting everyone else for US's own benefit. There would be no fairy land housing boom and bust if it weren't for European investors.

Re:First Time

[rubycodez]

you are confused, having a "gold standard" does NOT mean the value of gold held equals that of the currency. get a clue before spouting nonsense

Re:First Time

[TubeSteak]

Even the Keynesian purists would not hold that the money supply should forever increase faster than the economy actually grows.

The USD money supply grows faster than the US economy because the USA isn't the only country playing with dollars.
Since WWII, it has been *the* reserve currency for the world, even though it has lost some ground to the euro and [other] currencies in recent years.

Our economy as its been engineered today makes it structurally impossible to actually pay down the debt even in good times.

You could mean a lot of different things by this, but ultimately paying off debt is a political problem, not a structural one.
Unless you mean "we literally can't do it right now because of the bad political choices from previous Congress'"

It creates perverse opportunities to arbitrage billions of security instruments for tiny changes in individual valuations you see flash crashes. You have situations where a few bad economic turns lead to really destructive positive feedback ala the mortgage crisis.

You do know that the whole mortgage crisis was a mix of outright banking fraud, exemptions to traditional lending ratios, and deregulation which allowed the mingling of deposits and speculative money.
The TEA Party has some ideas that are useful, but the total thrust of their ideology makes for extremely bad policy in the current fiscal situation.

Re:First Time

[Cederic]

Thanks, it's good to get robust and grounded critique.

Re:First Time

[tibit]

Well, the European problem was also because people who had no fucking clue about anything were dabbling in shit. Iceland, with their 300k population and no business doing any world-wide finance, was investing in junk left right and center. Germans thought that all of the world is as fiscally prudent as they are and were buying credit default swaps like there was no tomorrow. The Irish idiots were building so many homes that their country's population would need to more than double to actually use all that newly developed real estate. And so on. Central government budgets are much smaller than the private banking sector.

The problem with both Iceland and Ireland was that their central banks decided to bail out non-structural institutions they had no business bailing out. Non-structural as in there'd be no country-wide issues if an investment bank had failed. I mean, come on, IIRC it was the Anglo Irish Bank that had a handful of branches, not even a single ATM, pretty much no private deposits to speak of, yet it was bailed out like if everyone's future depended on it. What sunk Ireland was pretty much the fact that all of Irish real estate development market turned sub-prime in a course of a few weeks. It didn't matter that they didn't have much exposure to US subprime securities, their own private housing sector defaulted all at once. Iceland was pretty much a hedge fund that was buying all the crap nobody else would buy. And the Germans were none the wiser either. Same goes for a lot of other countries that have used national banks to rescue private banks. That's what was the final straw, sometimes the only one, even.

Re:First Time

[tibit]

That it is a good way to store wealth. The germans were recently considering dumping some of their gold reserves (to the tune of hundreds of tons), in case things got really bad and they needed to rescue more private banks.

Re:First Time

[tibit]

I call bullshit on that. If it was $45k per year for 2012 tax year, then it couldn't be much more in 2011, and sure as heck I was way away from hitting AMT in 2011, earning way more than $45k.

Re:First Time

[Quantum gravity]

The problem is that is does not get paid back.

Sure it can be. The debt as a percentage of GDP decreased under both Jimmy Carter and Bill Clinton. I don't live in the US anymore, though I did, but in my country of residence the national dept was near 80% in 1995. At the end 2010 it had been reduced to about 35%.

I think Keynesian economics is a whole lots snake oil myself but I will concede we don't have a good test lab for it.

It is the dominant economic theory today. "We are all Keynesians now." -- Milton Friedman

The root of all inflation really is government debt.

Inflation can be caused by an overly large money supply, but is more commonly caused a larger demand than supply for goods and services.

Re:First Time

[Cederic]

How did Adam Smith handle the problems of insufficient gold (e.g. the US couldn't feasibly cover its current money supply with gold) or too much gold (e.g through generation of gold in nuclear reactors).

Tying the dollar to gold is pointless unless gold has a fixed value. If it doesn't have a fixed value then governments can merely restate the amount of gold you can exchange your dollars for, and print more money. If it does have a fixed value then you've just seriously constrained the size of your economy.

No offence to Adam Smith but the world's changed a little in the last two centuries.

Prudent fiscal management is needed whatever you pin your currency to. Instability on the supply side can lead to rampant inflation or deflation and severe problems as a result. Stability on the supply side leads to Greeks rummaging through garbage for food.

I'm not sure that's better.

Re:First Time

[Cederic]

Yeah, I'd let the banks fail myself.

Gold is convenient if you have a lot and can benefit from economies of scale on the storage and security overheads. For individuals it's hard to get enough gold to justify the expense of securing it, once you have enough gold to attract nasty people looking to help you dispose of it again.

I'd prefer the government backed security of my bank deposits. Other people prefer to buy gold bullion and sit at home stroking it, going "isn't it pretty!" I'm fine with that, but I'm still not seeing why people get so hung up on it, and on using it as some sort of standard measure of currency.

Re:First Time

[Rockoon]

Yes of course a Friedmanite would try to shift the focus away from large corporations. No, let's not focus on corporate welfare, it's those bastard unions, non-profits, etc. that are the real problem.

Friedman never tried to place blame on any of those things. He blamed the government.

How could you have missed it, unless you never listened honestly?

Re:First Time

[afidel]

Did you not read the entire sentence? I clearly stated that we need a safety net for those unable to work until the raised retirement age. I live in the rust belt, so I have plenty of friends that work in factories and on farms that are unlikely to be able to work to 67.

Re:First Time

[Wildclaw]

As government debt is equivalent to private sector savings (ignoring foreign savings for simplicity), it is fairly easy to see why governments run near permanent deficits.

As the economy grows, the private sector tends to want to save more. Hence, only the government is left to take on the debt (unless you want to involve the foreign sector and run a massive foreign trade surplus, but that is just moving the problem up to the international level instead as it is basically a zero sum problem)

That said, there is no reason to pay interest on all that debt. To allow more private sector savings, the government can issue currency with or without interest. However, the same people who whine about the debt tend to also complain about "monetizing the debt" (a.k.a. issuing zero interest debt).

Re:First Time

[phantomfive]

I am stunned at the depth of your denial.

He is enabled by an economist, Paul Krugman has been hammering that point for the last six months that deficit reduction is a bad thing (at least, deficit reduction right now).

Re:First Time

[phantomfive]

As soon as the interest rate rises above inflation, you start losing money on your borrowings.

Lucky the US government can create inflation then, eh?

Re:First Time

[phantomfive]

If the economy is in the toilet it is quite profitable for a government to cut taxes and raise spending to prime the pumps.

NO. It can be profitable, but it often isn't. You must consider two things:

1) What the money is being spent on. If you spend it to build a road everyone drives on, you'll have a good multiplier effect. If you spend it to build a road no one drives on, you'll have a negative effect on the economy.

2) Where the money comes from. If you take it from someone who would expand their business to hire more people, you've just hurt the economy. If you take it from someone who was going to just hoard it in the ground, then you helped the economy.

You must consider where the money comes from, and where it goes. If you don't consider those two things, then you can't know if your spending will help or hurt the economy.

Re:First Time

[phantomfive]

Even the Keynesian purists would not hold that the money supply should forever increase faster than the economy actually grows.

Yes they do. According to Keynes a nice 2%-3% inflation will help the economy grow, because it will give people the feeling they are richer and encourage them to spend.

I think Keynesian economics is a whole lots snake oil myself but I will concede we don't have a good test lab for it.

In the long term, you are right, Keynesian economics has been shown to be false. The question is on the short term scale (0-3 years or so), whether additional, timely spending can make a difference.

Re:First Time

[Cederic]

You've made the assumption that the additional government spending made possible by borrowing doesn't cause the economy to grow (and hence increase government revenue in future years). That can more than cover the interest - it's a similar concept to a business going into debt to buy some factory machine which increases their production/reduces their costs and generates more additional revenue than the loan payments.

Yeah, it was an implicit assumption. However that investment could occur without the borrowing, so allocating a portion of economic growth to government revenue would've been too complicated for a simple model created to answer someone on Slashdot :)

Re:First Time

[smugfunt]

I think readers of this thread will find this (pdf) thesis very interesting. I stumbled upon it while looking for works by Frederick Soddy.

Re:First Time

[smugfunt]

Crap, should have checked the link. This one works:
Harald Haas - Money Upside Down

Re:First Time

[anagama]

I'm sure you were way far away. Read the article though. It was set at $45k in 1969 and not indexed for inflation. Every year, congress has to manually adjust it. If they don't it reverts to the 1969 figure. It's insane, but true.

Re:First Time

[mikael]

And the American Eagle chicks attempt to push each other out of the nest until only one is left.

Re:First Time

[Rich0]

This is because the $45k figure is both misleading, and a regression.

Apparently the AMT exemption last year for joint incomes was $74k. This year it will be $45k unless it is raised - the level it was in 2000. They pass a law each year setting a one-year-only rate for the AMT, the logic being that raising it for all time would be "expensive" despite the fact that they're going to do it anyway.

The way the tax laws work is this. Figure out your regular taxes as you always do. Then take your gross income and subtract the AMT exemption and then calculate 26% of that number. That is your AMT tax due. You then pay whichever sum is larger, which for most people tends to be the ordinary income taxes.

So, yes, a married couple making $45k MIGHT be hit by the AMT, but only if their deductions exceeded their income so that they didn't have any tax due at all otherwise. A more realistic scenario is a couple making something closer to $100k. The AMT for such a couple would be about $17k, so if the regular taxes worked out to less than that they would have to pay AMT. That is still only 17% of their income.

They'll raise the exemption for sure, at least to the 2011 figures. It just is a matter of how much chaos they cause before then.

Oh, and if you're getting a refund you're going it wrong. I owe money every year by design, so I'm in no rush to get my return in. As long as you don't owe too much you can reduce your withholding without penalty. If you do owe too much then you have to pay interest on the money you failed to withhold. However, the rules aren't that harsh - as long as you withhold as much as you actually owed the year prior you'll never see a penalty.

Re:First Time

[tibit]

Oh, that's ridiculous, but hey, it figures. Bureaucrats won't exactly design themselves out of a job :(

Re:First Time

[DarkOx]

TubeSteak,

I disagree that its not a structural problem. We have been trying to find the political will to do it for 30 years now! the 2000's show pretty clearly what even flat wage growth does to the economy. You literally can't tax house holds that have large debt liabilities and have run 0% or even negative savings rates for decades. They can't pay, and if you make them they start defaulting and we a have a banking crisis all over again. All the revenue even the left is talking about hardly puts a dent in the deficit and never enters the ballpark of even potentially touching the debt under any best case economic performance.

I don't have a clear answer but what is apparent to me is that many of the talked about macro economic fixes will shatter. Middle America largely does not have the capability to restructure their balance sheets in a way that would serve them in a situation where the government actually took any money out of the economy to pay debt. It would mean devastating loss that would probably run the macro economy off the rails too. You have to fix the problem without radically altering the middle class experience. Not easy; even cutting defense drastically (which we should do I think) means many lost middle class jobs.

The only free lunch is taxing the wealthy which does not get us very far.

Re:First Time

[Your.Master]

No he didn't insist on perpetual debt. He described a scenario where perpetual debt was more optimal than a balanced budget, and it's correct.

There's nothing magical about 0 debt that makes it non-wasteful. The 0 point is almost arbitrary. You could just as easily say you should always have 50% of your budget be surplus so that more and more income comes from interest. The optimal point is very complicated, but with simplifying assumptions, you can say that a perpetually contracting economy should perpetually run surpluses, and a perpetually expanding economy should perpetually run deficits, and a perpetually stagnant economy should perpetually run balanced budgets.

Re:First Time

[Graymalkin]

I would agree with your points save the one on term limits. Look at what happens today with freshman Congress people. They get shuffled into receptions and dinners jam packed with lobbyists. Since the lobbyists are the ones with the longest lives in Washington the nascent Congress members need to sign on with them to have any clout. With strict term limits every Congress member will essentially be a freshman and we'd end up with lobbyists with even more influence.

Besides lobbyist ties the whole internal operations in Congress would need an overhaul. The current committee system would severely break down if there was no meaningful seniority (not necessarily a bad thing). Current tactics your side (someone that agrees with your personal politics) uses would be thrown all out of whack. This might be helpful when it disrupts your political opposition but would really suck when things you want can't make it out of committee.

I think much more fair drawing of congressional districts (performed by multi-partisan independent panels) would be more effective than enacting strict term limits. Gerrymandering guarantees that areas that go strongly to one party in state-wide and national elections can still go to another party in local elections. It's something that only really serves the desires of national parties and guarantees alternative parties could never see any significant representation in Congress. It also breaks any sort of ability for constituents to have a meaningful say with their representatives. If a neighborhood/borough/region makes too much noise they'll just end up with a district line cutting them in half so they can't ever effect an election.

Re:First Time

[Teckla]

Did you not read the entire sentence? I clearly stated that we need a safety net for those unable to work until the raised retirement age. I live in the rust belt, so I have plenty of friends that work in factories and on farms that are unlikely to be able to work to 67.

Are you proposing different retirement ages for different careers, and/or allowing people to retire early based on doctor's recommendations, or what exactly?

I think retiring at 69 with full benefits (what many in congress propose) is going too far, even for white collar workers. What we have currently (retire at 67 with full benefits -- at least for my generation) is already pushing the boundaries, in my opinion.

Sorry, I just have to disagree with your proposal to on average delay retirement, even if we have a safety net for those unable to continue working. Who decides who is and isn't able to continue working?

Smells too subjective and lottery-like. What if you get the bureaucrat or doctor that's ornery and not willing to let people retire early? Or if some people get the bureaucrat or doctor that's allowing healthy people to retire early? That approach seems too ripe for abuse.

Re:First Time

[nyctopterus]

So we should tie our counters to how much of a (fairly) useless metal we can dig out of the ground? Why?

Re:First Time

[Above]

I'm going to respectfully disagree with you on term limits. Yes, freshman are courted, and there are many reasons, but many of them will be weakened by term limits. The lobbyists are making an investment in folks they hope will be on their side long term. Term limits mean they need a much faster ROI, and change the decision process on how to invest money in a way I think would be beneficial.

As you point out seniority is huge in the committee system today, and I do believe that is part of the issue. Freshman often can't get an audience with senior members themselves as they have little to offer, and the lobbyists can get them an introduction and bring them along. If seniority were less important, there would be less division between the old guard and new guard, and less gatekeeping by lobbyists. Moreover, if committees were done by say a lottery freshman would get some key ones, giving them power to hold over other members and lobbyists. It would give them a bargaining chip if you will, unlike their current powerless position.

The key though is to move past arguing over which method is best, and start trying some of them. Lots of people have ideas for changes from filibuster reform to term limits that could improve Congress, but we keep arguing over which is best which just serves to keep the status quo. The status quo does not work, so let's try a handful of ideas even if they aren't our personal first choices.

Re:First Time

[smittyoneeach]

Your suggestions, unlike mine, do roughly jack for tackling concentration of power, which leads to trying to solve personal problems at a federal level.
Gerrymandered districts are a minor issue in the formation of our new aristocracy http://directorblue.blogspot.com/2009/08/one-chart-to-rule-them-all.html
In my perfect world, there would be a contest for a public graph algorithm that would calculate districts for minimal surface area.
The political knife fight would move initially to algorithm parameters, but then settle on making sure data inputs were not too thrashed. Such an algorithm would have a LOT of parameters, e.g. population, income &c. But it would happen in public.
If you'd followed my Barnett link, term limits are Article 7

No person who has served as a Senator for more than nine years, or as a Representative for more than eleven years, shall be eligible for election or appointment to the Senate or the House of Representatives respectively, excluding any time served prior to the enactment of this Article.

My own creative input would be a "Kill Switch Amendment", whereby, at 18 months, 2/3 of State legislatures have to certify a Congress "Doth Suck Not". Failure to pass muster means that no sitting Congresscritter can run for that seat again next time they stand for election. Like chemotherapy, a few good cells may be lost. I'm confident we've the population to compensate. The nice feature is that you could safely toss all 535 pieces of work in a shot, blowing away the seniority incentives that ensure an abject piece of work like, say, Jim Moran, has SCOTUS-like tenure.

Re:First Time

[techhead79]

http://www.macrotrends.org/1334/us-dollar-index-gold-and-oil-historical-chart

From the same site. Five years isn't enough of a picture to suggest that gold and oil always has value while the dollar does not.

Re:First Time

[HornWumpus]

The gold supply is not fixed, it is used by industry and 'produced' by mining and recycling.

Granting that makes it a worse currency. Unexpected shocks have caused inflation (e.g. new world gold screwed Spain's economy).

I prefer the plutonium standard. Realpolitic.

Re:First Time

[shilly]

Subtle code. Why not talk about "cosmopolitan"? Pin your colours to the mast, so to speak.

Or you could just fuck off back to antisemitic twat land, where you can play happily with all your vile friends, and leave the rest of us in peace

Re:First Time

[TapeCutter]

What do you mean "our", I'm an Aussie, "my" economy is doing fine, China now buys more of our special rocks than you guys do, if China becomes a military superpower (as well as an economic superpower) we will also have some disused foreign military bases we can rent to them. You see, I'm old enough to remember the last of Mao's famines on the nightly news, and while I agree their political system is more vulnerable to despots I'm also aware that they have dragged more people out of poverty in the last 40yrs than the rest of the world combined.

They paid a heavy price in environmental degradation and the one child policy, but "credit where credit is due", they did it, they basically turned a famine riddled "N Korea" into an economic superpower that now has a rapidly growing middle class and a booming real estate industry akin to the gold rush days of the 1800's.

Philosophically I'd say the most desirable superpower would be an ideological cross between Doctors Without Borders and The National Academies, but with the "can do" attitude of Attila the Hun. It really doesn't matter what you call your ideology, communism, democracy, whatever, what matters is results. Besides, it was rich merchants who forced the Magna Carta on the nobility. Today's rich merchants are not limited by oceans, just as the merchants of the Magna Carta were not limited by the intricate feudal borders of Europe. Since the end of the cold war hard core despots have been seen as bad for business on all sides, in the same way warring nobility were bad for business, their days are numbered because for the vast majority of rich merchants, peace is more profitable than war.

Re:First Time

[TapeCutter]

tl;dr. However I skimmed the conclusion and bookmarked it. The "Money is made for man" thing nails the problem in a soundbite, especial when you consider environmental "externalities". Now all we need is a thesis with an answer, a peaceful way to "socialize" profits, like we already do with losses. ;).

Re:First Time

[smugfunt]

tl;dr

:) It is essentially a book. Perhaps I should have mentioned that. You can get hard copies from the usual places.

It has a fascinating chapter on the tally stick system which was used in Europe for 700 years, with only 0.4% price inflation per year on average. All credit (ie. money) was a claim on actual existing wealth and could be issued by anyone who had the wealth to back it. I wonder if some kind of eTally system might be part of the answer.

Re:First Time

[Runaway1956]

"I'm not sure how the relative values of gold and oil matter, and I don't think gold prices are stable at all, given the annual fluctuations in price of up to 180%. That's more volatile than the US dollar."

No, the gold is stable. The gold has been stable for decades. The oil is stable, relative to gold. It is the DOLLAR which loses value, then sometimes gains some value back, then loses value again.

Re:First Time

[smittyoneeach]

I think the current seniority system is orders of magnitude worse than reasonable term limits.

Re:First Time

[Cimexus]

"I still don't understand. Why gold? Why not platinum? Why not pieces of slate? I like slate, I'd rather have a slate bed to my snooker table than a gold one."

While I don't disagree with your post, IF you are going to base a currency on a standard commodity (IF), the reason you pick gold is that:

- It's rare and requires industrial-scale effort obtain and refine (can't use slate, it's too common, otherwise people could just chip away at rocks around their neighbourhood to make money)

- It's stable (this rules out organic material like wheat and many other things that degrade, corrode or rot etc.)

- It doesn't have other uses in which it is consumed, that would compete with its function as a store of value (platinum for instance, has significant industrial uses, while gold doesn't ... gold is used in jewellery admittedly but isn't consumed in the process). Having said that platinum wouldn't be a terrible choice as it's stable and rare. It's one of the four precious metals that has a currency code (the others being gold, silver and palladium).

Anyway that's why you'd use gold (or another precious metal) as opposed to other physical objects. Civilisations throughout history have reached the same conclusion.

But like you say, it's easier just to use a piece of paper or electronic record. I don't have an issue with fiat money if it's well managed. Like you say, it's just a record that I have done some work that society finds valuable, which I can use to exchange for other work or goods. There's no inherent reason that the counters/tokens themselves need to have value... ...unless the system is abused or badly managed. I don't like the idea that the work I do now (or rather, the tokens of having done that work sitting in my bank account) loses value over time or can be arbitrarily rendered worthless overnight if there's a complete collapse/hyperinflation. The fiat system is great when it works. And most of the time, it does. But humans are fallible and catastrophes occur. And if the fiat system fails you'd be glad that your tokens also had some inherent value, and all that work you did is not now wiped out and made worthless. Not that I think this is likely to occur - I'm no doomsday nutjob. But I can see that side of the argument.

BTW I concede that gold doesn't really have 'inherent value' and it too only has value because we say it does. In practice oil or food and land have actual usefulness that gold does not. But they are unsuitable for the other reasons mentioned above and it's probably safe to say that gold will always be valuable to humans due to rarity and beauty, if nothing else.

Re:First Time

[gmack]

Spain's problem is of a different sort. Trying to base a whole economy on construction was a bad idea and the fact that they are still building like mad even though there are more houses than people in the country is just going to make the pain worse. House prices in Spain should be a third of what they are given the average Spanish wage but the huge amount of extra capacity risks dropping the prices even lower.

Re:First Time

[bentcd]

The US would have to buy around 45% of the gold ever mined to cover its issued currency at current prices. Forgive me for finding that laughable.

If currencies were tied to the value of gold, then this would have a drastic impact on the price of gold. Long story short, gold would have a much different price today than the one you base your assumption on and so your conclusion doesn't hold.

I still don't understand. Why gold?

