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

[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

[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

[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

[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

[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

[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

[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

[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

[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

[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

[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

[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

[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

[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

[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

[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

[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

[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.

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.

[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.

[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.

[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.

[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.

[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]

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.

[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.

[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.

[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.

[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.

[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.

[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.

[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]

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

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

[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.

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

[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]

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

[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.

Who cares...

[banbeans]

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

Even better -

[davidwr]

- first front page /. post of 2013.*

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

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

[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

[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

[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

[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

[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

[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").

Are there any vertabrate lifeforms in Washington?

[stox]

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

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.

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: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?

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: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: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

[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: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.

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: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: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: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?

USA's leaders are children.

[ex01]

Bickering over pointless crap without being able to get a simple job done...

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.

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.

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.

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: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:Tax the 47%

[Areyoukiddingme]

You propose getting blood from a stone?

Not bright.