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

Posted by Unknown on from the as-surely-as-the-earth-turns dept.

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.

60 of 639 comments (clear)

  1. First Time by Jetra · · Score: 5, Informative

    I need to learn to submit good submissions.

    1. Re:First Time by Runaway1956 · · Score: 5, Insightful

      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.

      --
      "Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
    2. Re:First Time by afidel · · Score: 5, Interesting

      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.

      --
      There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
    3. Re:First Time by 93+Escort+Wagon · · Score: 4, Funny

      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!

      --
      #DeleteChrome
    4. Re:First Time by jcr · · Score: 3, Insightful

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

      I am stunned at the depth of your denial.

      -jcr

      --
      The only title of honor that a tyrant can grant is "Enemy of the State."
    5. Re:First Time by Anonymous Coward · · Score: 5, Informative

      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.

    6. Re:First Time by sg_oneill · · Score: 5, Interesting

      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.

      --
      Excuse the Unicode crap in my posts. That's an apostrophe, and slashdot is busted.
    7. Re:First Time by Mindcontrolled · · Score: 5, Informative

      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.

      --
      Ubi solitudinem faciunt, pacem appellant.
    8. Re:First Time by shentino · · Score: 5, Insightful

      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.

    9. Re:First Time by eugene+ts+wong · · Score: 3, Insightful

      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.

      --
      testing out my trending skills
    10. Re:First Time by shentino · · Score: 5, Insightful

      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.

    11. Re:First Time by SomeKDEUser · · Score: 5, Insightful

      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.

    12. Re:First Time by anagama · · Score: 3, Insightful

      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.

      --
      What changed under Obama? Nothing Good
    13. Re:First Time by TFAFalcon · · Score: 3, Informative

      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).

    14. Re:First Time by Cederic · · Score: 4, Insightful

      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.

    15. Re:First Time by eugene+ts+wong · · Score: 3, Interesting

      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.

      --
      testing out my trending skills
    16. Re:First Time by smittyoneeach · · Score: 5, Insightful
      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.

      --
      Get thee glass eyes, and, like a scurvy politician, seem to see things thou dost not.--King Lear
    17. Re:First Time by Cederic · · Score: 5, Interesting

      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.

    18. Re:First Time by Cederic · · Score: 4, Insightful

      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?

    19. Re:First Time by gmack · · Score: 3, Interesting

      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.

    20. Re:First Time by makomk · · Score: 4, Insightful

      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.

    21. Re:First Time by DarkOx · · Score: 5, Insightful

      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

      --
      Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
    22. Re:First Time by Cederic · · Score: 5, Informative

      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

    23. Re:First Time by hibiki_r · · Score: 4, Informative

      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.

    24. Re:First Time by nedlohs · · Score: 4, Insightful

      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.

    25. Re:First Time by Above · · Score: 4, Informative

      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.

    26. Re:First Time by phantomfive · · Score: 3, Insightful

      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.

      --
      "First they came for the slanderers and i said nothing."
  2. Who cares... by banbeans · · Score: 3, Funny

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

  3. Fiscal cliff by girlintraining · · Score: 5, Insightful

    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.

    --
    #fuckbeta #iamslashdot #dicemustdie
    1. Re:Fiscal cliff by Anonymous Coward · · Score: 5, Insightful

      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.

    2. Re:Fiscal cliff by jamstar7 · · Score: 4

      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.

      --
      Understanding the scope of the problem is the first step on the path to true panic.
    3. Re:Fiscal cliff by Jetra · · Score: 4, Insightful

      Why are the good ones anon cowards?

    4. Re:Fiscal cliff by quantaman · · Score: 4, Insightful

      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.

      --
      I stole this Sig
    5. Re:Fiscal cliff by quantaman · · Score: 3

      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.

      --
      I stole this Sig
    6. Re:Fiscal cliff by hey! · · Score: 3, Insightful

      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").

      --
      Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
  4. Are there any vertabrate lifeforms in Washington? by stox · · Score: 4, Insightful

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

    --
    "To those who are overly cautious, everything is impossible. "
  5. Re:Remember Remember by anagama · · Score: 5, Insightful

    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

    --
    What changed under Obama? Nothing Good
  6. Re:let the cuts begin by SternisheFan · · Score: 5, Insightful

    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.

  7. Re:And this too shall pass away. by Trepidity · · Score: 5, Informative

    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).

    --
    10 PRINT CHR$(205.5+RND(1)); : GOTO 10
  8. Re:And this too shall pass away. by The+Master+Control+P · · Score: 3, Insightful

    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.

  9. Re:Remember Remembering by MightyMartian · · Score: 5, Insightful

    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.

    --
    The world's burning. Moped Jesus spotted on I50. Details at 11.
  10. Re:Screw 'em All! Let's Go Over the Goddamn Cliff by mdenham · · Score: 3, Insightful

    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?

  11. Re:And this too shall pass away. by Austerity+Empowers · · Score: 4, Insightful

    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.

  12. Re:And this too shall pass away. by Areyoukiddingme · · Score: 4, Insightful

    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.

  13. Re:Screw 'em All! Let's Go Over the Goddamn Cliff by Billly+Gates · · Score: 3, Insightful

    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.

    --
    http://saveie6.com/
  14. Re:Fuck the US by arth1 · · Score: 5, Informative

    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.

  15. Re:And this too shall pass away. by Anonymous Coward · · Score: 3, Insightful

    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.

  16. Re:And this too shall pass away. by jo_ham · · Score: 5, Insightful

    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.

  17. Re:And this too shall pass away. by Jeremi · · Score: 4, Insightful

    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?

    --


    I don't care if it's 90,000 hectares. That lake was not my doing.
  18. Fiscal Cliff? by Taco+Cowboy · · Score: 5, Insightful

    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.

    --
    Muchas Gracias, Señor Edward Snowden !
    1. Re:Fiscal Cliff? by deimtee · · Score: 3, Informative

      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.

      --
      I'm guessing that wasn't on their radar screen...
  19. Re:And this too shall pass away. by Jeremi · · Score: 5, Insightful

    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.

    --


    I don't care if it's 90,000 hectares. That lake was not my doing.
  20. Re:Fuck the US by will_die · · Score: 3, Informative

    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.

  21. Re:And this too shall pass away. by TemperedAlchemist · · Score: 5, Insightful

    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.

  22. Re:The day the liberals wake up ... by Anonymous Coward · · Score: 3, Insightful

    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.

  23. Re:And this too shall pass away. by rhsanborn · · Score: 5, Interesting

    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.

  24. Re:The "Raise Taxes" Myth by rhsanborn · · Score: 4, Insightful

    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.

  25. Re:And this too shall pass away. by TFAFalcon · · Score: 3, Informative

    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).

  26. Belief and value by sjbe · · Score: 4, Informative

    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.

  27. Great post, although also issue of money as debt by Paul+Fernhout · · Score: 3, Interesting

    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.

    --
    A 21st century issue: the irony of technologies of abundance in the hands of those still thinking in terms of scarcity.