Gold has a number of qualities that makes it a perfect material for coinage. It is rare but not too rare. It is not particularly useful for anything other than as a currency, so you won't get surprising losses of gold because people decide to eat it or something. It also doesn't corrode. These two aspects make for a stable currency which is good. It is easily malleable, divisible and recombinable which makes for a very practical currency. Also it's pretty to look at so people will generally be happy to own it.

Why not platinum?

If we didn't have gold, maybe we would use platinum in some capacity. It is however much more difficult to work and so much less practical in use. Also it may be a tad too rare, not really sure.

Why not pieces of slate? I like slate, I'd rather have a slate bed to my snooker table than a gold one.

Slate is too common, it is too heavy, it is too brittle, and it can not easily be reconstituted into large blocks once broken up.

Re:First Time

[nedlohs]

Junk securities and a housing boom are irrelevant. The economics being talked about is government fiscal policy. And the buyers of government debt are also pretty much irrelevant (until you get to defaulting in which case it can make a difference who owns the debt in terms of what the government decides to do) the government decides how much debt to issue after all.

Junk securities and housing bubbles are impacted by government monetary policy so you could assign some blame on the government for those too - but again that isn't the part of economics being talked about and hence not relevant to the topic at hand.

Re:First Time

[crypticedge]

Gold's only value is one we give it. It has very little practical use other than ornamental and electronics. Gold is as fiat of a currency as paper is, but people drinking Ron Paul and Glen Beck's koolaid missed that just before they started telling everyone to buy gold they put nearly their entire fortune in it, now that gold is at an all time high in price, they've been dumping it. They are profiting off the people pushing for the falsehood that is the "gold standard"

Re:First Time

[AlphaWolf_HK]

It's really not a good idea to do both austerity and tax increases at the same time because effectively the government is just draining from the economy. That is a very bad thing, especially right now given that the retail industry has reported the worst holiday season in a very long time (consumer spending inevitably ripples to other areas of the economy - good or bad.)

Yes we need to get rid of the debt, but you need to either cut taxes or implement austerity. Doing both will just bite you in the ass.

I personally wouldn't mind seeing us go off of the fiscal cliff very soon, better now than later when it gets even worse than it already is.

Re:First Time

[Medievalist]

"what mammals have always done."

so, eat their young?

That's not restricted to mammals. In fact the only creatures that will never eat their young under any circumstances are those that are physically incapable of it, such as for instance pelagic snails. Your off-topic pedant moment for the day; I just couldn't resist.

PS: the best things that could happen to the USA (and to the average US citizen) would be cutting government spending, raising government income, and driving the price of petroleum products up to the point where sustainable alternatives are economically viable in the marketplace.

Re:First Time

[squiggleslash]

The Federal Reserve is printing money, not the Government. And you guys have been predicting runaway inflation for the best part of half a decade now.

Inflation - outside of commodities whose supplies run dry - doesn't happen unless there are enough people with money to spend for it to happen. Nobody has any money. They can increase the size of the economy by 100x, but as long as that money's sitting in bank vaults or the pockets of the super-rich, inflation aint going to happen.

Re:First Time

[highphilosopher]

Wow! I think you managed to capture all the talking points in one post! Kudos to you!

Re:First Time

[UnknownSoldier]

> Friedman never tried to place blame on any of those things. He blamed the government.

Q. And who makes up the government?

A. We the people The problem is everyone in the mirror.

A solution will _never_ be found until EVERYONE takes _responsibility_.

Re:First Time

[UnknownSoldier]

> What's so fucking special about gold anyway?

Well, for one, hard currency is a lot less likely to be just created en masse like Soft currency. Let me tell you a little story about Zimbabwe:
  http://online.wsj.com/article/SB10001424052748703730804576314953091790360.html

I am not saying we should go back to gold. However, if you want to understand money, start with the excellent summary from The Ludwig von Mises Institute:

http://mises.org/books/whathasgovernmentdone.pdf

Money is nothing more then an exchange of energy (be it time, knowledge, services, or items). The token that is used to represent those things are irrelevant.

--
Classmates.com (MemoryLane) is a SCAM

Re:First Time

[Cederic]

Money is nothing more then an exchange of energy (be it time, knowledge, services, or items). The token that is used to represent those things are irrelevant.

..which is why I get confused when people demand that the token is gold :)

Re:First Time

[Bill, Shooter of Bul]

Except that's not even close to being true. The two largest expenditures are Military and Social Security. Not subsidies to green energy, PBS, or any other favorite target of the math challenged.

Re:First Time

[Kelbear]

I just want to mention a point that was brought up on NPR's Planet money podcast investigating the role of lobbyists in Congress.

As Slashdot is well aware, the congress critters on these committees may have little to no understanding of the subject matter. They need to at least try to get informed, and oftentimes the only way they can get information on the active state of the system is by meeting with those who are currently engaged with that system (i.e lobbyists).

Of course there exceptions like Elizabeth Warren on the Senate Banking Committee, where you have someone who is intimately informed, and can see right through lobbyist bullshit from the get-go. For other situations, you have legislators relying on industry insiders to get information. If the lobbyist says, "If you apply ___X____ regulation everything will fall apart, don't do it", how does the congressman know if the lobbyist is telling the truth about how this regulation might go down? Or is the lobbyist is just trying to protect their profit margin? I thought this was an interesting insight into the system.

Re:First Time

[nedlohs]

I already did, but apparently you can't read.

Re:First Time

[tragedy]

Not to mention the fact that the GP is incorrect about the average lifespan increasing. In the US it has actually been going down for the last 25 years or so.

Re:First Time

[nedlohs]

I made no such assumption.

Of course if you don't think we have inflation you are simply mad. What's the price of gold now, what was it 20 years ago? What's the price of oil now, what was it 20 years ago? What's the price of corn now, what was it 20 years ago? What's the price of copper now, what was it 20 years ago?

And no inflation hits the working class the hardest since income lags price rises. The wealthy will spend their effort investing their wealth in things that keep up with the inflation, which tends not to be productive investment that grows the economy, and do just fine (assuming you don't mean hyper inflation levels of inflation in which case everyone but the lucky is screwed - though the wealthy are the ones who can afford to put their money into the things that are more likely to be lucky too)

Re:First Time

[redlemming]

Keynesian economics is all about smoothing out the boom bust cycle. The government uses deficit spending in bust years to reduce the magnitude of the downswing. The government uses a budget surplus to in the boom years to reduce the magnitude of the boom (and also to save the money it'll need for deficit spending later).

Smart corporations use things like variable pay to smooth out the boom bust cycle, which allows them to reduce the impact of most downswings, without having to go into debt. The variable pay is tied to an accounting measure which is well defined, and the plans can only be changed every so often to eliminate tinkering.

It would seem like the various levels of government could do something similar for some of their budget items (including pay). Doubtless there would be some details to work out, but why are we paying our legislators and executives if not to competently handle this sort of thing?

It should be a fundamental human right that unborn generations are not placed into debt as a result of the actions of the present generation.

Re:First Time

[Rockoon]

Q. And who makes up the government?

This isnt an honest question. The Federal government that was intended is not the Federal government that we have, and Friedman spoke about this more than once.

A solution will _never_ be found until EVERYONE takes _responsibility_.

You are misguided in thinking that if everyone "takes responsibility" that the problem will be solved. The situation will remain asymmetric, where it is greatly advantageous to lobby for Federal favor but only marginally advantageous to lobby against that same Federal favor.

Re:First Time

[Hognoxious]

- Gold doesn't degrade (can't oxidise or otherwise react) so your vault contents is worth the same 100 years later

Worth the same? More like it weighs the same, which isn't the same thing at all.

Re:First Time

[Marxist Hacker 42]

As long as you're doing that- scrap the entire Constitution, let's go back to Kingdoms that can be measured in bowshots.

Re:First Time

[smittyoneeach]

That's what's going on now, albeit slowly, under the rubric "Progress".

Re:First Time

[TranquilVoid]

Yes they do. According to Keynes a nice 2%-3% inflation will help the economy grow, because it will give people the feeling they are richer and encourage them to spend.

I think that's backwards. Inflation makes people poorer and hence they spend now while their money still has value. Consequently they feel the need to continue to work. Both of these grow the economy as you say. Under deflation everything becomes cheaper. Why buy that gold watch today when you know tomorrow it will be less?

Re:First Time

[phantomfive]

In actuality it probably doesn't make much difference. Throughout history we see periods of growth and recession coinciding with inflation. We also see periods of growth and recession coinciding with deflation.

To be fair, there isn't a huge amount of data about deflation, because most of the time governments prefer inflation.

Re:First Time

[Hognoxious]

However that investment could occur without the borrowing

How? If I want to expand my taxi fleet, I can't finance that out of the increased fares because I need to buy the cars first.

Re:First Time

[Cederic]

But you could reduce spending on, e.g. driver wages, or you could increase fares to build up the funds to increase your fleet.

When your cost of investment is less than1% of your revenue and you run a nonprofit...

Re:First Time

[nedlohs]

If the extra fleet generates more additional revenue than the additional maintenance/wages/etc costs and the loan payments (lets not go all the way into depreciation of the assets and so on) then borrowing is better (in terms of profit anyway) than building up the funds first.

Riskier of course, but that's a different issue.

And this too shall pass away.

[Anonymous Coward]

"The American Republic will endure until the day Congress discovers that it can bribe the public with the publics money."

Re:And this too shall pass away.

[jamstar7]

Why are you against voting for a Democrat when a Republican held the country hostage?

Re:And this too shall pass away.

[Trepidity]

The U.S. already has rather low government spending by first-world standards, though. Including lower than some countries who are outperforming us (e.g. Germany still has a successful manufacturing sector, and a positive trade balance).

Re:And this too shall pass away.

[Anonymous Coward]

How about those of us with cancer that pay additional taxes due to Obamacare with no benefit from the new law?

FSAs cut from $5000 to $2500.
Deductions for medical treatment start at 7% of income where they used to be 4% of income.

These are taxes that wouldn't have had any impact on me without cancer treatments, but because I now have massive medical bills these are significant tax increase in addition to the income tax increases.

Re:And this too shall pass away.

[Anonymous Coward]

This is a lie, not just once, but twice.

The Democrats have compromised numerous times on the spending cuts. Obama's own proposal included many of them.

And no, it's not high government spending causing the problems, that's just the Republican mantra, even though they really do nothing to actually reduce the scale of government. They just prioritize things for their own needs.

Re:And this too shall pass away.

[number11]

I simply cannot imagine why anyone making 50K should even be asked to fill out a tax form, much less pay a dime of tax. I do not mean to belittle your income, but I have seen way too many welfare recipients make more than that.

Bullshit

Re:And this too shall pass away.

[The Master Control P]

You realize America is trying to run a first-world state with taxes that are around half of what they are almost anywhere else in the developed world?

This is the horrible thing about the current Republicans operate... Break program X, whatever X was going continues to coast on inertia in the short term, they brag about how we obviously didn't need X. Then of course the fallout lands, but by then it's too late, because X is Big Gubbermint Soc'lisms now.

Well, 30 years of "the wealth will trickle down" are now coming back to haunt us. 30 years of "if we only cut taxes enough we'll be more prosperous" is now coming back to haunt us. 30 years of blind faith in the Invisible Hand are haunting us. Starting two land wars, and then cutting taxes instead of passing a war tax (the first time in American history any administration has been so staggeringly foolish) are coming back to haunt us.

We may not like it, but taxes are the price of civilization.

Re:And this too shall pass away.

[Anonymous Coward]

the government has been spending nearly double what it earns for many years now, how is that not a spending problem? live within your means or pay the consequences later. It is almost time to pay the consequences and it is going to be severe no matter how you spin this one.

Re:And this too shall pass away.

[TemperedAlchemist]

Welfare recipients won't make more than that, unless they're gaming the system through some elaborate ploy. Or if you have like 13 children.

Re:And this too shall pass away.

[pwizard2]

IIRC you have to file even if you make as little as $900 per year.

Re:And this too shall pass away.

[DNS-and-BIND]

The United States government gets plenty of taxes already, thanks. What's the figure, something like one-third to one-half of all wealth created in the nation goes to the government? New taxes are not the solution. They aren't even the precipitate. Give them more money, and they will just waste it. Guaranteed.

Re:And this too shall pass away.

[Anonymous Coward]

Well I make roughly $50k, so if this late deal doesn't pan out this is going to cost me another $1,000 a year in taxes.

So Congress can feel free to bribe me with my own money. At what I make, another $1,000 a year really hurts.

Someone please remind me of this the next time I'm considering voting for a Democrat.

So it wasn't both Democrats and Republicans that agreed to this fiscal cliff as a motivation? Give me a break. If Republicans had agreed to defense cuts and taxes on the wealthy, none of this would have occurred. It is their stubbornness despite the fact that they lost all popular vote measures in the general election that allows this type of travesty to occur.

As far as I'm concerned, this fiscal cliff is a good thing. It is the first time in over a decade that the funding for the military industrial complex has decreased and taxes for the wealthy have increased. It is a pity that it is going to fuck the economy over, but you know that the Republicans would do that anyways with repeated filibusters on raising the debt ceiling. At least now when the recovery happens we won't have the Republicans being able to threaten a third recession.

Re:And this too shall pass away.

[Austerity Empowers]

Why are you against voting for a Democrat when a Republican held the country hostage?

NO. The republicans and the ~50% of the people who voted republican are "holding the country hostage". Of course they would say that the democrats and a bunch of crack mothers are holding the country hostage and leading us to financial ruin. That's really the problem.

Blame the other guy all you want, but the numbers are right there for us all to see. As a nation, we do not agree, we do not agree in approximately equal numbers, and haven't changed our positions after several elections. There is no way for Obama nor Boehner to keep their constituents happy, so they must drag this out until we are all pissed off enough to accept concessions. While I agree it is baffling with the election over, why they couldn't come out with a plan that pisses off both sides equally now, rather than drag it on another month, that is going to be the ultimate conclusion. Everyone is going to walk away from this mad, having lost something and gained nothing. It's the only way this ends, and as long as we continue to blame the other guy, it will drag on and on.

Re:And this too shall pass away.

[Areyoukiddingme]

Bullshit. US GDP 2011 $15 trillion. US Federal tax receipts 2011 from all sources $2.3 trillion. Divide, and we discover it's 15%. Your parent post thinks it should be 33%, and to be in line with the rest of the first world, he's right. That would finally make it to one third. One half? Not even close.

Re:And this too shall pass away.

[ahabswhale]

lol, you're number is way off. We pay less taxes than Canada. You need to learn what effective tax rates are. In any event, go hear and learn something:

http://en.wikipedia.org/wiki/Taxation_in_Canada

Re:And this too shall pass away.

[Slyfox696]

So which of the major spending by the government are you ready to do away with? Defense spending, Social Security, Medicare or Medicaid? Because, quite frankly, any cuts to any other program isn't monetarily worth the time or devastation the cut would bring.

So whose life are you willing to put into jeopardy for the rather foolish notion we don't have a revenue problem?

Re:And this too shall pass away.

[Anonymous Coward]

And now you're going to have to pay back all those bush tax cuts over the past 12 years, with interest bitch.

Re:And this too shall pass away.

[Anonymous Coward]

The problem is that is only the cut that the federal government takes, on top of that most have state government taxes and even local county taxes.

Re:And this too shall pass away.

[Karlt1]

"Because the Republicans are insisting on spending cuts."

But they refuse to cut military spending.

Re:And this too shall pass away.

[Anonymous Coward]

less taxes is a fine and workable situation, Just as is higher taxes. With less taxes the goal is a lean government with essential services and minimal extras, more taxes provide more services. The problem is everyone seems to want all the services while not paying the taxes. Either system can work, but you can't just take the good bits of both and stick em together like the current situation. The people/Government need to choose what it is they want and then work within that, it doesn't matter which one is chosen, they both really can work.

Re:And this too shall pass away.

[shentino]

Because stubborn political parties try to leverage the country's ills to advance their own positions.

Re:And this too shall pass away.

[ichthus]

If the store owner kept five Lamborghinis and a private jet, and vacationed with Jay Z and Beyonce, then your hypothetical store model would be a bit more accurate.

Re:And this too shall pass away.

[jo_ham]

the government has been spending nearly double what it earns for many years now, how is that not a spending problem? live within your means or pay the consequences later. It is almost time to pay the consequences and it is going to be severe no matter how you spin this one.

The problem is, the things they want to cut aren't going to do anything to help. The GOP wants to kill things like social security (which does not affect the deficit at all) and social programs and god damn funding for PBS, NASA etc while at the same time leaving the military spending alone.

That's like buying a car on credit and then "reducing your debt" by not borrowing money to take it to the car wash on the way home from the lot.

Re:And this too shall pass away.

[ducomputergeek]

The biggest problem has always been that with the tax cuts also have to come spending cuts. We've had the tax cuts, but never the spending cuts. A spending "cut" in washington is only increasing a program's budget by 3% over the next year instead of 5%.

We're to the point where taxes aren't the problem: spending is the problem. Even if the administration got all the tax increases they wanted, the additional revenue will only make up about 20% of the proposed deficits. If we want a balanced budget where is that other 80% going to come from? More taxes?

We've got to face the fact that spending has to be cut across the board on everything from entitlements to defense. And I'm not talking about increasing spending by 3% instead of 5% for >. I'm talking about departments getting 15% - 20% less over the next 5 years than they had last year. That's what really needs to happen.

Re:And this too shall pass away.

[jo_ham]

The United States government gets plenty of taxes already, thanks. What's the figure, something like one-third to one-half of all wealth created in the nation goes to the government? New taxes are not the solution. They aren't even the precipitate. Give them more money, and they will just waste it. Guaranteed.

Nonsense. Taxes in the US are at an all time low. The last time the wealth was this badly skewed in favour of the super rich with such ludicrously low taxes the Great Depression happened.

It's not a coincidence. Funnelling money into the hands of the few and crippling the middle and lower classes brings the economic engine to its knees.

Re:And this too shall pass away.

[Trepidity]

They don't take 30% of the average person's income. If you make $100,000, file single, and take only the standard deduction, under the 2012 tax rates you paid $18,700 in taxes, i.e. 18.7%.

Re:And this too shall pass away.

[shentino]

What we need to do is jumpstart the economy by not taxing people who can't afford to be taxed.

The rich can afford taxes that the poor and middle class can't.

Get the taxes off the backs of the poor and middle and they can do so much more capitalistic investment the boom in tax revenues from floating to higher social classes will more than mkae up for the tax cuts.

in the short term, less taxes mean less in federal dollars to spend. however, letting the middle class breathe and do business will let the economy boom.

it's the same effect as microloans in poor countries. Get people on their feet with capital investment, make them producers of wealth. Wealth that the government can tax without hurting anyone.

The primary purpose of taxes is to pay for government services. Emphasis on services. So the prime focus should be on who can afford to pay for it, not who deserves to foot the bill.

Re:And this too shall pass away.

[lightknight]

The American Republic will endure, in name, until the day Congress runs out of money, and can't find anything to hock that anyone wants.

Re:And this too shall pass away.

[Jeremi]

Limited government creates economic prosperity. Government largesse stifles it.

Which is why Somalia and Afghanistan are the most prosperous nations in the world, while Norway and Canada are hopeless dystopian nightmares. Right?

Re:And this too shall pass away.

[http]

30 years have accomplished exactly what was set out to be accomplished. It's now considered acceptable for a CEO to make over 1000 times what the guy actually creating value makes. Well, acceptable by anyone with an MBA, and you don't have one, so what do you know you moron get back to work, and don't worry your head about what percentage you take home of what you produce.
Trust me, they knew what they were doing with `trickle down'. It's based on the premise that, given an arbitrary level of national economic output, people who have more money should get more money. The question of who doesn't get it is left as an exercise.

Re:And this too shall pass away.

[lightknight]

While I am not defending the Republicans, your comment is somewhat disingenuous. What the Democrats are preparing to do is as dangerous as what the Republicans have in mind -> take out yet another loan in your name, and let it accumulate even more interest.

That's super dishonest, as I imagine most people are unaware that that's the plan; they think taxes will just go up on the rich, and everything will be fine for another several years, after which they will have to hike the taxes on the rich again.

Read what I am saying: no matter which side wins or compromises, even if either side gets everything they want and more, you're totally fucked. I've studied politics (something of a leisure activity), and I've studied economics (far from being an economist, but I can make the numbers dance); the American public is sitting on a triple F nuclear fiscal bomb here, and you have the choice of 1.1 Megatons now, or 1.7 Megatons later (the yield setting); those are your only options. You may argue that that's all doomsday crap and none of that has ever come true, but the numbers don't lie; look at the GAO's reports on government expenditures, look at what the Treasury is saying; but I digress, I feel like the kid on Venus who is telling his classmates that there is such a thing as the sun. When this thing goes, and it will (in all probability, short gold bars rain down from the heavens), an infantilised American people will wake up to find themselves paupers; how the safes and vaults were raided when the contents are still within will be a mystery for quite some time.

Re:And this too shall pass away.

[lightknight]

Imagine if you're a shopper, and required to purchase your groceries at said store; you'd like to shop elsewhere, but you must pay a hefty exit fee to do so. Now your analogy works.

Re:And this too shall pass away.

[lightknight]

I am actually okay with the spin -> if this keeps up, we'll be able to attach magnets to either side of them, and have a source of free energy for quite some time.

Re:And this too shall pass away.

[lightknight]

Then get in there, and help them. The Republicans can focus on what they want cut, and the Democrats can focus on what they want cut. And we'll cut both.

The military should be home now anyways. Let them rest.

Re:And this too shall pass away.

[Jeremi]

So which of the major spending by the government are you ready to do away with? Defense spending, Social Security, Medicare or Medicaid?

I think I'd start with Defense spending, which could easily be cut in half, and we'd still have by far the largest military on the planet.

Re:And this too shall pass away.

[Burning1]

You could put it that way. Or you could say that the government has been taxing half as much as it needs to pay for the wars, military, and pork that the general population keeps asking for.

Re:And this too shall pass away.

[Anonymous Coward]

Taxes may be the price of civilization, but that does not mean they have to be excessive. In fact, they should be minimal.

Re:And this too shall pass away.

[fnj]

Oh come now. Congratulations for looking up the income tax. Now maybe you will consider the Social Security tax. That's 12.4% (was over 15% but is currently under a temporary cut to ... wait for it ... stimulate the economy and help wage earners get through the year. Now, almost every U.S. citizen lives in some state; most states have income tax of 5% or more. Most states also have sales tax rates of around 5%. Finally, add a maze of fees in states which are used as revenue sources rather than to cover services. Add them all up; 30% if decidedly on the low side.

The median personal income in the U.S. for adults 25 or older was $32,140 in 2005. By definition of median, half make less and half make more. Now it's true that those below the median pay very little to no federal income tax, but if employed (even self-employed) most of them pay social security tax after deductions and exemptions, and that is a flat rate. Those particularly in, e.g. Massachusetts, pay a pretty burdensome state income tax because it is also a flat rate. A huge majority of them pay state sales tax; again a flat rate. For those who have a family, particularly single parents, it's a miracle if they can house and feed themselves and obtain necessary transportation, let alone any kind of leisure spending at all.

Now, for purposes of this discussion I won't advance an opinion on whether the taxation is "too" light or "too" heavy. I have a MOST DEFINITE opinion that it is cruelly burdened on the moderate income middle class. Those at the very low end and at the high end get essentially a free ride, even if it is a spartan one at the very low end (except for fat cow single welfare mothers zapping out babies so they can end up with a better standard of living than they could if they were working at $50,000 salary or better). But who can blame them for gaming a grotesquely distorted system?

The other cruel burden is on those retired with modest fixed incomes. Due to insane runaway deficit spending, raging inflation in food, fuel and other essentials is killing them. They tell us inflation is almost nil, yet we know damn well that we are paying TWICE as much for basic staples at the grocery store, as we did only a few years ago.

And look at the insanely unbalanced borrowing rates, due to the holy mess the economy is in, and the outright robbery the government allows the banks to engage in. The consumer spends 19-29% to borrow money on unsecured credit. But the bank pays the same guy a fraction of one percent to borrow HIS money which is on deposit. I vividly remember better days, when the rates were much more in harmony; when we got 5% on savings, and could borrow on credit at no more than 5-10%. Heck, the bank even paid us several percent on CHECKING account balances. No, I'm most definitely not talking about the 1950s. I'm talking about the 1980s.

Re:And this too shall pass away.

[fnj]

Reality check. The Republican House passed legislation that automatically imposes extremely heavy cuts on defense spending as well as social spending. That is exactly what the cliff is about. And we fell off the cliff 3 hours and 42 minutes ago.

Re:And this too shall pass away.

[fnj]

So in other words they ARE doing it.

Re:And this too shall pass away.

[TemperedAlchemist]

Well, even if the parents were irresponsible twats, you can't very well leave those children to dry, can you?

I mean, you'd really have to game the system to make a lot more than that. Welfare bonuses are a source of income, so you can't just accumulate a bunch of them and be like, "I MAKE NO MONEYZ GIMMEH MOAR." It doesn't work that way. If you get SNAP you may not receive full electricity reimbursement or some other form of welfare assistance. And yes, workers can look up if you are. So I mean, if you're that good at gaming the system, then you'd probably be good at gaming other systems too, like the markets.

A lot of the problem is that full time workers receiving minimum wage are getting 12k a year. If 6k a year costs rent/utilities in some shoddy apartment. That leaves only 6k to live on. You've got $500 a month to pay for food, gas, and other necessities. They work plenty hard, I've seen them, some with a kid. And they have to have SNAP just to be able to live on something other than ramen.

Re:And this too shall pass away.

[Anonymous Coward]

You realize America is trying to run a first-world state with taxes that are around half of what they are almost anywhere else in the developed world?

Except the most successful / fastest rising countries in the world (ex. Hong Kong, Singapore, Taiwan, Switzerland, Australia, New Zealand, Luxembourg, etc) have lower gov spending than USA does. USA's corporate tax rate, which chases away the most mobile capital, is nearly the world's highest! Even Canada now ranks higher in overall Economic Freedom!

They can afford more "butter" for their tax dollars, because USA is paying for their "guns". Only a few European countries manage to combine high taxes with a decent standard of living, while coasting on the economic momentum of the past - their so-called "success" is thoroughly debunked.

This is the horrible thing about the current Republicans operate... Break program X, whatever X was going continues to coast on inertia in the short term, they brag about how we obviously didn't need X. Then of course the fallout lands, but by then it's too late, because X is Big Gubbermint Soc'lisms now.

When you get rid of a government program, you free those funds to be spent in the voluntary sector - where consumers actually have a choice, and the product / service providers are actually accountable. When you solve problems through reason and technology rather than through the guns of state, the results can be significantly more substantial and cost-effective.

You could make a conjectural argument that private charity would be insufficient to help the poor, which could justify direct redistribution of income, but not everything else that the government does. In the US, the government currently spends $61,000 per poor family - while they remain in poverty! Get the government middlemen out of the picture, and no poor people would remain!

Well, 30 years of "the wealth will trickle down" are now coming back to haunt us. 30 years of "if we only cut taxes enough we'll be more prosperous" is now coming back to haunt us. 30 years of blind faith in the Invisible Hand are haunting us. Starting two land wars, and then cutting taxes instead of passing a war tax (the first time in American history any administration has been so staggeringly foolish) are coming back to haunt us.

Socialists use the term "trickle down" without really understanding what is being discussed. The diffusional benefits are a non-controversial economic phenomenon, but that's not the point. You don't prevent Peter from robbing Paul because Peter too will be better off in the long run, you prevent it because theft is morally and pragmatically wrong - a system of systematized theft destroys all incentive to be productive in the first place! As brains and capital are no longer imprisoned by borders (unless you're willing to build a new Berlin Wall), they will simply go where they are stolen from the least. Why is this so hard to understand?!

It is the socialists who have blind faith in their policies - except the more cynical ones at the top, who see them as a means to power. The supremacy of free market capitalism is backed by every chapter of the entire econometric history of mankind!

We may not like it, but taxes are the price of civilization.

Civilization is not mo

Re:And this too shall pass away.

[fnj]

Did I even imply I would have either the parent or the children left to dry? It's the system that is sickening. A noble purpose should be served by something better than a corrupt, degrading system.

Re:And this too shall pass away.

[funwithBSD]

Social security does not effect the deficit at all?

Then why is the President warning us that if the debt ceiling is not raised, we won't make Social Security payments?

With he is lying, or you are wrong.

Give you a hint: future payments are not from invested money, but from current payments by new investors. Grandma and Grandpa are not paid by their money invested over the last 45 years of paying into SS, but by the current payments of their children and their grandchildren. THere is no lockbox.

I.e. how a Ponzi scheme works... Until there are not enough investors, then it collapses. In this case, we start cashing in the SS IOUs, forcing the government to issue bonds to pay those IOUs and thus impacting the debt, and why we need to raise the debt limit to cover the bonds.

We are at that tipping point right now, it will only get worse as the baby boomers retire.

Re:And this too shall pass away.

[funwithBSD]

He is right, we collect about 1/3 of GDP from local to fed.

http://www.usgovernmentrevenue.com/

So we are in line, and even then our debt is far past 16 trillion if you include state and local debts/bonds.

Re:And this too shall pass away.

[jo_ham]

Social security does not effect the deficit at all?

Then why is the President warning us that if the debt ceiling is not raised, we won't make Social Security payments?

With he is lying, or you are wrong.

Give you a hint: future payments are not from invested money, but from current payments by new investors. Grandma and Grandpa are not paid by their money invested over the last 45 years of paying into SS, but by the current payments of their children and their grandchildren. THere is no lockbox.

I.e. how a Ponzi scheme works... Until there are not enough investors, then it collapses. In this case, we start cashing in the SS IOUs, forcing the government to issue bonds to pay those IOUs and thus impacting the debt, and why we need to raise the debt limit to cover the bonds.

We are at that tipping point right now, it will only get worse as the baby boomers retire.

Because the government has borrowed money from SS to pay for things, and thus when the payments need to be made the government needs to pay back what it borrowed... with more borrowing from somewhere else.

Social Security is paid into by those who claim the money back later - it's not something that "costs" the government in that sense, except that they borrowed from it and need to pay it back.

Re:And this too shall pass away.

[rhsanborn]

And that's why we need to balance out the tax system first. The dems aren't proposing a tax increase on couples making less than 250k/year. I think thats a bit low. When you start looking at the super rich like Romney who pays ~10%/year, and since social security and medicare cap, he pays marginally more for that, it seems a bit unfair that he's paying 10% in taxes while you and I pay 30%. But, he's a job creator, right? Apparently, we're just scum. That's the sticking point. The republicans have refused to discuss, until the very last moment, anything that even smelled like more revenues. Yes, we need to cut spending, but we also need to balance revenues, and having a temper tantrum and saying they refuse to play isn't productive. WORSE, the repubs cry for decreased spending, but the moment anyone proposes cuts to their major donors, I mean military, they throw another tantrum cry 'terrorists!'.

By no means do I give dems a pass.They refuse to consider anything that even looks like a reform in medicare or social security. Some people need to pull out Simpson-Bowles and have a real discussion about long-term deficit and tell people to take the giant wet teats of lobbyists out of their mouths and do their jobs.

Re:And this too shall pass away.

[jo_ham]

So, I'm not getting it. Funneling even more money into the government, where it has been proven to be wasted, is somehow better?

Well it's certainly wasted where it is now. Hoarding the money in tax havens and other such things essentially makes it useless to the economy. You want it to circulate through the economy to keep it working. Large spending programs are a way to do that (science and tech, education, welfare, infrastructure etc) by creation of jobs.

The other option would be considerably increased wages across the board and a vast increase in the minimum wage - the average wage for the middle class hasn't really moved in decades (proportionally to the cost of living), unlike the compensation for the super wealthy, which has skyrocketed. Great for them, but at the cost of stagnating the economy.

There's no simple answer, but low taxes on the wealthy is certainly not among the right options. It just siphons money away from where it does any good. It's like reducing the amount of blood you circulate in your body, keeping a large volume of it in a separate body that you can't use.

Re:And this too shall pass away.

[rhsanborn]

Agreed, we could all due to pay higher taxes to pay for the services we get. The Bush tax cuts weren't paid for. It was assumed that the magic Reagan sauce (which didn't work for Reagan either) would invent magical dollars and trickle down and all that. It didn't. So, yes, we need to increase taxes across the board. But, I think it would be way more palatable if we dealt with the inequities first. I think 250k is too low a threshold. Those people make their money from payroll generally, and are paying a progressive rate. It's people like the Buffets, and the Romneys, who are making 1 million+ generally from investment income who are paying 10% or less. That's a gap, that's a failure. But, of course, they are the noble job creators, right?

Re:And this too shall pass away.

[rhsanborn]

You're right. I think both sides are bit blind. I personally think the right is more blind than the left, and grossly unrealistic about what taxes are currently, and have been historically. We pay relatively low taxes for a first world country. But I do agree, this wouldn't be dragged out this way if there weren't people on both sides screaming in the ears of the legislators that they won't accept one inch of compromise.

We are actually lucky Obama is in his second term, it historically gives him more leeway to compromise because he doesn't have to prepare for another election. There is speculation that both sides, but the repubs especially would like to see the tax cuts expire, because then they wouldn't have voted for a tax increase and therefore wouldn't have violated their blood pact never to ever even think about once raising taxes (or Jesus might hate them), which they can then cut after the fact and call it a compromise, blame the big bad dems, and never had to violate the letter of their little agreement.

Re:And this too shall pass away.

[Drakonblayde]

You are grossly missing the point.

The point is that the amount being paid into social security by current workers is not equal to the amount going out each month, and it's only going to get worse as the next generation of retirees approached retirement age.

That would be bad enough if the government had just treated Social Security as a big old piggy bank and never done anything to grow the payments coming in. Besides that basic logistical flaw in Social Security, the government compounded their stupidity by using the money for stuff other than social security payments.

The federal government spends more than it takes in. Now you may be naive enough to believe that all that revenue gets put back into Social Security and that we only borrow for everything else, but the truth of the matter is that the payments going out to granny and gramps come from borrowed money just because the money isn't there anymore. And in order to make up the shortfall, the government has to borrow even more money!

And you think Social Security has a zero effect on the countries debt generation?

You know, I can't wait until these bleeding heart liberals who are defending social security so closely are old enough to actually collect and need it. When they find themselves getting a fraction of what they paid in (assuming the entire system doesn't collapse in on itself before then) and they need to go smile at people at the front doors of Wal-Mart, I suspect their opinions on Social Security may change somewhat.

I would gladly let the government keep everything I've ever paid into Social Security to date, without taking any benefits from it, ever, if they would let me opt out from this day forth. Just keep borrowing to cover the current payments, and when those folks die and their benefits are no longer on the books, we'll be able to disengage from the horribleness of the program and actually start paying down on the debt it generates instead of snowballing it.

On the other hand, that would reduce government revenues, and we can't have that, oh no

Re:And this too shall pass away.

[foniksonik]

Here's the rub. You stop paying to keep people above poverty levels and they start to get sick. Sick from poor infrastructure, sick from poor nutrition, sick from lack of preventative healthcare, sick from poor working conditions, sick from poor housing conditions, sick from poor education.

Soon you have a sick impoverished population that can't work, can't produce and requires increasing levels of emergency care. Soon the sickness begins to spread up from poverty into every class. Unemployable populace leads to a lack of demand leads to unemployment in all sectors leads to lack of demand and so on into full blown depression. The job makers can't make jobs if there's no demand, so they just keep their money which leads to a lack of liquidity and no money market which then prevents anyone who can find demand from borrowing. No demand, no liquidity, no productivity, no economy.

So go ahead and stop providing a basic level of prosperity. See what happens.

Re:And this too shall pass away.

[TFAFalcon]

Sure the Republicans are willing to slash government programs, but only those that benefit the majority. They are completely unwilling to slash things like defense, which is just like a black hole- the more you spend the more it will want to just maintain it's arsenal.
And since the Republicans are unwilling to raise taxes for anyone - even people that are exploiting the loopholes you mentioned, the debt will continue to go up.
Now the Democrats aren't much better on the spending front - cutting a bit of everything, but not enough to balance the budget on it's own. However they do want to raise revenues by not extending some of the tax cuts on the rich, so they may eventually get to the point of having a balanced budget (perhaps even before the heat death of the universe).

Re:And this too shall pass away.

[Charliemopps]

And you realize that every first world country in the world is currently in the middle of a huge financial catastrophe mostly brought about by huge amounts of public and private debt? Your argument is like my wife telling me we should take that trip to Cancun because all of our neighbors are in foreclosure to. You take for granted that our government needs to spend money on the things you see every day, and you don't question it. We have aircraft that cost over a billion dollars each. Think about that. We still have over 50 military installations in Germany... just in case the Kaiser rises from the dead or something. FIFTY. We subsidize farmers to NOT plant corn and leave fields fallow. My father owns some acreage that a farmer rents from him but never plants. He's renting the fields to collect subsidies not to plant. Think about THAT. This is what happens when the government has too much of the public's money.

Re:And this too shall pass away.

[TFAFalcon]

But in a Ponzi scheme there are no assets. The government has 'invested' all those early SS contributions. So why not sell off a few of those investments to pay back the people who are now expecting some return for their SS payments? I'm sure China would be happy to buy an aircraft carrier or two and there should be plenty of buyers for the drones and stealth fighters.

Re:And this too shall pass away.

[Rockoon]

Why are you against voting for a Democrat when a Republican held the country hostage?

Maybe because that extra $1000 per year in taxes he is going to have to pay was a tax cut given to him by the Republicans, not the Democrats.

We hear it all the time that the Bush tax cuts were for the rich, but this guy right here who is squarely in the middle class is looking at a 2% tax hike when those Bush tax cuts phase out.. because the claim that the Bush tax cuts were for the rich was always just a lie repeated again and again by Democrats.

Between Federal, State, and Local government spending its scheduled to be $6.3 trillion in 2013. Thats over $47000 per household. Think about that for a moment. $47000 per household. Thats the actual number, folks.

This guy you are replying to makes $50000 per year. Compare $47000 to $50000.

Its a spending problem. Its a flat-out lie that its a taxation problem.

Re:And this too shall pass away.

[nedlohs]

Define "sufficiently economically free", or is it a moving definition set somewhere above max(min(economic_freedom(A), economic_freedom(B)) for A and B that have faught a war with each other?

Re:And this too shall pass away.

[nedlohs]

NO. The republicans and the ~50% of the people who voted republican are "holding the country hostage". Of course they would say that the democrats and a bunch of crack mothers are holding the country hostage and leading us to financial ruin. That's really the problem.

It's no where near 50%.

The current bunch are still the leftovers from 2008 and 2010 (and 2006 for senators), right?

http://www.census.gov/compendia/statab/cats/elections/voting-age_population_and_voter_participation.html has numbers for "U.S. Representatives" I'm going to assume they mean that and that they aren't counting senate votes. In which case the voter turnouts 53.3% and 37.0% of the voting age population actually voted for the (including the senate would make the number "worse" since 2006 wasn't a Presedential election year and hence a turnout of 36%).

If we assume the votes really are 50/50 - we ignore third party votes and that there are more republicans in the house - then we have (0.5*53.3 + 0.5*37.0)/2 = 22.6% of the people being republicans and holding the country hostage, 22.6% of the people being democrats and holding the country hostage, and 54.9% of the people not thinking either side is better enough than the other to bother voting and just being held hostage.

Re:And this too shall pass away.

[Slyfox696]

I think I'd start with Defense spending, which could easily be cut in half, and we'd still have by far the largest military on the planet.

I'd be completely okay with this. But my guess would be the person I replied to would not.

Re:And this too shall pass away.

[SashaMan]

Bullshit. Democrats have a spending problem??!! Yeah, like they were the ones who were leading the charge for two unpaid wars, crazy increases in homeland security spending, and added a huge new unfunded entitlement in the form of Medicare prescription drug benefits.

And Greece? Let's take a look at the European debt crisis:

Greece (and perhaps parts of Italy, too) are the only nations whose problem is related to government spending. Even there, the problem is vastly more compounded by the fact that their debts are denominated in a currency they don't control, and their economy is wholly uncompetitive with the rest of the world. Austerity has been a complete disaster for Greece.

If you look at the rest of the struggling countries, especially Spain and Ireland, they were MODELS of fiscal restraint, and were held up by conservatives as how great your economy can be when you deregulate everything. Of course, then the 2008 crisis happened and the governments were forced to backstop their banks, and now everyone in those countries is paying for it.

Re:And this too shall pass away.

[HornWumpus]

Madoff could have printed Madoff bonds. It would have been bullshit same as the SS trust fund is bullshit and will not help.

They will print money to cover the outstanding bonds.

Re:And this too shall pass away.

[Marxdot]

there are only so many socialist problems in the world that remain to be solved

What do you mean?

The world is gradually becoming more capitalist, and sufficiently economically free countries never ever fight wars amongst themselves.

Yeah, they collaborate with massive businesses to overthrow the governments of 'insufficiently economically free' countries and install rightist dictators who will then give those businesses favourable treatment as foreign investors.

Looking forward to your denial or pallid justification of the above.

Re:And this too shall pass away.

[tranquilidad]

First, regarding comparison of tax rates - you are comparing the effective rate of capital gains taxes vs. the non-effective rate of income taxes. They are not the same though some think it cute to discuss them as if they were. If you want to argue that any income and/or gains you make when investing your after-tax dollars in capital investments should be taxed at the same rate as ordinary income then make that argument but please cut out the nonsense that Romney's capital gains tax rates are somehow related to income tax - something he already paid on his income. You may even get support for treating capital gains the same as ordinary income if you allowed capital losses to be deducted from the equation. However, that was changed back under Clinton and only the first $3,000 of losses can be counted against the current taxes and the rest has to be carried over.

If you think that income on already taxed money that is put at risk to invest in the capital of the nation should be taxed at the same rate as income then make your argument. The 10% vs. 30% numbers you quote given the current tax code is just BS.

Second, the Republicans have not refused to discuss revenue and, in fact, it's the POTUS who has refused to discuss revenue in favor of income tax rates. The Republicans for years have advocated for a simpler tax system - one that broadens the base while lowering rates resulting in higher revenue.

The only legitimate reason for a tax is to raise revenue. We have no business creating a tax system that is designed to introduce artificial market incentives in order to drive societal behavior.

If there's an income tax then everyone with income needs to pay it.
If there's a property tax then everyone with property needs to pay it.
If there's a sales tax then everyone who buys something needs to pay it.

It's the lack of skin in the game for everyone that makes it so easy for those holding elected office to pit one group against another.

The bigger problem is that we have not and will not go back to zero-based budgeting. Once something ends up in the government it stays. While I'd like to think that just getting rid of the waste and duplication in government programs would solve the problem the reality is that we have promised more to ourselves in benefits than we or even the next couple of generations can deliver.

Re:And this too shall pass away.

[Marxdot]

Excuse me sir; did you just imply that the US has an actual left wing on its political spectrum?

Re:And this too shall pass away.

[HornWumpus]

You neglect those of us who deliberately vote gridlock.

Both sides are bad and should not be given free hands.

Re:And this too shall pass away.

[nedlohs]

No, you are part of the two 22.6% groups.

Re:And this too shall pass away.

[HornWumpus]

Elaborate, commonplace and average ploy. Simply collecting all the handouts they can while working off the books.

Re:And this too shall pass away.

[glueball]

Double fucking bullshit.

US GDP is $15T give or take. UNFUNDED LIABILITY is currently $100T give or take and about to increase.

The problem is not how to collect an additional $5T is taxes. It's how to STOP THE FUCKING SPENDING.

Re:And this too shall pass away.

[glueball]

I would gladly let the government keep everything I've ever paid into Social Security to date, without taking any benefits from it, ever, if they would let me opt out from this day forth.

I think you have the first plank of a third party platform.

Re:And this too shall pass away.

[TFAFalcon]

But Madoff didn't have as many assets as the US government has (well at least he hid them well enough if he did). I'm guessing you could sell the White House for quite a bit, and the Capitol building would also probably be worth something.

Re:And this too shall pass away.

[glueball]

Hoarding the money in tax havens and other such things essentially makes it useless to the economy.

Right. Because an investor putting money in a haven keeps it in cash.

What actually happens is that money is put into investment baskets which goes to buying debt in enterprise. That enterprise probably employs you.

It just siphons money away from where it does any good for me. Fuck the rich. .

Just making your point more clear

Re:And this too shall pass away.

[phantomfive]

outperforming us (e.g. Germany still has a successful manufacturing sector, and a positive trade balance).

The US still has a successful, growing manufacturing sector as well, and there is more to 'performance' than a trade balance and manufacturing. If those are the only two things you measure, you're going to get a distorted view of the world.

Re:And this too shall pass away.

[phantomfive]

Seriously? You think the tax rate caused the great depression? Please, I'd love to hear the mechanism by which you think that happened.

Re:And this too shall pass away.

[mesterha]

Hoarding the money in tax havens and other such things essentially makes it useless to the economy.

Right. Because an investor putting money in a haven keeps it in cash.

What actually happens is that money is put into investment baskets which goes to buying debt in enterprise. That enterprise probably employs you.

Or that enterprise buys capital or employs some workers in a third world country. What we have is a tragedy of the commons. Corporations, in order to maximize profits, are outsourcing and cutting wages. To an individual corporation, this makes sense; however, when many corporations do it, they destroy the consumer base that create and buy their products. If every corporation slashed salaries of all their employees, their short term profits might rise, but in the long term who has the money to buy their products. Henry Ford had the right idea, but I doubt a publicly traded company could pull that off.

Re:And this too shall pass away.

[HornWumpus]

Assets are not the issue. It's not an arms length transaction.

Looking at where we are now and it's obvious that this has always been a bad idea.

The outcome is obvious, print money, cause inflation, raise benefits to counter inflation (minus as much spread as you can get away with), print more money.

Sucks to hold non-productive assets in that situation (like treasury bonds). Hold productive farm land and profitable companies.

Re:And this too shall pass away.

[jbengt]

The issue is that SS is required by law to invest its' trust fund In Treasury bonds, and that transfer has not been accounted for as part of the official "deficits".

Re:And this too shall pass away.

[TubeSteak]

While I am not defending the Republicans, your comment is somewhat disingenuous. What the Democrats are preparing to do is as dangerous as what the Republicans have in mind -> take out yet another loan in your name, and let it accumulate even more interest.

Interest rates on Treasury bonds have gone negative.
For every $100, bond purchasers will be getting back $99.
With that kind of interest rate, I'd love it if someone took out "yet another loan in your name, and let it accumulate even more interest"

Re:And this too shall pass away.

[Areyoukiddingme]

Answering that question requires writing a book, if you want comprehensive coverage of all local jurisdictions. It gets absolutely absurd. If you continue to ignore sales tax, states like New Hampshire and Oregon look very whacky, because they have no income tax.

I'm not familiar enough with the state and local tax situations of western Europe to be able to say. I would guess the numbers we hear out of Europe are similar to the ones I quoted, i.e. they omit state and local, so if you add ours in, you'd need to add theirs in as well. And you'd have to ignore oddballs like New York City and London, where they're trying to drive behavior by adding a huge car commuter tax.

Ask a European.

Re:And this too shall pass away.

[loneDreamer]

A quarter is probably more than enough for defense. Offense on the other side..

Re:And this too shall pass away.

[volmtech]

Our military spending is the largest jobs program in the world. Cutting it in half would eliminate three million high paying jobs. Every congressman, Democrat and Republican, has some of those jobs in his district. They are never going to cut military spending one dime.

Re:And this too shall pass away.

[volmtech]

You don't think the Somalia's and Afghanistan's ethnicity and religion have any thing to do with that?

let the cuts begin

[Anonymous Coward]

we spend trillions on many useless things - I'd be willing to wager quite a lot that most of these spending cuts won't amount to much for the majority of the population...and, we need to scale our military to what is prescribed by our constitution - a defensive force - some drastic cuts are needed there (spread over a few years to avoid a major shock to the system)

Re:let the cuts begin

[SternisheFan]

Do you wonder, like I do, that the whole fiscal cliff thing is really just some bit of choreographed acting job? It had all the drama, tension and suspense of an action movie. And a last minute, down to the wire, happy ending. Gosh, makes a person feel like our representitives are really sweating for us, and their large salaries/perks. I feel so-o safe in their capable hands.

Re:let the cuts begin

[MaerD]

Congress built the cliff, willingly walked out on to and then stood around arguing about how to get down while half of them were trying to saw themselves off of it Wiley Coyote style.

Every single person (regardless of party affiliation) who voted *for* this charade in the first place should be voted out of office. Maybe the next person will get the message that you can't fool all of the people all of the time. I don't particularly care if we keep the same party in the seat, just change the person.

Re:let the cuts begin

[19thNervousBreakdown]

Yeah, they probably would get the message pretty quick. But let's be real here, we're not going to send that message. To keep their two-party system going, they don't have to fool all the people, just 67% of them (at worst). Which, as it turns out, is pretty easy.

Re:let the cuts begin

[ducomputergeek]

I think both sides realize there has to be some real spending cuts, but neither side wants to be the party that fesses up to it. So with these automatic cuts, what needs to be done can be done and both sides can continue to blame the other.

Re:let the cuts begin

[rhsanborn]

The GDP of the US is 15 trillion. Cutting 1 trillion would definitely be noticed. We are currently borrowing that money and pumping it into the economy through the government. Eliminating that is the equivalent of eliminating the share of the economy born by 20 MILLION people. Or, to think of it another way, it would be like raising the unemployment from it's current 8.2% to almost 15%.

Note, I think there is value in moving toward a balanced budget, but it needs to be done carefully and deliberately. For example, it would be much less painful if many of those cuts came from over seas spending, like foreign wars and military bases. But that doesn't account for a trillion dollars. So, reductions beyond that really do take that money out of the economy (albeit in the short term, because it's debt, we are definitely taking that money out of the economy, we're just doing it in the future, rather than now).

Re:let the cuts begin

[HornWumpus]

The one trillion doesn't magic it's way into existence.

Printing money doesn't increase wealth.

The printed money is just reducing the value of all the other money.

Re:let the cuts begin

[ultranova]

Maybe the next person will get the message that you can't fool all of the people all of the time.

You don't have to. It's quite sufficient to fool them the split-second their brain spend deciding whether to treat a discussion as a way to decide what's the best course of action or a tribal battle.

Think of it like Martial Arts Bullshitting: even if they're smarter than you, if you know their psychological weaknesses you can turn their own intelligence against them by having them rationalize your argument rather than pick it apart. Sidestep the charge, deliver a little tap on the right nerve to shut down critical thinking for a while, and twist their arm behind their back. Of course they could just break free anytime, but it hurts too much to do so. BSAikido, if you will.

Never think a politician is stupid just because he's saying stupid things. He's simply accepting appearing that way to you to put someone else under his spell.

Re:let the cuts begin

[DeadCatX2]

I'd be willing to wager quite a lot that most of these spending cuts won't amount to much for the majority of the population

It will take some time, but it will amount to much, I think.

Part of the problem is that we have too many people and not enough valuable work for them to do. A lot of the "government largesse" is actually unemployment compensation where we pay someone to essentially watch paint dry or some other useless thing. You may think we're cutting fat off the meat by getting rid of these useless people, but that's going to make our "too many people and not enough valuable work" problem worse. (so will raising the Social Security retirement age)

Re:let the cuts begin

[bentcd]

Do you wonder, like I do, that the whole fiscal cliff thing is really just some bit of choreographed acting job? It had all the drama, tension and suspense of an action movie.

Maybe it feels like an action movie from inside the US. Watching it from here across the pond, it's been a comedic farce which is now transitioning into slapstick.

The US congress up in arms about the US congress refusing to fund the programmes that the US congress enacted? Really? Hang on while I nuke up another batch of popcorn! :D

And a last minute, down to the wire, happy ending.

Oh but it's not over is it, it's just been postponed. Again. It is the X-Files of political dramas: plenty of overacting by all involved but we're not going to see any actual plot development this side of the century.

Re:let the cuts begin

[rhsanborn]

Much of this is borrowed money, so, for right now, to the economy, it looks like magic money. It will be noticed if this magic money goes away. I'm not saying it's a solution, but it does need to be handled delicately.

Re:let the cuts begin

[SternisheFan]

Do you wonder, like I do, that the whole fiscal cliff thing is really just some bit of choreographed acting job? It had all the drama, tension and suspense of an action movie.

Maybe it feels like an action movie from inside the US. Watching it from here across the pond, it's been a comedic farce which is now transitioning into slapstick.

The US congress up in arms about the US congress refusing to fund the programmes that the US congress enacted? Really? Hang on while I nuke up another batch of popcorn! :D

And a last minute, down to the wire, happy ending.

Oh but it's not over is it, it's just been postponed. Again. It is the X-Files of political dramas: plenty of overacting by all involved but we're not going to see any actual plot development this side of the century.

Pass that popcorn over this way, would you? We individuals here in the U.S.,that's what we do too, watch the show, and shake our heads. A comedic farce, spot on! The American public has gotten much savvier in areas where they had to rely on blind trust in their leaders doing the right thing. We know the b.s. for what it is now, though the beat goes on, and there are no real consequences for intentionally faulty leaders, we hear the apologies, usually a couple people do get jailtime, but the damage has been done. Individual human greed and lust for power, how do you change those basic human traits? People lie, manipulate and steal in so many areas, and the harm done to the country is tremendous. Politicians are owned by big business, they live to serve their masters, not the people that voted for them, a sad example to the watching world indeed..

I think I'll end my reply to you with a quote I learned this last year:

Democracy does not come from government. Democracy comes from the people.

Woohoo!

[Anonymous Coward]

Happy Fiscal Cliff, everybody!

Remember Remember

[bobstreo]

All the fine Congress critters and Representatives who managed to screw up something so simple.

In their next election.

Hint:
Vote them out.

Re:Remember Remember

[Jetra]

Tried that. Didn't seem to work. I'm going to vote Ron Paul until he's dead. Then, I'm going to clone him and attempt to get him in office until it is achieved.

Re:Remember Remember

[jhoegl]

The problem is clear.
There are those that "signed" the no new tax vow, which is backed by large money if you break it.
But if you dont, you get that money.
Our congress is in its state because people have been openly bought by the system we have.
It is time to get some laws in there to prevent this shit, or start cleaning house.

Re:Remember Remember

[anagama]

Won't happen due to the district gerymandering.

Over the last 20 years, the number of House districts that swing between political parties has shrunk by two-thirds from 103 in 1992 to roughly 35 today, Silver found. At the same time, the number of districts where parties win by landslides has nearly doubled from 123 to 242.

Today, 55 percent of House members come from districts where their biggest threat is losing a primary election, not the general election. Of the landslide districts, 124 are held by Republicans and 117 Democrats (one is an independent). They have little incentive to compromise. Instead, their incentive is to play to their party base. Making independent boards responsible for redistricting, as some states have done, would be far better.

http://www.nationaljournal.com/politics/america-s-greatest-economic-weakness-in-2012-was-its-government-20121231

Re:Remember Remember

[Anonymous Coward]

All the fine Congress critters and Representatives who managed to screw up something so simple. In their next election. Hint: Vote them out.

A majority of the House of Representatives were ***voted in*** with a mandate to not give Obama everything he wants. By not accepting the President's proposals and forcing the President and the Senate to actually specify budget cuts rather than make an ambiguous promise to cut something in the future, the House is doing what it was elected to do.

Contrary to the President's belief, he was not the only one who won an election in 2012.

Re:Remember Remember

[Anonymous Coward]

The problem is clear. There are those that "signed" the no new tax vow, which is backed by large money if you break it.

Apparently it is not clear given that you are offering the Norquist red herring. The actual problem is that the current plan being offered is quite light on the spending cuts side. We've seen this before, tax increases now, budget cuts promised for later ... however the budget cuts never happen. The House is actually quite reasonable in wanting to see real spending cuts in the current plan.

Re:Remember Remember

[anubi]

We try. Most people seem to vote for those with the most "microphone time", backed by the media. Geez, I get so frustrated on how we sheeple do whatever the microphone men of the media hock up into the little chrome stick.

I have been hoping so much that the internet would offer so many alternatives to the megacorp media that their megadollars would not be able to buy elections. I would much rather see a record of how the politician used his pen and his vote. I note businesses keep records of who keeps their promises ( Equifax, TRW, TransUnion, ChoicePoint, etc. ) and I would see databases of CongressCritters along with their "credit score" of how effectively they serve the public-at-large. A congresscritter wagging his pen for a corporation wanting special-interest law passed to guarantee private monopolization would quickly see his credibility rating zonked. The laws already existing which hold credit rating agencies harmless for defamation of character should be sufficient for holding politicians to their word as well.

But so far, we simply seem like sheep, going wherever the media-men shepherds herd us... including into the shearing room when its friggen cold outside.

Re:Remember Remember

[rve]

There are those that "signed" the no new tax vow, which is backed by large money if you break it.

But if you dont, you get that money.

In the rest of the developed world, if a representative is caught taking money in exchange for political favors, he'll likely go to jail, and certainly lose his job. They don't use the 'lobby' euphemism, and just call it corruption. The person caught offering the bribe likewise.

Re:Remember Remember

[Jeremi]

Hint: Vote them out.

That only helps if you simultaneously vote in somebody else who will do better. Based on the results of the 2010 election, it's clear that simply replacing Bozo A with Bozo B doesn't improve things. It may make them worse, since now Bozo B will spend his freshman year making all the same freshman mistakes that Bozo A had (perhaps) finally learned to avoid.

Re:Remember Remember

[aepurniet]

there was a great question proposed during the founding of this country. does a "good" congressman vote how his constituency wants him to vote? or what he feels is best for the country? that question was also the basis for the founding of the electorate college. voting the former would increase his "credit score", voting the later would increase his "balls score". of course most times these two are not in conflict. especially with two highly polarized parties. i feel that all candidates just tow the party line. (not a recent development). i would be more interested in the "balls score". see HW Bush for a relatively recent and memorable example of "political balls", while it may be good for the country, candidates like that rarely get reelected. its unfortunate.

Re:Remember Remember

[aepurniet]

Bozo B learns right away to not do what Bozo A did, so that Bozo B can get reelected. congressman apply their critical thinking abilities not to the problems of this country, but the problems of reelection. unfortunately a side effect of seeking reelection is casting votes.

Who cares...

[banbeans]

Who cares...
It is all bread and circus anyway.

Solved

[Osgeld]

"After the usual hemming and hawing, horse-trading and partisan hysterics, Congress and the White House have seemingly agreed to a deal to get the country passed the so-called “fiscal cliff.” (Worth noting: The deal has yet to pass the Senate or House — meaning that it is not totally done just yet. But, it does appear to be as close to a done deal as possible.)"

too late slashdot

Even better -

[davidwr]

- first front page /. post of 2013.*

*official /. Standard (???!!!) Time.

Re:Fuck the US

[anagama]

Jeez -- don't give them any ideas. They'll gobble it up with relish.

Fiscal cliff

[girlintraining]

Yes, the fiscal cliff -- the totally preventable budget crisis that we created for ourselves because we couldn't figure out how to work together. And, apparently, still can't. So now our fragile economic recovery is going to be thrown under a bus... because we can't play nice with each other. That's a great way to signal the start of a new year. What next, placing bombs under things with two keys, one given to a republican, the other to a democrat, and then a timer set and they have to figure out how to work together or it explodes? :(

It's stuff like this that make me wonder what the hell is wrong with my country.

Re:Fiscal cliff

[currently_awake]

This is what you get in a country with no leadership.

Re:Fiscal cliff

[Anonymous Coward]

It's stuff like this that make me wonder what the hell is wrong with my country.

It's simple. The electorate views compromise as a weakness, and elects people with similar views.

Re:Fiscal cliff

[jamstar7]

This is what you get in a country with no leadership.

No, this is what you get when you have a bought and paid for Congress. Lobby money bought them, now they're delivering on their promises to keep from raising taxes on the rich and the corporations.

Re:Fiscal cliff

[Jetra]

Why are the good ones anon cowards?

Re:Fiscal cliff

[Billly Gates]

"Yes, the fiscal cliff -- the totally preventable budget crisis"

No, this is exactly a preventative crises aka Greece style 1000x over!

I do not agree with Republicans 100% of the time including the pledge not to raise taxes when you have 160% debt to assets ratios! But this? Yes, the Tea Party said enough is enough and put their foot down saying "If you are not going to be serious grownups and live within your means with no plans to pay it back, then I wont sign the check". That is what the debt ceiling is.

It is not a new budget. It is to pay your existing bill. Every American owes $150,000 each and by not going off the fiscal cliff you are telling your creditors that you wont pay them back! In essence raising the debt ceiling is simply paying your credit card bill by charging to the same company over and over again.

Look at that video above to get an idea averaged out. So on average, we all pay $20,000 in yet owe $150,000 with no plan in site other than ... oh yeah the economy will eventually get better and we all will ahve so much money after the great recession that we can pay it back. Any bond investor would be nuts to invest in the dollar right now.

Republicans are trying to do the right thing and that is do what they were hired for. To put in an ultra conservative mandate in 2010 to stop government and bailouts. Not everyone agrees with this, but I happen to feel Obama is not being serious enough with cuts and republicans know how to talk to the talk but refuse to raise taxes.

We need 5 fiscal cliffs in a row for the next 20 years to dig out of this hole. Seriously, Americans are clueless and watch what will happen next?

Re:Fiscal cliff

[rtb61]

Not to forget. Also allow them to blatantly cheat with overseas tax havens and fraudulent charges so as to off shore profits. They wouldn't need to raise taxes if they just collected on the ones owed both federal and state.

Re:Fiscal cliff

[ub3r n3u7r4l1st]

The debt is an illusion.

Greece's debt are denominated in Euros, not drachmas. The Greeks can't print Euros by themselves to pay them off.

U.S. debts are denominated in U.S. dollars, something our government can easily produce unlimited amounts via the Platinum Coin Seigniorage, and pay it off.

Re:Fiscal cliff

[Billly Gates]

Then you have hyperinflation. We are seeing this now with home prices skyrocketing, food, fuel, insurance, and other services going up. The rich will just get richer and use the extra fake money to raise prices and collect rents off the poor making everyone not them poorer.

You also have a potential situation where bond investors see the value of the dollar going to shit and demanding skyhigh interest rates due to the risk. Then you have to print more and more which creates the rates even higher! A depression will start either way.

You can not engineer out of a debt crises. The only way out is to pay out.

Re:Fiscal cliff

[ub3r n3u7r4l1st]

You are assuming the extra money generated will go to the rich. A proper full employment social program and expansion of infrastructure spending will ensure money flows to the bottom of the ladder.

We don't need bond investors, as there is no need to borrow money anymore. We can issue "ceremonial" or "souvenir" bonds, and the interest rate at OUR choosing. Either pay or leave.

I suggest you to read the following article about the illusion of the national debt:

http://neweconomicperspectives.org/2012/12/americas-deceptive-2012-fiscal-cliff-part-2.html#more-4107

We have enough natural resources to cut off our imports. Then we can also utilize our world's strongest military to nationalize resources around the world for our interests.

Saying "the only way is to pay out" is the same is subduing yourself for being raped by the international bankers.

Re:Fiscal cliff

[quantaman]

But this? Yes, the Tea Party said enough is enough and put their foot down saying "If you are not going to be serious grownups and live within your means with no plans to pay it back, then I wont sign the check". That is what the debt ceiling is.

Except the middle of an economic crisis is a really bad time to suddenly get concerned about the dept (why weren't they around in the Bush years?), particularly if your attempt at austerity causes the economy to go into recession, the tax receipts to plummet, and the social safety net to balloon.

It is not a new budget. It is to pay your existing bill. Every American owes $150,000 each and by not going off the fiscal cliff you are telling your creditors that you wont pay them back! In essence raising the debt ceiling is simply paying your credit card bill by charging to the same company over and over again.

...

Any bond investor would be nuts to invest in the dollar right now.

Apparently the market disagrees with your assessment since treasury bonds are at record lows. All those people are apparently convinced they're going to get paid back, as someone with faith in the market I tend to take their word over yours.

Republicans are trying to do the right thing and that is do what they were hired for. To put in an ultra conservative mandate in 2010 to stop government and bailouts. Not everyone agrees with this, but I happen to feel Obama is not being serious enough with cuts and republicans know how to talk to the talk but refuse to raise taxes.

We need 5 fiscal cliffs in a row for the next 20 years to dig out of this hole. Seriously, Americans are clueless and watch what will happen next?

The Tea Party had a bit of a mandate in 2010, but now they've definitely lost it. And it's quite doable to start paying off the dept without a cliff, simply wait for the economy to get going again, then raise taxes, slash military spending, slash healthcare spending, maybe a few other bits, then soon you'll be in the black and paying off the dept.

Re:Fiscal cliff

[quantaman]

Except the big problem in the recession has been too little inflation, which is why the fed started setting inflation targets.

Besides, the US is in an unusually good position wrt to hyperinflation because you're the world's reserve currency (and will be for the foreseeable future). So you can safely maintain much higher dept levels than other countries since there's so many USD out there, and so many parties with a vested interest in its stability.

Re:Fiscal cliff

[Billly Gates]

The same investors bought internet stocks in 1999 and also exotic home mortgage instruments too. This one got laughed off Fox news and was mocked in 1999 when his predictions came true. Here is is talking talking about the economic crises of 2009, back in 2006 saying mortgage back securities are not assets but liabilities.

Anyway the investors trusted Greece too to pay back its loan. I do not buy it that with a 150% debt to assets ratio is possible to payback without major austerity?

True he is just one guy, but I trust those with a track record first and I believe debt should be a liability instead of an asset in the accounting books. Consider I make 40k a year and maxed out my credit cards for -$10k and then claim I have $50k in assets! That is luducrious and a sign of trouble.

For history the UK never recovered from its debt and financial collapse in the depression of 1873 (The 1930s was not the first). America superseeded it as it took 50 years to pay it back and recover when it was too late.

Treasury bonds will be toxic very soon and you can mark my words. Japan made its intentions of printing more money and a crises like that will spill into the US where investors will then ask for their money and both republicans and democrats will refuse to compromise showing them they will not keep their words in seeing their money back. Simple investing 101. It is never a good time to payback to the debtor, but the US technically has been out of the recession for 2 years. That means the bill is due.

Re:Fiscal cliff

[Wildclaw]

Then you have hyperinflation.

No you don't. The bond vs currency balance has minimal impact on inflation. Especially considering what the current bond rates are.

The way that you get hyperinflation is if the currency issuer wants to consume more resources than it can tax from the economy. Considering that the US production capacity is currently underutilized, that is unlikely, outside of governmental collapse or civil war.

Also, the platinum coin itself has no impact on inflation at all. It simply removes the artificial restrictions that prevent the government from fulfilling its debts obligations. (restrictions that are constitutionally questionable I might add)

You also have a potential situation where bond investors see the value of the dollar going to shit and demanding skyhigh interest rates due to the risk. Then you have to print more and more which creates the rates even higher!

Sovereign currency issuers controls the interest rates of their own bonds. All bond traders knows that.

Re:Fiscal cliff

[hierofalcon]

While your value of 150,000 isn't far off according to the debt clock, the actual amount we're currently obligated for via the legislated pensions and entitlements along with the popular debt value that is bandied about and used to get the number you gave comes to something around $86.8 trillion. This is roughly 550% of the GDP. The Wall Street Journal had a good editorial on this a month or so ago.

Re:Fiscal cliff

[Billly Gates]

Then you have hyperinflation.

No you don't. The bond vs currency balance has minimal impact on inflation. Especially considering what the current bond rates are.

The way that you get hyperinflation is if the currency issuer wants to consume more resources than it can tax from the economy. Considering that the US production capacity is currently underutilized, that is unlikely, outside of governmental collapse or civil war.

Also, the platinum coin itself has no impact on inflation at all. It simply removes the artificial restrictions that prevent the government from fulfilling its debts obligations. (restrictions that are constitutionally questionable I might add)

You also have a potential situation where bond investors see the value of the dollar going to shit and demanding skyhigh interest rates due to the risk. Then you have to print more and more which creates the rates even higher!

Sovereign currency issuers controls the interest rates of their own bonds. All bond traders knows that.

Tell that to Europe? Germany had to raise its rates as no bank would touch them with a 10 foot pole. Coins are just coins and its value is what someone might pay at the moment. If people are not willing to trade them for 15,000,000,000,000 then they are useless. To pay off this debt the currency issuer (The FED) will have to consume more and print more money to do so which does not cause hyperinflation. Rather it is hyperinflation.

What will happen is like Greece and Spain the bond holders will start raising their rates based on risk. The only way to stop it is to pay it off with devalued junk money printed off or to match their rates higher. If they want 8% interest, the FED will have to raise rates up to 12%. That would be disasterous but necessary.

Gold and Platnium are nice ways to avoid inflation in a bad scenario but what is best for everyone is to avoid having that happen in the first place by strengthening the dollar.

FYI we can't produce as we can't work cheaper than China. We are underutilized just like what happened with England which never recovered and are moving toward low wage service jobs selling chinese junk and financial instruments to each other. This itself is eating us alive making it worse until we are as poor as CHina and then we can start producing again.

Re:Fiscal cliff

[DrEasy]

If you were truly drunk you wouldn't be posting anonymously! ;)

Re:Fiscal cliff

[quantaman]

The same investors bought internet stocks in 1999 and also exotic home mortgage instruments too. This one got laughed off Fox news and was mocked in 1999 when his predictions came true. Here is is talking talking about the economic crises of 2009, back in 2006 saying mortgage back securities are not assets but liabilities.

Everyone saw the internet bubble bursting, and a lot of people foresaw the housing crisis (though they couldn't guess the year to the same degree). But that's not really relevant since bubbles are due to a completely different mechanism. In modern bubbles mutual funds attract investors through growth, so even if the fund manager knows it's a bubble they can't avoid it since the other funds joining the bubble will cash in on the growth and attract more investors.

But that wouldn't apply to the low fed rates since there's no low interest rate bubble for them to cash in on.

Anyway the investors trusted Greece too to pay back its loan. I do not buy it that with a 150% debt to assets ratio is possible to payback without major austerity?

I don't understand all the mechanisms at work in the Greek crisis (maybe they just didn't anticipate the effects of the 2008 meltdown) but again, very different circumstances than the US.

True he is just one guy, but I trust those with a track record first and I believe debt should be a liability instead of an asset in the accounting books. Consider I make 40k a year and maxed out my credit cards for -$10k and then claim I have $50k in assets! That is luducrious and a sign of trouble.

For history the UK never recovered from its debt and financial collapse in the depression of 1873 (The 1930s was not the first). America superseeded it as it took 50 years to pay it back and recover when it was too late.

Treasury bonds will be toxic very soon and you can mark my words. Japan made its intentions of printing more money and a crises like that will spill into the US where investors will then ask for their money and both republicans and democrats will refuse to compromise showing them they will not keep their words in seeing their money back. Simple investing 101. It is never a good time to payback to the debtor, but the US technically has been out of the recession for 2 years. That means the bill is due.

The problem with trusting one guy with a track record is there's a plethora of pundits, so it's easy to find one who's nailed a couple predictions and shares your beliefs. As for history I'm not sure an economic crisis from 1873 is relevant (if for no other reason than the gold standard). Also note that one of the reasons why Japan's economy has struggled for so long is they never got their interest rates back up.

btw, debt IS a liability, the $10k in your example would only be an asset if you used it to buy $10k of assets, then you'd have $50k of assets and $10k of debt, nothing crazy there. Though the credit card company will consider your $10k in debt an asset, which was one of the causes of the crisis if you default and that asset vanishes. Either was the US is technically out of recession, but growth is still sluggish and Europe is vulnerable to a second crisis, there's a reason why so many economists think going over the cliff is a bad idea.

Re:Fiscal cliff

[Wildclaw]

Tell that to Europe? Germany had to raise its rates as no bank would touch them with a 10 foot pole.

Way to make my point. Germany is not a sovereign currency issuer. Neither is Greece.

Re:Fiscal cliff

[aliquis]

On the other hand your debt level raise very fast to.

So it may make sense to do anything about it.

And as we know both parties can't agree on what that is.

Imho it's rather obvious and I can't understand how so many of the americans are pro what is likely the most beneficial for a very few and likely not for them. But then kind of thinking may be a huge part of your history and culture.

But back in real life the income gap between the rich and the poor is enormous and ever increasing and hence maybe some kind of rebalancing of the wealth is appropriate. Something more even may have made sense when income to was more even. Now there's some who have so freaking much and many which doesn't.

Also taxes on say dividens are lower than on income and if you only get a small income and a huge dividend as your total income you won't tax that much which is rather unfair if you are one of the people with the most money.

Finally imho wealth transfers easily over boarders and taxation systems and as such each trillion you miss in taxation will likely be very hard to get back later and the gap between rich and poor will just increase even more (and the rich will use their money and lobbying to get what's best for them.)

The system isn't really unfair against the rich ..

But then again I'm from Sweden (and we do have huge splits here to considering the guy behind IKEA (which you can't buy stocks in) is Swedish and the guy/family behind H&M is pretty rich to. Not that I've got a problem with that. Imho they are still doing good things for the country I live in. Likely they could had done more but it's not like I feel like we would be better without them and their branding and peoples knowledge where they are from.))

Re:Fiscal cliff

[aliquis]

So it's not really the avoidable budget crisis which risk the fragile recovery.

It's the debt and fed stimulated recovery which really wouldn't be there without them both and an economy which isn't allowed to contract and restructure itself.

Re:Fiscal cliff

[lightknight]

Read what you just read. Read it. "You are assuming the extra money generated will go to the rich. A proper full employment social program and expansion of infrastructure spending will ensure money flows to the bottom of the ladder."

That program will never work as intended, and you know it. You know that it will be corrupted and compromised twenty ways 'til next Tuesday. You may as well have said "and Leprechauns will hand out prizes to the Just."

Re:Fiscal cliff

[fnj]

An interesting point of view. I'm not going to make fun of it, but there are a couple of easily refutable points.

You have the wrong idea of what "nationalizing resources" is. It's when the locals seize the property of those who they see as trying to colonize them. You are talking about "anti-nationalizing". You are talking about building an Empire. It ain't going to happen. There isn't enough military power in ten USAs to do it. Your "world's strongest military" recently hustled itself out of Iraq barely ahead of getting booted out. Now the same thing is happening in Afghanistan. Both are ending up exactly as the USA sought to prevent. That's called L-O-S-I-N-G. One minor country and one den of dirt poor thugs and your "world's strongest military" got its nose bloodied bad and ran home to mama.

Finally, if twice as much money is available to spend, things will end up costing twice as much. Inflation is not a plan, so you can't plan stopping inflation. Not in any more than the very short term. Inflation a natural response.

Re:Fiscal cliff

[fnj]

Except the big problem in the recession has been too little inflation

Try telling that to anyone who actually gets out of the basement to buy food and fuel. They will laugh at that idea, but inside they will be extremely upset.

Re:Fiscal cliff

[quantaman]

Except the big problem in the recession has been too little inflation

Try telling that to anyone who actually gets out of the basement to buy food and fuel. They will laugh at that idea, but inside they will be extremely upset.

The price at the pump is determined by the world price for oil (which is world supply and demand, and the strength of the US dollar). And gas prices have yet to hit pre-meltdown levels, hell, just yesterday I was driving by gas stations surprised at how cheap it was, and I can also remember the prices in '07 and '08 that are higher than anything I've seen since.

As for food it's risen about 1.8% in the past year. Sure you can cherry pick a few items that have gone up more, but there's others that have stayed the same or even gone down. (my grocery bill has definitely gone down, but I've also grown smarter with my shopping habits)

Re:Fiscal cliff

[fnj]

BULLSHIT. I don't care what GOVERNMENT source you find to pull the wool over our eyes. Anyone who actually has to meet food expenses knows inflation has been AT LEAST ten times that figure in the last year.

Re:Fiscal cliff

[aepurniet]

Republicans are trying to do the right thing and that is do what they were hired for.

if spending is 3 and income is 1, then the right thing to do is balance those so s=2, i=2. this is how families do it. the job of the republicans is to decrease both, after they are balanced. democrats have the opposite job, but both parties should be working to shrink the gap right now. maybe im stupid and oversimplifying it, but to me this is a clear goal. after that we can argue about which way we need the government to go.

To put in an ultra conservative mandate in 2010 to stop government and bailouts

without the bank bailouts, everyone's bank balance would be zero. with the bank bailouts, we got to keep our money (yeah i know how it sounds, but i think its a true statement) and the government made a nice profit on those loans. i balked at the auto bailouts, but i cant argue with the result. mostly paid back, and lots of jobs.

Re:Fiscal cliff

[dkf]

I don't understand all the mechanisms at work in the Greek crisis (maybe they just didn't anticipate the effects of the 2008 meltdown) but again, very different circumstances than the US.

The principal mechanism at work in the Greek crisis is the total moral bankruptcy of the relevant political class. The Greek economy was mismanaged for decades, with entrenched corrupt practices. The problems caused by that were usually dealt with through devaluation and other fiddles, but that ceased to be possible with the Euro. (I remember that they did an accounting fiddle just before joining; a lot of people at the time were surprised that they qualified for membership.) The crisis in 2008 was just the trigger for another round of problems in Greece; the real problem is that the economy there hasn't been properly healthy for as long as I can remember (as a result of bad politics). Fixing it is going to make a large number of people exceptionally upset.

More widely, the problems were a general lack of competitiveness for various reasons (e.g., in Spain it was the labor market sclerosis that was the core problem) though time and again it is the politics that is at the core of the difficulties. Overall within Europe, the big problem is that the necessary fixes are always utter anathema to some group or other: countries which have excessive bad debts have to pay things off and put their economies on a sounder footing, and countries which made excessive bad loans (directly or via their banks) need to take a hit and remember that lending is never ever risk-free.

Re:Fiscal cliff

[IamTheRealMike]

Wait, so you admit you don't understand what happened in Greece (which was quite simple), but you're sure it's not the same thing as in the USA? How does that work?

What happened in Greece was that investors stopped believing that the Greek government could pay back its debt. Yields climbed to levels so high that it was practically impossible for them to borrow any more and because they had a massive structural deficit the economy was plunged into deep recession.

If you want a slightly bigger picture, when Greece entered the Eurozone they produced deeply fraudulent statistics about the state of their economy that made it look like a real, honest to goodness first world country. As a result they could borrow very cheaply. Later on it was discovered that the economy was in much worse shape than they had admitted to and that Greece was, to a large extent, actually a third world country posing as something more. As one memorable quote put it, they imported flat screen TVs and exported tomatoes.

I've seen some people posting that if only Greece had its own currency and was not in the Eurozone, the crisis could have been avoided and everything would have been peachy. This is a fundamental error. There is no way to avoid recession in Greece because it is simply the name we give to "the economy fixing itself". The Greek economy was massively distorted by unsustainable government spending, of which examples are legion. Entire government departments that were discovered to exist only on paper. Railway workers that earn more than skilled engineers in other countries do. Etc. The Greek standard of living was artificially pumped on cheap debt for a long time and is now returning to its normal state. A very painful process, of course. If Greece had its own currency the same thing would be happening via a different mechanism - they would print the money needed to pay back their debts, inflation would soar and Greece would have been ejected from the markets for a while, causing (if anything) even faster and deeper depression than what they already have. The Greek people know this which is why they vote to stay in the Eurozone.

The USA is in a somewhat different position because it's much larger than Greece, and the dollar is the currency you need in order to buy oil, which provides an artificial lift. Countries that try to switch to a different currency tend to get invaded. A bunch of other issues too keep the dollar artificially valuable. I seriously doubt there's going to be a Greek-style correction in the USA, but who knows. Maybe we should ask Peter Schiff :)

Re:Fiscal cliff

[hey!]

No, this is what you get when you have a bought and paid for Congress. Lobby money bought them, now they're delivering on their promises to keep from raising taxes on the rich and the corporations.

No, it's definitely NOT what you get when you have a bought and paid for Congress; in that case we'd have some kind of "compromise" that'd keep taxes low on the rich, even if it made the deficit worse. This is what you get when you change the parliamentary rules to disenfranchise the minority party but your own party is so divided you can't enforce party discipline.

In the post Gingrich/Hastert Congress, speakers only allow votes on bills the majority of his party's caucus will back. The speaker doesn't allow votes on bills that might pass because some of his party vote with the minority party. The problem with the 112th Congress is that the majority caucus (the Republicans) are split between pragmatic old-school conservatives and Tea Party radicals. Not to mention those who have reason to fear Tea Party activism in the primaries -- a side effect of gerrymandering safe Republican seats is strengthening radical party elements in a district.

In any case, since the Republicans can't decide on an agenda the majority of their caucus can get behind, and the speaker won't allow measures to come to vote if they'd only pass with a coalition of Democrats and pragmatic Republicans, nothing gets done. The 112th Congress is possibly the least effective Cognress in history, not just failing to pass no-brainer legislation like veterans benefits, but failing to even bring them to a vote. In the end it boils down to one man, Speaker Boehner, whose leadership is so weak there's almost no point negotiating with him. He can't even get his coalition to pass *his own proposals* for dealing with the fiscal cliff ("Plan B").

Re:Fiscal cliff

[HornWumpus]

Have you ever thought through what 'jubilee' would do to the average person?

They would never buy a house or anything else that took longer then 7 years to pay off.

No loans would ever be made that spanned the 'forgiveness dates'.

It's a dumb idea. Almost as dumb as Muslim banking.

Re:Fiscal cliff

[quantaman]

Then give me a reputable non-government source that gives a different figure, or at least explains why the 1.8 figure is BS. You don't get to win an argument simply by typing 'BULLSHIT', implying conspiracy, then backing it up with unverifiable anecdotes.

Re:Fiscal cliff

[quantaman]

Wait, so you admit you don't understand what happened in Greece (which was quite simple), but you're sure it's not the same thing as in the USA?

Ok, if the Greeks stayed with the drachma lenders would have realized the Greeks may get in over their heads and start inflating their currency so they could pay back their debts. As a result lenders would have charged higher interest rates and the Greeks would have restrained their borrowing, they probably still would have had a pretty bad crisis but not to the same degree.

What happened with the Euro is the lenders knew two things one countries don't default on debts, and two, the Greeks couldn't simply inflate away their debt because they didn't control the Euro. Thus they continued to give Greece an interest rate on par with the stronger European economies, assuming that it would get paid back no matter what.

Of course the reason countries don't default is they generally control their own currency and thus can inflate debts away. What I didn't understand (and you don't really explain either) is why the Greek lenders didn't realize this. They may have been working off a US model with multiple governments (states) who are all on the same currency with separate budgets so just discounted a default, maybe they were taken in by the fraudulent statistics, maybe it's simply that Greece was a small nation so you didn't need that many bad lenders to give it money.

But at the end of the day the Euro is the defining feature of the Greek crisis because it's the cause of the scale of their crisis and the reason why they have so much trouble recovering, if you want Greece without the Euro look at Iceland, their currency underwent a huge devaluation, but since then the economy has been growing.

I agree there's a bit of a comparison to Greece since the USD is a reserve currency, so rates might be a bit lower on that account, but the US itself is still a huge economy with the ability to print USD so I don't think the Greek example is useful.

Re:Fiscal cliff

[quantaman]

Without links I'm guessing you're referring to Democratic legislators? If so it was probably just politicizing and not real opposition (the debt ceiling is a bad time to complain anyhow since you've already agreed to the spending)

There's a big difference regardless, during the Bush years the economy was healthy, running a massive debt while the economy is strong is moronic and they absolutely should have been paying it down, running a debt during a recession is simply necessary.

Re:Fiscal cliff

[phantomfive]

Except the middle of an economic crisis is a really bad time to suddenly get concerned about the dept (why weren't they around in the Bush years?),

FWIW the first time I ever heard a Republican call for a new 'constitution' party because the current party had lost its way was shortly after Bush invaded Iraq and we found out he was lying.

The movement really caught steam during the final months of the Bush presidency with many people actively and vocally opposing the TARP bailout of the banks.

It was a few more months though before it congealed to a movement with a name.

Re:Fiscal cliff

[phantomfive]

It's scary to me how many people I've seen recently who think printing more money is the solution to the debt.

Re:Fiscal cliff

[stanjo74]

They can always agree to agree later. Meanwhile the private Federal Reserve is monetizing $40 Billion/month of US debt with no end in sight. Who needs tax revenue when you have a sugar daddy like that.

Re:Fiscal cliff

[shilly]

Mod parent up, insightful

Re:Fiscal cliff

[volmtech]

These bond traders are using other peoples' money to buy bonds. They are using the money the rich have made by off shoring jobs and having tax cuts. If the U.S. defaults on theses bonds we can just consider it recapturing taxes they should have paid anyway, nothing needs to, or will be, paid back anyway. Just keep your cash out of the bond market, silver and gold look good to me.

Re:Fiscal cliff

[ub3r n3u7r4l1st]

You are not getting food or fuel at the right place.

You are not clipping coupons.

You are not exploring available options such as SNAP or food pantries.

If you are not qualified for SNAP, it means you spend too much on unnecessary things, such as entertainment, dining out, cable TV, high speed internet yada yada .....

Are there any vertabrate lifeforms in Washington?

[stox]

If there are, they are surely on the endangered species list.

Platinum Coin Seigniorage (PCS) hack

[ub3r n3u7r4l1st]

The only legitimate solution to the debt crisis. The treasury should immediately mint a $1 quadrillion platinum coin and deposit to the fed, using the proceeds to pay off ALL obligations.

http://neweconomicperspectives.org/2012/12/new-msm-trillion-dollar-coin-wave-heres-the-big-story.html

Read carefully if you still believe that will be inflationary. For those who don't want to be "otaku" on those subjects, in one sentence: Debt repayment by PCS will not be inflationary. Starting new spending is inflationary.

By doing so, the power of the Federal Reserve ( to inflate money supply) is stripped and going back to the government, exactly what Ron Paul has tried to achieve.

IMHO, the PCS Hack gives to the presidency the power to prevent an abuse of power by the Congress, namely the debt ceiling legislation itself, and also gives the President the power to avoid interest bearing debt instrument-based financing of Congressional deficit spending appropriations if he/she desires. I think both of these are very good things, especially since the key power of controlling the purse strings still remains with the Congress, and not with the President. It seems to me that any greater leverage that falls to the President as a result of using PCS is leverage that can always seized back by Congress anytime it wants to do its collective job and represent the majority of the American people. On the other hand, if it wants to continue to represent narrow and plutocratic interests seeking to block any Federal spending that doesnâ(TM)t directly benefit them, then PCS profits may be viewed as a check on such an abuse of power by the Congress, and a reminder to Congress that the âoehow are we gonna pay for itâ excuse for not legislating Federal programs people desperately need won't work anymore!

Re:Platinum Coin Seigniorage (PCS) hack

[Anonymous Coward]

Playing slight of hand with money is exactly how you ended up where you are. Doing more slight of hand may postpone the inevitable for a bit, but I wouldn't rely on the ability of anyone to 'fix it' if it isn't an immediate problem.

Re:Platinum Coin Seigniorage (PCS) hack

[swillden]

Debt repayment by PCS will not be inflationary. Starting new spending is inflationary.

Bullshit.

Even if we ignore the complex -- and I suspect fundamentally specious -- arguments about how debt repayment won't be inflationary, it will cause new spending. Magically retiring all of the existing debt will erase any incentive for Congress to even pretend to ensure tax revenues meet expenditures. Why bother, when they can keep wallowing in pork and just rely on more magical PCS hacking to erase their debts?

I think the argument that debt repayment won't be inflationary is crap, too, but anyone with a brain has to see that it will stoke the furnace of new spending, guaranteed.

Re:Platinum Coin Seigniorage (PCS) hack

[Jeremi]

The treasury should immediately mint a $1 quadrillion platinum coin and deposit to the fed, using the proceeds to pay off ALL obligations.

... and then, step two, we sneak into the Mint and steal this coin! We'll all be rich! Rich I say!

Re:Platinum Coin Seigniorage (PCS) hack

[lightknight]

Indeed. The problem with a court filled with magicians who are used to using illusions to get what they want, is that when those illusions begin to fail, the magicians think it's just a matter of conjuring up new ones. No matter how many times you do the nickel or apple trick, if you only have one nickle or apple, you only have one nickle or apple. At which point, you're going to starve.

In other words, it does not matter what the number is that you write on those bad checks, if people have stopped accepting checks. But no, don't let me stop you; some people can only learn through pain.

Re:Platinum Coin Seigniorage (PCS) hack

[orzetto]

Curious, I read it. It demonstrated nothing about inflation, in fact it said "I’ll consider the inflation objection at length in my next post".

However, I don't need a Interwebs wacko to tell me that you can dry water and drink it. If you produce money with no actual wealth to back it up, be it old-style gold reserve or economic worth of the issuing country, it will cause inflation the moment it hits the economic system. Of course if you kept the quadrillion-dollar coin under your bed and told no one, it would cause no inflation as no one would know it existed; but if you use to pay the US government's debts, you have more currency around and no wealth to back it up; by simple supply and demand, value of currency will plummet (there is less than a trillion dollar circulating worldwide), i.e. inflation will boom so much it will make Zimbabwe look like Switzerland.

Even if the quadrillion-dollar coin would not start inflation, it would tell the rest of the world that the US are ready to issue fiat currency to pay their debt: that would start a bank run to get rid of their petrodollars (guess what, there is no fiat fuel, and you would not be able to buy much oil with those petrodollars). See the link above, according to the Fed most dollars are outside the US, a lot of them in the coffers of countries that need to buy oil.

What the US need is not "more" or "less" spending, it is more of the right spending and less of the wrong spending. The US have humongous military spending, which is by definition unproductive (in fact, destructive by its very nature, though the destruction is usually externalised to other countries). Yes, the military also finances R&D, but that R&D would be better aimed for the US economy if it were financed by universities or the private sector with governmental financial support, instead of being trickle-down adaptations of military technology.

The US have too low welfare, with insane amounts of poverty rampaging across the country; these people have no opportunity of becoming productive citizens because they never receive appropriate education. The point is not giving the poor food and shelter (which is of course still necessary), but giving their children good public schools that give them an alternative to crime as the best option for gaining wealth.

Also, there is a disproportionate amount of inmates in US jails. US prisons house more inmates than China, not just per capita— in absolute numbers . All these have to be fed, clothed and guarded, and this is expensive. It is way cheaper to institute education programs to make sure they don't recidivate, but then again some politicians would not look though on crime, which seems to be more important than to be smart on crime. Also, several states outsourced jail management to privates, who are paid by the inmate and have thereby no interest in re-educating their inmates (in fact, they do want their customers to come back!). More government, less market here.

Re:Platinum Coin Seigniorage (PCS) hack

[Kergan]

Even if we ignore the complex -- and I suspect fundamentally specious -- arguments about how debt repayment won't be inflationary.

Read the post he linked to. The bloggers that run that site hold fairly sane views on a number of topics, so give their arguments a chance instead of dismissing on grounds that they're inconsistent with your worldview.

And, by the way, there's nothing inflationary about the Treasury minting $20 trillion to repay its debt in its entirety and secure cash for its next couple of budgets. I admittedly haven't read the linked post's author's reasoning, which I'd wager offers a few insightful remarks; but I can offer you my own remarks.

Consider, for a moment, the useful clue that central banks (not just Bernanke; also the ECB, etc.) actually have printed a few trillions since 2007, and that the only material price increases we can speak of since then are in commodities and stock markets -- which is to say, wall street is blowing new bubbles with the free cash instead of loaning it. Why? One reason is that financial institutions are just as over leveraged and insolvent today as they were in 2007; in some cases even more so. The liabilities and bad loans were merely swept under the rug, waiting to bite us in the ass even harder when hell breaks loose. Another is that they've essentially nobody to loan money to in this economy, except themselves.

Whichever combination of reasons it actually is, the net effect is that the money isn't finding its way into the consumer's pocket, and the consumer's pocket is where official inflation is being measured. If we factored all asset prices into official inflation, we'd probably have been measuring deflation for the past few years. Instead, we mostly look at household expenses like grocery shopping, where money running around after goods has been more or less the same (you stop paying your mortgage before you stop eating), and we thus observe no material price increases except those related to gasoline prices -- which have a lot to do with peak oil and events in the Persian Gulf, and which weed into grocery prices in the form of truck deliveries.

It's tempting to dismiss the latter observation as specious, on grounds that price increases are a mere consequence of inflation, that inflation itself is an increase in the money supply, i.e. that what we're really seeing here is banks sitting on cash hoards instead of handing it over the the public, and shit will hit the fan the minute banks decide to leak some of it to the public.

And I agree... except for the fact that inflation is not an increase in the supply of money; it is an increase in the supply of money and credit. Fractional reserve banking helping, the key creators of money in our economy are financial institutions; not governments or central banks. (As an aside, delve into Steve Keen's research for sane views on how this actually works.) incidentally, the private sector as a whole is currently deleveraging, destroying credit faster than the Fed is willing to print money, and that is why hyperinflationists have been proven wrong again and again in the past few years.

In that light, I'd opine that minting $20 trillion into the economy would have absolutely zero effect if, at the same time, financial institutions are regulated in such a way that they're forced to deleverage by a similar amount. This could be as simple (and in fact, sane) as requiring banks to maintain reserves at 30% of deposits and denying them to count junk like AAA-rated mortgage backed securities as reserves. (And I'd actually suggest that such a move would force them to deleverage be a shit ton more than whatever the Treasury mints.) Anyway, my $0.02 worth.

Re:Platinum Coin Seigniorage (PCS) hack

[swillden]

I notice that you ignored my core point completely.

Re:Platinum Coin Seigniorage (PCS) hack

[Kergan]

Because I agree with it. I've absolutely nothing to add to it -- you're entirely correct. Printing money to extend new payments to new interest groups is indeed inflationary. :-)

The part I didn't agree with was your dismissal of "specious arguments about how debt repayment [by minting money] won't be inflationary." The case for it is not at all specious.

By the way, if you take the time to delve into Steve Keen's research and watch a couple of his videos (e.g. the one he did for Google) per my suggestion, he makes the interesting case that one way to squeeze the excess debt out of the system would be to perform a modern variation of a mass-debt cancellation. In essence, literally printing a few trillions, and handing it over to the public directly but with strings attached: the money must be used to pay down debt if you have any. It would deleverage indebted households, recapitalize banks in the process, and if the handout is large enough, the spending by non-leveraged households could very well generate enough activity to revive the economy, helping the latter two groups further.

Re:Platinum Coin Seigniorage (PCS) hack

[ub3r n3u7r4l1st]

i posted a wrong link.

this is the description how PCS will not cause inflation.

http://neweconomicperspectives.org/2012/12/platinum-coin-seigniorage-issuing-debt-keystroking-deficit-spending-and-inflation.html

Cut the bullshit.

[Seumas]

There aren't ever going to be any "spending cuts".

When both sides talk about "spending cuts", they really mean "instead of increasing spending by a $500 million for this project over the next five years, we're going to increase it by $400 million -- HURRAH, WE CUT $100 MILLION IN SPENDING! YAY!".

Fucking thieving scum.

Re:Screw 'em All! Let's Go Over the Goddamn Cliff

[Billly Gates]

The Tea Party is trying to save America from a horrible meltdown by 2018 aka Greece style with 100x worse due to the US being bigger and having assets all over the world.

Your 401k GONE, Stocks gone, your dollars? Worthless, unless you have gold. The best way to prevent it is to raise taxes and cut spending. It is time we paid the bills. I do not agree with the NO NEW TAXES pledge at all.

Here is how an economist views this. FYI he was one of the few who predicted this recession and told everyone that a horrible crises was coming in 2006 and was laughed off stage. He was right due to looking at debt ratios.

Is it really wise to keep signing a check over and over again like this? Something has to give. Either you have Greece style panic and a 2nd great depression or Bernakke prints money fast and we all have hyper inflation (we are seeing this now in food, insurance, gas, etc).

Spending cuts = job cuts

[elucido]

And with the population increasing we can't afford either spending or job cuts.

Re:Spending cuts = job cuts

[Anonymous Coward]

then by all means continue on the way the US is going for a few more years then you can experience what Greece is currently going through, though without the other larger countries that the Greek have to save them the US will hit bottom and hit it much much harder.

Re:Spending cuts = job cuts

[Seumas]

By the same logic, I should keep buying expensive home furnishings and electronics, so that I don't put the workers all along that supply chain out of business. There are no excuses that, ultimately, save us from having to tighten the belt. That is, if we give a shit about balancing the budget or paying off the debt. Quite simply, we have to stop spending. This isn't rocket science. You tell a fat person to consume fewer calories than their body burns to lose weight and you tell someone with debt problems to STOP SPENDING. Yes, it hurts. That's irrelevant.

On the other hand, we could also just determine that we have such massive debt and that our money actually doesn't mean a fucking thing, so let's just print an endless supply of it (after all, I believe most of our debt is actually owed TO OURSELVES, so we could just wipe that out if we really felt like it).

Either one -- fine. I don't really give a fuck. But for fuck's sake, let's stop going around talking about how important it is to have fiscal responsibility and to be concerned with the budget, if we're never actually going to do a god damn thing about it.

Re:Spending cuts = job cuts

[elucido]

By the same logic, I should keep buying expensive home furnishings and electronics, so that I don't put the workers all along that supply chain out of business. There are no excuses that, ultimately, save us from having to tighten the belt. That is, if we give a shit about balancing the budget or paying off the debt. Quite simply, we have to stop spending. This isn't rocket science. You tell a fat person to consume fewer calories than their body burns to lose weight and you tell someone with debt problems to STOP SPENDING. Yes, it hurts. That's irrelevant.

On the other hand, we could also just determine that we have such massive debt and that our money actually doesn't mean a fucking thing, so let's just print an endless supply of it (after all, I believe most of our debt is actually owed TO OURSELVES, so we could just wipe that out if we really felt like it).

Either one -- fine. I don't really give a fuck. But for fuck's sake, let's stop going around talking about how important it is to have fiscal responsibility and to be concerned with the budget, if we're never actually going to do a god damn thing about it.

It's not a problem to tighten our belt it's a matter of what we cut. I think we should cut the salaries of the highest paid workers because they make more money than they can possibly hope to spend in their life. That lack of spending slows the economy down. The best way to spend the economy up is to spend and shop as much as possible and to balance the salaries a bit so everyone has either enough money from their labor to shop more, or give them money from the government to spend so everyone can buy our products and pay for our jobs.

Re:Vote them out.

[TaoPhoenix]

We actually did, the next batch of critters will have 100 newbies, who are even LESS willing to compromise. The Tea Party has trapped the R side of the Aisle.

Re: choreographed acting job

[TaoPhoenix]

It absolutely is.

I dunno exactly who thought it up, but spending was never a problem for 8 years of "Staying The Course In The War On Terror".

They didn't even have to wait

[Leuf]

Letting a temporary tax cut expire isn't raising taxes, anymore than not continuing to get a Christmas bonus in January isn't cutting your pay. I really have no idea why no one calls them on this nonsense. If you are only interesting in technically not raising taxes then you can play whatever word games you want.

The problem is that Republicans see this as an opportunity to cut every program that they disagree with while continuing to spend just as much or even more on the things they do agree with. This is their opportunity to do with the budget what they can't do with votes or the courts, and they won't accept that their little fantasy isn't possible.

It's all theater

[BenSchuarmer]

Democrats wanted to raise taxes on the rich, but most of the Republicans vowed to not raise taxes.

Now that we've gone over the fiscal cliff taxes have been raised without anybody having to vote for it. The can cut taxes for the non-rich so the Democrats get what they want and Republicans can say with a straight face that they didn't raise taxes.

Re:Our universe is doomed!

[Zemran]

No sir, the universe is fine and the planet earth is happily looking forward to the extinction of the human infestation. If all the insects died tomorrow, all life on earth would die out within 3 months... but if all humans died tomorrow, life on earth would thrive.

Re:Remember Remembering

[MightyMartian]

And then when the first big hurricane, tornado or tsunami of Paul's presidency kills tens of thousands because NOAA has been wipes out, I'm sure you will feel proud of having put an ideological fruitcake in the White House.

Re:Screw 'em All! Let's Go Over the Goddamn Cliff

[Anonymous Coward]

The Tea Party is trying to save America from a horrible meltdown by 2018 aka Greece style with 100x worse due to the US being bigger and having assets all over the world.

The Tea Party is a bunch of hysterical butt monkeys then, because they're obsessed with Greece for some harebrained reason while failing to realize that Greece built their economy on tourism, sold themselves out to international banks and couldn't do anything about it.

We, as you point out, have assets all over the world, and don't have to kow-tow to financiers. We could get in their face, point out that bailout they got, and realize that they exist only to parasitically leach off the rest of us.

Then shoot them. Because they are criminals.

Your 401k GONE, Stocks gone, your dollars? Worthless, unless you have gold.

Gold is worthless unless people want it. I really don't value it that much.

The best way to prevent it is to raise taxes and cut spending.

The President has tried to cut spending. Remember that outrage over Medicare cuts? Or how Romney complained about how Obama was cutting vital US defense spending?

Fuckers don't care about doing things right.

It is time we paid the bills. I do not agree with the NO NEW TAXES pledge at all.

Good. Go shoot that traitor Grover Norquist.

Here is how an economist views this. FYI he was one of the few who predicted this recession and told everyone that a horrible crises was coming in 2006 and was laughed off stage. He was right due to looking at debt ratios.

Is it really wise to keep signing a check over and over again like this? Something has to give.

One of the few? Any Idiot could have predicted it in 2000 when the GBL deregulation bill passed.

Either you have Greece style panic and a 2nd great depression or Bernakke prints money fast and we all have hyper inflation (we are seeing this now in food, insurance, gas, etc).

No we aren't. I admit, I am seeing my insurance company deciding to screw me by switching my roof coverage to value of the materials (ie, they can depreciate it ) from replacement cost, but that's not hyper-inflation.

That's them being greedy dicks.

Same with the rise in gas prices. It's not inflation-driven. It's greed driven.

Re:Did they sign Norquist ?

[MightyMartian]

The Republicans are taking care of Norquist's puppets. The rank and file realize the Tea Party isn't just a cancer on the GOP, it's a potentially fatal one. They realize all to clearly that the only thing that prevented a total loss in Washington was gerrymandering, and with the major demographic shifts occurring even in supposedly rock solid red states, they don't have that long to get their shit together. Norquist will soon be forgotten, Tea Party Representatives will either be detoxed or marginalized.

It may be too soon for GOP hopes for the 2014 midterms, but Norquist-style stupidity has to been by 2016.

Re:Welcome to Cliff year

[PNutts]

12. Cliff Clavin

Teabagger Repubs created the fiscal cliff

[Anonymous Coward]

Please remind eveyone you know that the Republican party were behind the legislation that created this artificial fiscal cliff as an act of political brinksmanship to impose their policies into the budget. Any fallout can be laid at their doorstep. Why the President is negotiating at all is a bit of a mystery to me.

Being a non-Republican conservative, I'm okay with going over the cliff. We need both the reduction in spending and backlash to decimate the extremist Republicans currently in office.

Summary is ridiculously misleading

[butlerm]

The summary is ridiculously misleading. The Senate didn't vote before midnight either. They have yet to hold a vote, although supposedly one is scheduled for about 4:00 a.m. EST. Sometime tomorrow morning the House will reconvene to consider whatever the Senate passes.

Re:Fuck the US

[Austerity Empowers]

Surely you're not paying attention. We'll tell you we don't like that, Jesus wouldn't approve, while a few would meet you in a bathroom stall with a bottle of relish. In response to your public offering, we may decide to invade your country to give you democracy (and Jesus), wherein an unmanned predator drone may choose to eat your dick too.

Re:Screw 'em All! Let's Go Over the Goddamn Cliff

[mdenham]

we all have hyper inflation (we are seeing this now in food, insurance, gas, etc).

Hyperinflation has a specific definition (50% or higher monthly inflation, so ~12,900% annual inflation).

No, we are not seeing hyperinflation. We aren't even seeing inflation anywhere close to what has historically been "high" in the US, except in the healthcare field! Hell, up until this weekend, gas prices were dropping.

The Tea Party is trying to undo everything that made the country great back in the 50s and early 60s. What do you call someone trying to undermine the country?

You're all wrong.

[inode_buddha]

Onan the barbarian developed opposable thumbs in order to whack it better. Imagine what it must be like to fap without the benefit of thumbs. It almost makes you cry, no? But nay, we overcame adversity! Fapping is an essential survival skill, for keeping an even temperament and surviving a partnership in which you're not getting any. Which both are desirable traits for selection in this day and age. Notice how the ladies are drawn to an even-tempered steady mate. How do you think he got that way!? Opposable thumbs of course!

Let's face it -- everyone does it. Every single man that you have ever shook hands with, has fapped with that hand.

Have a nice day!

Impossible to reconcile the philosophies

[PacRim Jim]

There is no common ground. The far-left Democrats who have captured the party believe in spending and taxing. Period. Republicans believe in protecting the middle class from over-taxation, believing that the private sectors better allocates money than do the various levels of government. You can't reconcile fire and water. Try and you'll get steaming ashes.

Re:Impossible to reconcile the philosophies

[fnj]

You are still in denial about the Republicans. Please consider what I believe is a better description of the situation.

The Democrats believe in social spending with taxes to support it. The Republicans believe in social and military spending with nothing to support it. No significant party believes you can just eliminate social spending and consign the disadvantaged to hell.

As an ex Republican leaner (now cured), critical evaluation like that helped me a lot to recognize the insanity on the Republican side.

Re:Impossible to reconcile the philosophies

[ErikZ]

The Democrats believe in social spending with taxes to support it.

No, they don't. They believe in social spending, more every year.

Re:Impossible to reconcile the philosophies

[Rockoon]

The Democrats believe in social spending with taxes to support it.

Current government spending (federal, state, and local) is $47619 per household.

How much more spending do you need? See, we've been hearing this all along.. just some more necessary spending.. and now its $47619 per household, and you still want more.

Re:Impossible to reconcile the philosophies

[Marxdot]

The far-left Democrats [sic] who have captured the party

Republicans believe in protecting the middle class

Mate, I'm sorry to inform you that you're totally fucking mental.

Re:Our universe is doomed!

[Roachie]

Tax the INSECTS!!

Re:Screw 'em All! Let's Go Over the Goddamn Cliff

[Billly Gates]

What did you pay for gas 10 years ago? It went up 300%. How much was your house worth in 1999? My guess is 40% its current value.

That is inflation and why did it go up? Because the fed pumped money into banks. The investors made bank and they used that money to flip homes. Your health insurance company can't make a profit with interest rates near 0%. So they charge you more to make up for the low interest rates. Banks and rich with extra fed printed money just go buy up things like fuel, gold, or loan it back to the government where you pay the interest to them later etc. Gee thanks.

I do not agree iwth the Tea Party 100%. But when you have 15,000,000,000,000 something has to give. Yes, austerity is needed to pay it back. That money wont just vanish. It will be used to invest in small business again. Why should MegaBank invest in your dream home when it can loan it back to the government and be gauranteed paid! You can't compete with the US treasury so your employer can't expand etc. It is classic economics 101 and not this keysenian stuff they try to do today.

I see nothing wrong with saying NO! Show me you are going to pay back and I will sign the check?

A fiscal cliff is A HELL OF ALOT BETTER than the alternative of a currency crises. The US would collapse and I am not exgerating either. Every bank would close with every corporate and personal savings account where 90% unemployment would happen within a few months as each bank would collapse like dominos in such a frightening scenario. The 1930s would not be as bad as debt was not as contagious or as widespread as today. It is too ingrained.

Re:Fuck the US

[arth1]

What country do you live in and how much US foreign aid does it receive?

The myth about USA being so generous needs to stop.

Foreign aid pro capita, 2002 (latest available figures for all the richest countries):
Norway: $1.02
Sweden: $0.61
France: $0.25
United Kingdom: $0.23
Germany: $0.18
USA: $0.13

But Americans give a lot in private, non-government aid, is a usual response. Well, the same year, the average Norwegian gave a quarter, and the average American gave a nickel. Impressive.

Never mind that what USA gives in "foreign aid" quite often is at odds with what other countries consider aid. In 2009, the US gave $2.3 billion in foreign military aid to Israel, by far the biggest post except for Afghanistan and Iraq.

Re:Screw 'em All! Let's Go Over the Goddamn Cliff

[aardvarkjoe]

What do you call someone trying to undermine the country?

I'm pretty sure that the answer to that question is "a politician."

Ladies and Gentleman, I give you...

[Anonymous Coward]

That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

Paying for a war we can't afford and don't need

[Nyder]

What we need to do is stop this stupid war in the middle east and quit wasting our money on such low priorities.

I don't have a problem with a defense budget, I have a problem with a needless war while America can't balance it's budget. This would be like me going and spending my most my paycheck on whac-a-mole https://en.wikipedia.org/wiki/Whac-A-Mole, then eating top ramen and bread because I can't afford better.

 

Re:Fuck the US

[yndrd1984]

Well, I live in the US. I like the ideals that my country was founded on, and the people and culture aren't much better or worse than what you'd find in any other first-world country. But the government - those buggers are so corrupted by power that they'd make the average third-world dictator blush.

So hate on the US government all you want, just realize that most US citizens don't like them either.

Fiscal Cliff?

[Taco Cowboy]

Careen over the fiscal cliff?

Oh, c'mon !

When tomorrow arrives, the sun still rises from the East, tides still ebb and flow, and billions of people still go to work (or looking for work), just as usual.

It doesn't matter if the US politicians have failed to come up with a compromised.

The world still goes on, as usual.

Re:Fiscal Cliff?

[deimtee]

Careen over the fiscal cliff?

That word doesn't mean what you think it means. Unless you mean the US was run up on a beach for the fouling to be removed from its hull. Perhaps you meant (or the Editor meant) career?

It is also used to mean tilt or lean while in motion.
Your definition does seem oddly appropriate though.

Re:Fiscal Cliff?

[Anonymous Coward]

When tomorrow arrives, the sun still rises from the East, tides still ebb and flow, and billions of people still go to work (or looking for work), just as usual.

And your take-home pay decreased by 2-5%. Sure, its _likely_ to get restored over the next few weeks, but you can certainly justify being just as sad about this cliff thing as you would be happy about a 5% raise. The whole "economic collapse" thing is going to be a lot slower, if its even anything more than media hype, but then economies the size of the US generally move slowly enough that the media has forgotten about the causes by the time any effects actually appear.

Re:Fiscal Cliff?

[Kupfernigk]

As well as its meaning of pulling a sailing ship on its side to expose the bottom for anti-fouling or hull repair purposes, the idea of movement in a curve certainly coexisted. I'm thinking of "Lucifer in starlight" by James Meredith:

"And now upon his western wing he leaned;
Now his huge bulk o'er Africa careened
Now the strange planet shadowed Arctic snows"

Re:Fiscal Cliff?

[BlueStrat]

Here's something that might help someone who just truly doesn't understand this whole "fiscal cliff" thing.

"Fiscal Cliff" put in a much better perspective

>Lesson # 1:

U.S. Tax Revenue: $2,170,000,000,000
Federal 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

Do you think bankruptcy can be very far off, with that budget?

Got it?...OK, now...

>Lesson # 2

Here's another way of looking at the "Debt Ceiling":

Let's say you come home from work and find there has been a sewer backup in your neighborhood, and your home has sewage all the way up to your ceilings...

What do you think you should do?

Raise the ceiling, or remove the shit?

This is not rocket-surgery, people.

Those who try to tell you that the government continuously deficit-spending, printing money, and adding to the national debt...especially at the alarmingly-increasing rates seen over the last 20 years...is a good thing and/or nothing to worry about, are either uninformed idiots that have lapped up the propaganda like starving kittens do milk, or are knowingly flat-out lying to you for the sake of ideology and/or politics.

They're insulting you, as they don't think you're smart enough to tell that they're full of shit. All too often, they're right.

Strat

Re:Fiscal Cliff?

[Bill, Shooter of Bul]

Yeah it would be exactly like that, if the government had as little power over the economy as a middle class family. But of course it has much more power than that, so its options are greater than that of the family.

Creating shitty analogies never solved any problem.

Re:Fiscal Cliff?

[cduffy]

Let's say you come home from work and find there has been a sewer backup in your neighborhood, and your home has sewage all the way up to your ceilings...

What do you think you should do?

Raise the ceiling, or remove the shit?

I'll tell you what you don't do: Keep on spending as if nothing was wrong, and simply refuse to pay the collections agents. That's what refusing to raise the debt ceiling does, and that's why it wrecks our credit rating.

It's an entirely irresponsible "solution".

Re:Fiscal Cliff?

[BlueStrat]

Yeah it would be exactly like that, if the government had as little power over the economy as a middle class family. But of course it has much more power than that, so its options are greater than that of the family.

Right, the government can do things that would put a citizen in prison, like print funny-money, and loan money to itself. The problem is, the rest of the world won't and doesn't go along with the fraud.

The rest of the world sees the US print money, sees they're at a point that the US will never be able to pay it's debts, and they raise prices and/or interest rates they charge the US for loans and what they import to the US.

Or they simply won't loan the US any money at all. No cops are going to arrest the US government, but the rest of the world will simply trade with and financially treat the US, it's currency, and it's credit like any other debt-ridden 3rd-world failed economy.

The government can enact all the reality-distortion-field financial/monetary/debt/stimulus/etc policies it likes, but, just as with physics, the physics (and in this case the world of international trade, finance, and currency exchanges) doesn't care if the government passed a law repealing gravity (or prints funny-money)...it will still happily drop it on it's head without a care, regardless.

When the government spends itself into a hole and starts devaluing its' currency as the US has been doing, then other nations, foreign financial institutions, etc, will demand ever-higher interest rates, and eventually refuse to loan the US money at all, which is currently in the process of happening. We're buying our own bonds because of that, like reaching into one pocket and putting that money into the other and believing that gives you more money.

It also means anything we buy non-domestically will have it's price raised to make up for the lost value of the inflated/devalued currency.

Creating shitty analogies never solved any problem.

Good thing I was simply explaining a concept and not trying to solve any problems then, eh?

Strat

Re:Fiscal Cliff?

[BlueStrat]

Let's say you come home from work and find there has been a sewer backup in your neighborhood, and your home has sewage all the way up to your ceilings...

        What do you think you should do?

        Raise the ceiling, or remove the shit?

I'll tell you what you don't do: Keep on spending as if nothing was wrong, and simply refuse to pay the collections agents. That's what refusing to raise the debt ceiling does, and that's why it wrecks our credit rating.

It's an entirely irresponsible "solution".

You've almost got it. However, it's not the debt ceiling causing the "collection agents" (economic consequences) to come. The so-called 'debt ceiling" is simply the amount that Congress has authorized the US government to borrow.

The "collection agents" are other nations, foreign banks and investment houses, etc that raise the interest they charge the US or refuse to loan the US money at all as the US becomes ever-more obviously unable to.pay back their debts, or even maintain the interest payments. They (the foreign banks/exchanges/nations) could care less what the US "debt ceiling" is, if we exceed it, or even have a "debt ceiling" at all.

They're like George Thoroughgood's landlady in the "story part" of the live recording of the song "One Bourbon, One Scotch, And One Beer"

"That don't befund me, 'long as I gets my rent next Friday!"

The US has...what was the number I saw?....Something on the order of $284 Trillion in unfunded liabilities?

And you think that not raising the artificial-and-arbitrary "debt ceiling" is the problem?

May want to re-think that one. Just sayin'.

Strat

Re:Fiscal Cliff?

[cduffy]

And you think that not raising the artificial-and-arbitrary "debt ceiling" is the problem?

"The" problem? I never said it was "the" problem -- but it sure as hell is a problem, and a big one.

The debt ceiling is only used to pay for things that Congress already approved. So -- they're happily passing spending bills, but then by refusing to raise the debt ceiling, they're refusing to pay for the things they already spent the money on.

Your claim that our credit rating is entirely unrelated to the debt ceiling is directly contradicted by (very) recent history -- S&P described their reasoning clearly and in detail when we lost our AAA rating, and a great deal of it had to do with political paralysis: for instance, their prior rating had assumed that the Bush tax cuts would be allowed to expire. Moreover -- to claim that a default on T-bills, which the enforcement of this arbitrary limit would trigger, absolutely will impact our credit rating -- much akin to how a household credit rating can be hurt badly by being in too much debt, but hurts far worse after bills have gone past due.

Sure, we've got problems, but trying to leverage the debt ceiling is the wrong way to solve them.

Re:Fiscal Cliff?

[Hognoxious]

Poetry is hardly a reliable source. The vast majority of it, or so I am informed, is completely made-up.

This is probably the origin of the expression poetic license which is a euphemism for lying slightly in order to make things sound better.

Re:Fuck the US

[will_die]

Foreign aid is not an indication of generosity, the numbers you are using are bad for bunch of reasons they don't include things such as personal gift and spending coming for specific projects that the people who did those numbers did not like
If you want a better and newer numbers look here and other locations.

Re:Fuck the US

[Burning1]

Another issue is that US forign aid often comes with the stipulation that the aid money can only be spent on US manufactured products. So, in many cases it's as much industrial subsidy as it is aid.

Re:Screw 'em All! Let's Go Over the Goddamn Cliff

[fnj]

... trying to save America from a horrible meltdown by 2018 ... Your 401k GONE ...

My 401k was toasted early in the GW Bush years. Nothing more can happen to it.

Re:Screw 'em All! Let's Go Over the Goddamn Cliff

[fnj]

What do you call someone trying to undermine the country?

I'm pretty sure that the answer to that question is "a politician."

Or its current synonym: TRAITOR.

How this will develop in the next 10 years

[hamvil]

Let me tell you how an italian thinks this will develop in the next 10/20 years. People that did not study, that have no ambitions, and that dream only of the next pack of beers will work for the gov for max 2 hours per day out of 8 working hours. People that did study and worked their ass to be good at something (surgery, engineering, you name it) and that are willing to work 15 hours per day will work for the gov 10 of those hours. This is a form of slavery already very common here in Italy where being paid well for being good at something is apparently a crime. I seriously encourage you to change path. I still wonder why you of all people bought this Obama vision.

Re:Fuck the US

[funwithBSD]

Americans are generous, the US is not.

As it should be, personal contributions are a far more effective method of way of ensuring the money goes where people want it to go in times of crisis, not to implement foreign policy.

The "Raise Taxes" Myth

[BlueStrat]

If you raised taxes to 100% for everyone making $68K/yr and up, it would fund the US Federal Government for approximately NINE DAYS!

The top 10% pays over 70% of total federal income taxes. The top 1% pays 40% of total federal income taxes.

Here's a good piece using the government's data and has a nice chart.

http://seekingalpha.com/article/1044651-tax-share-by-bracket-an-update

Let's talk "fairness:" The top 10% of income earners in this country already pay over 70% of federal income taxes, and the top 1% (the rich) already pay almost 40%. Is that not enough? Almost half of those who work pay no federal income taxes. Is that fair? Is it healthy for so few to pay so much, and for so many to pay nothing? When almost half the population has no skin in the game, and another quarter pay only a very small share of total taxes, it is easy to demonize or exploit the richâ"it's called the "tyranny of the majority."

And, do you think the rich will just wait around to have their wealth confiscated? Ask the French actor Gerard Depardieu. When the rich move their wealth and themselves out of reach, who do you think the government will come after for their tax-money "fix"?

Strat

Re:The "Raise Taxes" Myth

[rhsanborn]

The top 1% control 43% of the wealth of the nation. ...gosh, that's awfully close to the amount of income tax they pay. Shit, don't let that get out, it might hurt their pity party.

Re:The "Raise Taxes" Myth

[BlueStrat]

The top 1% control 43% of the wealth of the nation. ...gosh, that's awfully close to the amount of income tax they pay. Shit, don't let that get out, it might hurt their pity party.

That's all fine and good for the "get those rich guys and TAKE what they have!" crowd of useful idiots that socialists and communists stir up by appealing to envy and greed, but it still doesn't address any of the points I made, now does it?

Is it fair that half the people who vote on taxes don't pay any, and another quarter pays a relatively very small share? Why should they care if the tax rate is ridiculous?

That's mob-rule, nothing less. That's armed robbery by the non-taxpaying majority using the government as the stick-up man and fall-guy.

You also didn't have any answer for this:

And, do you think the rich will just wait around to have their wealth confiscated? Ask the French actor Gerard Depardieu. When the rich move their wealth and themselves out of reach, who do you think the government will come after for their tax-money "fix"?

Also, see all the rich that are fleeing NY and CA, many of whom are choosing to leave the country altogether. Corporations have been fleeing for decades now, and now it's coming down to individuals. Do we wait until there is no manufacturing, no jobs, and no investment capital left before we decide that, just maybe, raising tax rates...yet again...on the minority actually paying taxes in order to redistribute it to others who do not pay taxes is not the answer?

I'm sorry, but even the simple math doesn't work. There's no way that raising tax rates can bring in enough revenue to sustain the current government spending, unfunded liabilities, and entitlements at anywhere near their current cost without a collapse.

Even if the Democrats raised all the tax rates they want, by as much as they want, unopposed by anyone, it would still be a drop in the ocean and have no real effect on the fiscal collapse that's in our near-future if major cuts, like 20-30-40% or more in government spending, are not instituted post-haste.

Besides, hell, even _*I*_ have a better track record than Timmy "TurboTax" Geithner does!

Strat

Re:The "Raise Taxes" Myth

[BlueStrat]

Would it be more fair if we didn't give them the right to vote, if laws could be passed and implemented without their input?

How about more people pay taxes, even if it's a very small amount, so they too have skin in the game and the curve of tax rate progression could be shallower for everyone? That way, everyone shares the pain when they vote for those who advocate for tax rates to go up.

But, that would throw a monkey-wrench into politicians buying votes, wouldn't it? Good lord, politicians might have to actually win election based on their own merit and track record rather than promises of free stuff! Disaster!

Even if the Republicans cut taxes all they want, and spending, unopposed by anyone, it would not solve any fiscal issues

Tell it to JFK. And President Harding.

There's a word for your ideas....let me think...

Oh, yeah!

"Wrong."

Disproven again and again throughout US history.

Forgivable, though. You're probably a victi...err...a product of the modern US "educational" system.

Happy New Year! :)

Strat

Re:The "Raise Taxes" Myth

[Areyoukiddingme]

If you raised taxes to 100% for everyone making $68K/yr and up, it would fund the US Federal Government for approximately NINE DAYS!

Bullshit.

Apple corporation is a person making more than $68k per year. Apple corporation makes $8 billion per quarter in profit. Tax them at 100% and you just paid 1% of the federal budget for the entire year. (Actually 1.4%. $32 billion / $2300 billion.) Do the same to the remaining 99 companies in the Fortune 100 and you have now paid for the entire federal budget, and we haven't even gotten into the Fortune 500 yet, let alone natural persons.

So you can stop repeating that stupid lie you heard on Fox News. Simple arithmetic a 5th grader can do demonstrates it's a lie.

Meanwhile you're whining about the alleged "half the population has no skin in the game", which is also a lie you heard on Fox News. I know, because they're the ones who are promulgating that specific phrase. First, they do pay taxes. Tons of taxes. We've been over this. Sales tax, personal property tax in states that have it, state income taxes in states that have it, driver's licensing fees, vehicle licensing fees, et cetera et cetera ad infinitum ad nauseum.

But aside from that, who cares? You can't get blood from a turnip. Fox News proposes squeezing a turnip to try to get blood from it. You will get no blood. All you will do is crush the turnip. A crushed turnip is a dead turnip.

Stop advocating killing poor people, you sorry stupid pathetic excuse for a human.

Re:The "Raise Taxes" Myth

[phantomfive]

Even if the Democrats raised all the tax rates they want, by as much as they want, unopposed by anyone, it would still be a drop in the ocean and have no real effect on the fiscal collapse that's in our near-future if major cuts

No, because a lot of Democrats are talking about instituting a national VAT tax (aka sales tax), which will essentially hit where the income is, at the middle class.

Re:The "Raise Taxes" Myth

[Graymalkin]

Where are these rich people going to go? Almost every other first world country to which they can flee has higher tax rates for the wealthy than the US. They can flee to third world countries where they can spend most if their wealth trying to give themselves the luxuries of the US and then the rest hiring private security to protect those luxuries.

You need to cure yourself of the belief that if you don't suck up to the rich that they'll just up and leave and take their money with them. Even with slightly higher tax rates the truly wealthy have it better here than just about anywhere else in the world. They'd still have lower tax rates than most of Europe.

Re:The "Raise Taxes" Myth

[Dan667]

the rich need government more than people that don't have very much. The rich also disproportionately benefit from government services including things like educating their employees and using roads. That ads up to the rich not paying their fair share. And if you are at all concerned about the economy taxing the rich a hirer rate is good for the economy as they rich will not just sit on their money and actually invest it / risk it.

Re:The "Raise Taxes" Myth

[lexman098]

How much do you expect them to pay? They don't have any money and they already pay sales and payroll tax etc...

No one is going to put forward a useless, but symbolic bill that requires people making 20k to pay like 100 dollars in income tax. They'd have "skin in the game", but it's pointless and political suicide.

Totally predictable

[tiqui]

The nation is severely divided because about half the population wants the small government the Constitution provides, and the other half thinks the Constitution is an out-dated obsolete document and wants the government to do everything the majority wants; these positions are not reconcilable and the smaller government people have just recently realized that the bigger government people will never compromise (no proposed compromise ever includes smaller government or government at least not getting any bigger ..... EVERY proposal by Harry Reid and President Obama has included GROWTH and TRILLIONS in new debts being heaped upon our kids and grandkids)

In previous generations, such impasses were much less severe because government was smaller and involved in less of our lives; A citizen might not like some of the things Jack Kennedy or Ron Reagan did, but most of those things had no direct impact on the citizen, who could ignore stuff and go-on with his life. Now, however, government is so huge and so involved in everything .... and president Obama is using it to force his beliefs and positions onto his opponents. Obama is leaving his opponents no way to peaceably disagree with him and ignore him. He has forced government into our healthcare, into religion (both with HHS mandates and "gay marriage") and much further into things like energy resources than previous presidents did. Under Obama, the very air we exhale is not regulated by the EPA and while they are only using that new power to kill-off the coal industry and try to slow natural gas, the power and the precedent they have set has no natural limit that will keep them from regulating everything from cow farts to bad breath. If your religious beliefs are that artificial birth control is wrong (not my personal position, but a good example), then under Kennedy or Reagan you'd not be forced to use it or to provide it for anybody else (though others might well have the freedom to get and use it) but Obama is now demanding you give-up your beliefs and provide it to others. In the past, two Americans who disagreed on that subject could agree to disagree .... but under Obama, the government is forcing one of them to violate his beliefs and pay for the other. Before somebody tries to claim he is being forced to subsidize religions he disagrees with, allow me to point out that a tax EXEMPTION is NOT the same thing as funding... a tax exemption is simply allowing some person or organization to keep his or its own money; the federal government has never required all citizens to, for example, pay tax dollars to a Methodist or Catholic church. I am not Catholic and I would be outraged if the government was requiring me to fund the Catholic church .... but I have no problem with the Catholic church being tax exempt; the government has no claim on their money. That's how such disagreements USED to work in the US. Obama supporters might think this idea of the federal government forcing people to buy stuff they find objectionable is really great (now, while their guy is in office), but they'd be outraged if G.W.Bush had ordered every American to buy every Rush Limbaugh book or buy something REALLY objectionable like CDs of country music ....

Re:Totally predictable

[rubycodez]

there is no such large group that wants a small government. The Republicans want a huge government in the pockets of mega-corporations, the Democrats want a huge welfare state. Meanwhile, those with the government in their pockets can make money either way.

Re:Fuck the US

[mwvdlee]

It has as much reliability as a penis-size survey.

Re:Fuck the US

[jandar]

So hate on the US government all you want, just realize that most US citizens don't like them either.

If you don't like something you don't vote for it. Most US citizens vote for the two major parties so they seem to like them. There are other parties to vote for so there is no excuse.

Re:The day the liberals wake up ...

[Anonymous Coward]

The thing is - debt, and the size of government and military, always expands more under conservatives.
Conservatives talk about small government, but they still want a secret policeman in every bedroom. They are by definition a dead end.

Please grow some gray matter

[tiqui]

"Republican party were behind the legislation that created this artificial fiscal cliff as an act of political brinksmanship to impose their policies into the budget"

Not so much. President Obama had borrowed and spent more money than any president in history and he maxed-out the national credit card. When he came back for more money and demanded a rise in the "debt limit" (the limit on the national credit card) they insisted on some assurance he would cut back on the spending so there would be something left for the grandkids to inherit. As part of the compromise that gave him a higher debt limit to allow him to get through the 2012 election cycle without a government shutdown, Obama demanded the massive defense cuts in the sequestration package .... and Obama has been demanding for four years now that the nation must end all the Bush "tax cuts for the rich" (which were actually tax cuts for every taxpayer) .... and all the new healthcare taxes are part of "Obamacare". In summary: Almost everything that is part of the so-called "fiscal cliff" is something Obama demanded .... and that's why the Republicans have not been able to make a deal with him (if there's no deal, most of what happens is what he wanted in the first place).

Re:Please grow some gray matter

[Todd Knarr]

That's an odd position to take given the actual budget numbers. I collected some of them here. What's odd is that every Republican President since 1976 has presided over a larger year-to-year increase in both the debt and the deficit than the worst Democratic President (Carter). And you can't blame it on a Democratic Congress: the majority of of Clinton's term saw a Republican Congress, as did the majority of Bush Jr.'s terms, yet Clinton's terms saw net reductions in the deficit and rate of growth of the debt while Bush Jr. oversaw net increases in both. And Obama has had a Democratic Senate since he was elected and a Democrat-controlled House for half his term, yet again net reductions in the deficit and rate of growth of the debt. The numbers... appear to add up to exactly the opposite of your position.

Re:Please grow some gray matter

[Rockoon]

What's odd is that every Republican President since 1976 has presided over a larger year-to-year increase in both the debt and the deficit than the worst Democratic President (Carter).

Ok, now redo the analysis using the party in control of both House and Senate, instead of the Whitehouse. After all, the Democrats are blaming the Republicans for there not having been a budget passed even though its the Democrats are in control of the Whitehouse.

I know that if you do so, that you will find a much stronger correlation than your Presidential analysis.. but you wont like which party it lands upon one bit.

Re:Screw 'em All! Let's Go Over the Goddamn Cliff

[Osgeld]

most of the tea party could not identify Greece on a map

Re:Screw 'em All! Let's Go Over the Goddamn Cliff

[Osgeld]

same here, some us felt this shit 8 years sooner

we typically are the younger adults ... I entered my 20's with a war against the wrong country, the dot com crash, a decade of being told the system would not be there for me, and rapid devaluation

that's my happy America, never even had a chance at the dream. keeping my head above water is the best I can hope for

Re:Norquist is the problem here

[TFAFalcon]

Wouldn't going over the cliff solve that problem for the Republicans? The tax increases happen without them voting for them. Then they can start voting for tax decreases with a clear conscience.

Taxes

[Anonymous Coward]

They will ALWAYS SPEND more than we send them even if we doubled that amount.

Re:Fuck the US

[Anonymous Coward]

(1) USA is #1 in donations per capita, and #3 in volunteering of time.

(2) Government-forced "aid" should not exist - all charity should be voluntary. When given voluntarily, in a free market environment where charity institutions compete on the basis of merit, aid tends to be far more effective. What is the point of giving money to some third-world dictator if it only strengthens his power and makes his "subjects" worse off in the long run?

(3) You cannot compare a country as large and diverse as the USA to a couple of small hand-picked homogeneous Northern-European nations. These few small countries have a remarkable culture and work ethic; they were the first in the world to go capitalist and industrialize, and they have been coasting off the economic momentum ever since. Why not compare USA to a slice of Europe with a comparable population of 315 million? The per-capita numbers will definitely be in USA's favor!

(4) The "wretched refuse" immigrants from those countries that left for America are now wealthier than those that stayed! Comparing apples to apples, I bet Scandinavian-Americans / Dutch-Americans / etc also give more to charity than their counterparts that have remained in Europe.

(5) A large country is also disadvantaged in "foreign aid" numbers - someone from Utah helping a Hurricane Katrina victim doesn't count, while an Austrian giving to a charity in near-by Albania does.

(6) Lest you forget - it was USA that paid to save the world from a multitude of global socialist threats over the past century, from Fascism to Soviet Communism to Baathism, including clandestine ops that have saved many countries from going socialist in the first place. Chile would be just another Cuba if not for the USA! The same could be said about dozens of other countries as well. But, instead of recognition and gratitude, all USA gets in return is jabs from economically-illiterate punks who once saw an emotionalist Michael Moore movie and now think they have a monopoly on truth!

(7) Foreign aid might be a national religion in places like Norwaystan, which has so much natural resources per capita that they're ridden with guilt over it, but most Americans make their money the hard way. USA has no ancient monarchies and noble houses passing wealth from generation to generation. It also doesn't have a history of colonial tyranny on the scale of the Belgians, and no ghosts of war and genocide like the Germans. We (and I'm a naturalized USA'ian, by choice and conviction) don't need to use foreign aid to fig-leaf our guilt!

(8) What most people fail to understand is that, before being redistributed, wealth must be created in the first place, and therein lies the chief virtue! Putting your money into the private sector (including "microcredit") instead of giving it away also does tremendous good. Poor people of this world benefit from technological innovation and investment far more than they do from simple handouts of aid! Give a man a fish, and he may eat for a day; give him freedom and a more rational way of life, and he will never be hungry again!

--libman

Re:Did they sign Norquist ?

[aepurniet]

id argue the other way, they were greedy for campaign funds. thats the beauty of the pledge. (within the current rules of campaign finance). he created a prisoners dilema for all repulicans.

Re:Fuck the US

[arth1]

Foreign aid is not an indication of generosity, the numbers you are using are bad for bunch of reasons they don't include things such as personal gift and spending coming for specific projects that the people who did those numbers did not like
If you want a better and newer numbers look here and other locations.

Your link doesn't provide any data on foreign aid. It's a phone poll on whether people have (a) donated money to a charity, (b) volunteered time to an organization or (c) helped a stranger.

Not only does it miss the 'global' part of 'global aid', and misses the mark completely by e.g. measuring money given to e.g. PETA, time volunteered to church, or holding the door for an old man at a restaurant, but it's also a boolean measurement - someone giving a nickel is counted the same as someone giving a thousand dollars.
There's also a strong selection bias in that all the recipients answering have a phone and are willing and eligible to answer questions.

As for the numbers I were using, yes, they do include things like personal gifts - for the comparison between Norwegian giving $0.25 in personal foreign aid vs.Americans giving $0.05, what did you think those numbers were?
As for your "for projects the people who did those numbers did not like" hyperbole, do you claim that the US, EU and Japanese governments rig their own numbers to look worse?

Re:Fuck the US

[arth1]

(1) USA is #1 in donations per capita, and #3 in volunteering of time.

That includes local aid.
Yes, Americans have a great tradition for holding yard sales and bake-offs and whatnot to support their neighbor who can't afford aid that the government would have provided in other countries. Or calling in a $10 guilt donation when the ASPCA commercials with abused puppies roll over the TV screen at Christmas.
And this is relevant, why?

Re:The day the liberals wake up ...

[gmack]

Where have you been for the last decade? Was it not Dick Cheney, a conservative, who said people dont care about deficits? Really the only difference between liberal and conservatives on this issue is what the money gets spent on. Through this whole negotiation we have had the republicans argue that savings from exiting the wars in Afghanistan and Iraq should be kept within the military rather than being used to cut the deficit and the republicans have been, over the years, very guilty of forcing the US military to buy equipment that it neither wants or needs.

Anyone who thinks only one side is to blame on this issue has their had stuffed up the wrong orifice.

and let's not forget

[argStyopa]

...that these are the same guys who just voted themselves a raise.*
*non-coincidentally, many of them had their salaries raised to $174,900/year, because $175,000/year is the next income tax bracket.

USA's leaders are children.

[ex01]

Bickering over pointless crap without being able to get a simple job done...

Something something deckchairs

[Swampash]

Something something Titanic.

Belief and value

[sjbe]

A standard, whether it be gold, silver, titanium, of even wheat, bases your money on SOMETHING.

Except that it does not. The only thing that give currency value is the belief that it has value. You can base the currency on the value of something else but then guess what? Gold only has value because people believe it has value. So you are not changing ANYTHING but you are making it more difficult to deal with economic problems when they arise. You are pegging the value of one commodity (currency) to another (gold). This means that you have to transfer a bulky physical commodity to adjust your money supply which is a HUGE problem. (and no, keeping your money supply fixed is not actually a good idea especially during a recession)

If we weren't paying private banking for the privilege of using their fiat money, the government wouldn't be in debt.

Bankers are no different from you or me. I would not loan the government money for free and neither would you. You don't take a risk without some change of a commensurate return. Bankers simply facilitate doing the same thing you or I would do. No difference whatsoever except the bankers can do it more efficiently that you or me.

A gold standard has it's own strengths, one of which, you can remove some from your pocket, or your vault, and give it to a creditor, who can carry it home with him.

I can do the same thing with a dollar bill. No difference whatsoever.

Tax the 47%

[russotto]

Or whatever the number is today not paying Federal Income Tax.

Sure, you can raise taxes on the 2% or the 1%, but first of all it won't get you much, because they're such a small part of the population, and second of all they can usually figure out way to avoid most of the bite. So you do that to great fanfare, then you quietly sock it to the bulk of us in the next follow-up bill.

A situation where (just over) half the country is paying all of the bills makes no sense. Before raising taxes on those of us who are, in fact, paying taxes, it's about time to impose taxes on the broad base of people who are not paying taxes. Mostly this means not raising rates, but cutting deductions and credits -- in particular, the darling of Republicans and Democrats alike, the Earned Income Tax Credit.

Re:Tax the 47%

[Areyoukiddingme]

You propose getting blood from a stone?

Not bright.

Re:Tax the 47%

[russotto]

A stone? 47% of the country is completely unproductive and has no money to give? I don't think we're that far gone.

Great post, although also issue of money as debt

[Paul Fernhout]

http://en.wikipedia.org/wiki/Money_as_Debt

Basically, the USA uses a token system to ration the output of our industrial base. We call these Kanban-like tokens "fiat dollars". While such tokens could legally be printed in any needed quantity by the US treasury, they way most are issued in practice is by creating debt through borrowing from the semi-public Federal Reserve. If the US was to have a "balanced budget", the money supply of fiat dollars would be restricted and we would have an even worse economic depression. That is the biggest difference between government debt and household debt.

Another difference is related to getting out of debt. Because these tokens (as paper of as bits in a computer) are accepted internationally, the US can create "debts" in terms of tokens in banking computers exchanged for real goods from China and real physical materials like oil and ore from elsewhere. If China or other countries come to collect the debts in the future, what do they have to collect except some ones and zeros in a computer? If they demand paper tokens, the US government can just print them and call is "Quantitative Easing". If a US household tried that, it would be illegal and would be called "counterfeiting". So, it is a good confidence game for the US government as long as you can run it -- with the downside though that the USA has exported all its manufacturing know-how to China in the process and is now dependent on China which gives China a lot of physical authority over the USA. Essentially, the Chinese people have paid a tax by consuming less so that the Chinese society could rapidly industrialize and gain this power over the USA (rather than, say, defer consumption to build up a huge military like the US did).

That omission aside, your points on good ways for the USA to invest in its future are great!

One other idea I might add is that "retirement" should be replaced with a "basic income" for all from birth. Why should old people get a basic income and medical care (Social Security and Medicare) when younger people and their parents do not? We could divide equally 50% of the US GDP as a basic income and then let people compete over who gets the rest. That will help deal with the issue of increased structural unemployment from increasing robotics and other automation, expanded voluntary social networks, improved subsistence production via solar panels and 3D printers, and more effective government planning via the internet -- which can all reduce the need for paid employment.

Re:Fiscal cliff - What planet are you from?

[WittyName]

Bernanke has injected something like 3 trillion into the economy in QE1,2, and 3. Home prices are down to y2k levels, fuel is low too. Where is this inflation hiding? We need more inflation. Perhaps 3% for a few years to let people get debt down to manageable levels.

Bond investors? Those that shorted bonds in the last few years got killed. Further, bond markets show low yields for DECADES into the future. Negative rates on 20 year bonds at the moment. Seems the rest of the world does not agree with you about the hyperinflation.. A weak dollar would be GOOD as it would make exports easier, leading to higher employment.. Bad for those holding piles of cash though. Problems in europe causing a flight to safety though, thus driving up the dollar. Pity.

Why do you view inflation as bad? Debtors benefit, workers benefit (via higher wages), assets appreciate.. The only losers are those sitting on large piles of cash.

Also, depressions are started by deflation, not debt.

"The only way is to pay out" - Might want to read up on the paradox of thrift: http://en.wikipedia.org/wiki/Paradox_of_thrift.

Basically you are about 100% wrong. Your mistake is using a micro economic solution to a macro economic problem. Resonates with Fox news viewers but is directly contradicted by facts and theory.

Re: Yep, I say go ahead and jump!

[almechist]

Wouldn't going over the cliff solve that problem for the Republicans? The tax increases happen without them voting for them. Then they can start voting for tax decreases with a clear conscience.

Yes, exactly! And it is precisely this that scares the Republicans more than anything, that after the cliff the Democrats will start introducing tax breaks for the poor and middle class, which of course is legislation the GOP can hardly oppose, and so... Voila! Taxes on the rich have effectively been raised! Although in point of fact they likely won't even have been restored to Clinton-era levels, but I digress. Going off the cliff is a win for the Dems, unless the mere fact of it happening sends the Market into a tailspin, but Wall Street probably has just enough intelligent and level-headed traders to limit any disruption to a temporary blip. Really, I see going over the Dreaded Fiscal Cliff as something that might actually be good for the country, with very little downside. You heard it here first!

Re:Remember Remembering

[Anonymous Coward]

The department of education in the U.S. has done absolutely nothing since its creation, as evidenced by the continually rising cost per student and stagnant or declining achievement.

immoral strategy

[hort_wort]

I have no idea how this would work at the international level. I've never heard a news anchor ever say anything like it. What if the idea is to borrow as much as they possibly can without ever intending to pay any of it back? Just borrow money from a country, wait for that country to have a revolution or collapse or something, then just throw our hands in the air and say, "Oh darn! We lost the records of all the money we owed. I guess things are even now."

Or even more directly, what if the US just declared war on its debtors? Just make up some BS reason to do it and sell it to the rest of the world?

Quote Stalin

[Kupfernigk]

It was Stalin who said that WW2 was won by Russian blood, American resources, and British brains. Most US innovation was post WW2, though US machine tools in WW2 were excellent and contributed a great deal to eventual victory. Both Germany and the UK during WW2 were centers of innovation, and it was lucky for us that we concentrated on things like the magnetron, digital data processing, nuclear energy and advanced aircraft while the Germans spent so much effort on missiles and efficient ways of killing unwanted people. (the Mosquito stealth bomber was one of the most effective weapons of WW2 and did far more damage to the German war effort than either the V1 or the V2 did to the UK).

Re:Quote Stalin

[Kupfernigk]

You know it was because Stalin executed all the competent senior officers in the Purges? Without Stalin's paranoia, WW2 might not have happened, or would have ended in 1942.

sequestration process

[Presto Vivace]

Preliminary Sequestration Exempt Classification by OMB account and type of Budgetary Resource

Re:Our universe is doomed!

[rubycodez]

false, plenty of life does not depend on insects in any manner. you flunked biology?

human life is the only life on earth that matters. man is the measure.

you think like a man-hater; you might be a sociopath.

The "federal income tax" myth

[DeadCatX2]

Note how the parent was very specific about income tax. Why do the top 10% pay a greater share of federal income taxes? Because of Republican initiatives like the Earned Income Tax Credit, which allow a great many working poor to have negative federal income tax liability.

Take a look at payroll taxes. They are capped at about $106k. So for me and many other 95%ers, we are paying the full payroll tax liability. And yet anyone in that top 5% or so is paying a lower payroll tax rate than me. Whereas those taxes are usually about 6% of my income, for a really wealth individual they may be 0.6% or even less.

While we're busting this "federal income tax" myth, capital gains are not subject to income tax. It is actually the case that about six of the top 400 households in terms of income actually paid no federal income tax, either. It's my belief that capital gains should be taxed as ordinary income, because the person actually creating the wealth shouldn't pay more taxes than the person who merely fronts the money - especially when the person fronting the money isn't actually on the hook for any risk because the government will bail them out.

Re:Are there any vertabrate lifeforms in Washingto

[ClickOnThis]

If there are, they are surely on the endangered species list.

There may yet be some hope.

Re:oh?

[Nyder]

Uh, you DO realize that Obama borrowed and spent more money in one year on his "stimulus" bill than 10 years of Bush's wars cost, right?

Oh, and you do realize that every year he has been in office Obama has spent over $1,000,000,000,000 MORE than he takes-in in taxes and that even if he got his demands to "tax the rich" the new money would only fund his INSANE spending for 8 DAYS, right?

Thanks to Obama, who has taken the national debt from 10 trillion to 16+ trillion in only 4 years, we now spend ten times as much money every year on interest payments on the national debt than we spend on the space program! ..... and don't try blaming it on Bush; Bush sucked, but the Bush deficits were part of the $10 trillion debt that went on the books before Obama was sworn-in. Every Obama deficit has been 2 to 3 times bigger than the worst Bush deficit.

Stupid anonymous bitch, I'm not an Obama fan. I'm not a Bush fan. I'm not a political party fan, and I am not a fucking fan of corporations. I don't give a fuck which president was worse, they both suck bad. They have been fucking the world in the name of "terrorism" and "IP" for way too long. Not to mention they cater to the lobbyist, not the American People. Congress, The Senate, all guilty. Local governments, same problem.

Our government has been up for sale to the highest bidders for too long. They are morally and physically robbing the people of the United States in the name of "greed" and "terrorism".

But since you are a coward, I will point out that I was bitching about us wasting money in an unneeded war in the middle east that would free up a lot of money for the budget. But much like CEO's of Big Corporations, they still get paid when they fuck people over, so they do NOT care much. How about we withhold the Presidents, Congress and the Senates pay until they can balance a budget?

Technically Speaking...

[conquistadorst]

If you want to speak "technically" then the whole thing was never a fiscal cliff to begin with. It was more like a budgetary hill. Funny thing is, even if we we went over the cliff, the deficit gap wouldn't have been closed. Goes to show what dreamland we're currently living in with our current level deficit spending. It's fine for now to continue borrowing... but a may day will come when folks no longer want our debt. It might be 5, 50, or a 100 years from now. Long story short, if the economy doesn't pick up the US is completely screwed.

Re:Screw 'em All! Let's Go Over the Goddamn Cliff

[conquistadorst]

Oh stop your whining, if you kept your money in the market since the GWB years you'd already be ahead again. If you continued investing new monies you'd have made 100's of % on it. This isn't the first time markets have crashed, and it *certainly* won't be the last! If you want nothing but a steady % investment with minimal risk then invest in bonds instead. Buy them straight if you want your principal back, buying in bond funds will subject your to interest/credit risk price changes otherwise. Just don't cry about the meager returns on bonds, especially these days.

Re: choreographed acting job

[Bob the Super Hamste]

It was for some of us but then our elected representatives never bothered to listen. I write and call mine frequently and if I get a response it is often a patronizing one at best.

It seems so obvious

[daniel_l_mills]

"The onl y sensible thing to do, is to ensure that our debt shrinks a little bit every year. GROWING the debt is just plain suicide." I don't understand why everyone talks about the situation as either feast or famine when a bit of logic dictates that slowing debt growth is a great start.

Re:The day the liberals wake up ...

[UnknownSoldier]

"The bureaucracy is expanding to meet the needs of the expanding bureaucracy."
  -- Oscar Wilde

Interesting usage: quote voiced by Leonard Nimoy (Spock) in Civ 4.

Re:Screw 'em All! Let's Go Over the Goddamn Cliff

[Bob the Super Hamste]

Yet mine has consistently gone up with the exception of 08 when it went down about 3%. You should really consider being more diversified and re-balancing every so often (I do it 2 to 4 times a year when things start getting unbalanced). Yes in the boom years it wasn't quite as good but then in the bad years it wasn't the blood letting that others saw. Now that the end of year financial statements are arriving it looks like it was a fairly good year with between 12% and 19% rate of return for things (Roth IRA, 401K, brokerage account with a diverse set of mutual funds, company stock, 529 savings plans, etc) which isn't too bad but still not like the crazy years just before 08 where 25% to 30% happened all the time.

Re:Remember Remembering

[crypticedge]

And the department of energy, so nuclear material and nuclear reactors will be unregulated and not inspected.

Ron Paul would be us voting for creating our own disasters. A vote for him is a vote to give the death blow to America, and let him and his friends profit off the final execution of it.

Re:Remember Remembering

[crypticedge]

Private sector is a wasteful way of handling it though, things of safety, health, infrastructure or required for life should not have profit as an option for it. Profit in those areas is a theft from the people, because all those things are required for the population to live, and they have to pay for it anyway and should be provided at cost. The only way to profit in those areas is by cheating the people of the service by providing substandard service, or by overcharging for the service. Thats it. Both are theft, and both are reprehensible. Defending profit in those sectors is flat out evil.

There was a case where a city had a vote to stop publicly funding street lights and the vote passed. In that city, the wealthy then got together, and bought street lights for their own neighborhood. This project ended up costing 25% more than it would have cost them to put them in everywhere in the city, but the wealthy preferred this wasteful spending because it wasn't helping the poor, and it was going to force them to boot strap their own lights.
There are still no lights providing the very safety they should in those poor areas, all because wealthy people would rather screw over their neighbors (at an extra cost to them no less) than to help one person they see is below them.

It's an incredibly immature position to want to remove the government, and to refuse to help the others in society. Society is designed about the betterment of all, it's root word is social. Sociopath is based also off this word, and means to have a lack of a social conscience. That town is full of sociopaths, as is the tea party, the republican party and the rest of the people who think we need to "bootstrap" our way out of a problem that the people screaming it never have been up against. Profiting off the essential services of the nation is the act of a sociopath. Voting for someone who wants to harm our nation like that is an act of a sociopath.

Defense spending - why?

[Gob Gob]

"......Let's say the government stops spending so much on defense....."

Thank you for your economics lesson. You could have opted to suggest the US Government invests in green energy projects, R&D, space research, (healthcare?) - but no you picked defense.

The day that countries stop spending on defense and move those resources to better the plight of their citizens and the human race is the day we as a species take a large jump forward. Justifying that defense is necessary so that Mandy from Iowa can stock grocery shelves after school doesn't amount to progress, it amounts to perpetuating a gun culture or at least one that is dependant on a handful of boardrooms paying a congress of politicians to own masses of people.

Re:Defense spending - why?

[TFAFalcon]

I agree with everything you wrote. You'll notice I didn't suggest they should invest more in defense, but that suddenly stopping spending could lead do problems.

Unlike many products, things like aircraft carriers and fighters don't really have any other buyers except the government. So if the government suddenly decides that they aren't going to buy any more, the companies will go out of business. There won't be any kind of a slow reduction of operation - why make things when you know you won't be allowed to sell them. So what is needed is gradual reduction of defense spending - a few % each year. And just stopping the constant growth of the military budget would do wonders for the bottom line.

Gold as currency

[iMactheKnife]

Regarding the value of gold as a currency vs. "fiat money", please read:

www.snowflakehell.blogspot.com May 23, 2010, "The Decline of Money"

Re:Gold as currency

[Cederic]

Interesting read. The opening section and "The Underlying Reality" actually make the same point that I do, albeit I wasn't quite so eloquent. Leaving aside the political views on regulation, it's a well reasoned and intelligent assessment of currency in multiple forms.

However,

Finally, fractional reserve banking allows the holders and loaners of money to actually create money from nothing. Fractional reserve banking and interest are the most common and insidious means of manipulating money.

I don't think that I agree with this. They don't create money from nothing. They recycle the money that exists, making it possible to use it multiple times concurrently. There is still only a fixed amount of base money in existence.

However, that's merely an aside in amongst an otherwise very good article. Thanks for sharing.

Re:Fuck the US

[Burning1]

The example I was thinking of is Motorcycles.

http://matadornetwork.com/change/7-worst-international-aid-ideas/

In the example linked, dirtbikes were needed to transport medical supplies, but the only motorcycle available that fit the requirement was a Harley.

I do really enjoy the above comment !

[Taco Cowboy]

Thank you for the excellent comment !

BTW, for the "raise ceiling or remove shit" question I would just move

No point of continuing living in that house no more - it'll stink sky high, even if all the shits can be removed.

Re:Totall recall--English lesson

[volmtech]

Agree with you 100% but they have changed the definition of subsidy. Now if you are not forced to pay a tax that others do pay YOU are being subsidized by them, so tax exemptions are now also subsidies. Welcome to the twenty-first century and newspeak.

Re:Remember Remembering

[crypticedge]

And it is every business by design, after all their first goal is maximize profits. You can't do it without screwing over your customers. It's impossible.

Businesses are designed to extract wealth from you and me. That's their entire goal. They don't create wealth, they shift your share of wealth, my wealth, and the wealth of thousands to millions of others into the pockets of a few. Government programs have when compared to private sector on a significant basis been more efficient than private sector, and always been more efficient when it comes to essential services. Essential services can't be run for profit and still be efficient, it's not possible.

Here in the US we pay over 15% of our GDP on health care, while only providing an acceptable level of care to 1/3rd of the population. A socialized health care nation spends between 8-12% depending on the nation, with nations that have a large GDP being on the lower end of course. Our nearest analogue in size/economy is around the 9% mark. We are overpaying by 6% in theory just by leaving profit in there, and 6% of GDP is a huge number.

We can't have socialized health care though, it's not allowed because theres things called lobbyists who make up lies like "death panels" (we have those, we call them humana, cigna, blue cross and other such names, and pay them for the privilege of letting us die) and they make up lies like how it would cost us more even though every study has shown to the contrary.

Are government programs perfect? No, they can always be improved, but so can everything. Are they better than the private sector skimming 20+% off of it? Hell yes, if you don't see that your either blind or your someone who's doing the skimming and if your one of those people your this nations true enemy.