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Revelation
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Now, Time To Face The "Fiscal Cliff"!

Wed Nov 07, 2012 12:30 pm

Seems now is the time of reckoning for the failing of the "super-committee" to come up with a plan.

Seemed everyone was content to kick the can down the road to right now, after the election.

Seems the good ol' Congress has 49 days to reach compromise or $500B of automatic tax hikes and spending cuts kick in.

http://www.washingtonpost.com/politi...-11e2-b2a0-ae18d6159439_story.html says:

Quote:

If Obama can engineer a compromise to avert the cliff with the freshly reelected Republican House, he could set the stage for progress on other second-term priorities, including immigration reform, climate change and investments in education and manufacturing. Such a compromise could also infuse fresh energy into an economic recovery that has suffered from uncertainty over the future of federal budget policies.

“Getting a deal on long-term fiscal soundness is paramount to move forward and to see the economy really keep improving,” said Bill Daley, Obama’s former chief of staff. It will also “give confidence that the political system can address a major issue.”

Personally I think that is way too optimistic, but who knows?

The GOP has been happy to find ways for the political system to not address major issues, so why should it be a Dem concern?

In any case, we shall find out to what degree Obama has learned the lesson of the debt ceiling debate.

He has the Senate and the veto power and a House full of GOPers who will probably take the hit for not coming up with a compromise.

Some more food for thought:

Quote:

Despite the risks to the economy — and the potential disruption to the 2012 tax filing season — Democrats see a clear advantage to going over the cliff. In January, once the Bush tax cuts have expired, Democrats would be free to draft their own plan to cut taxes for the middle class, but not the wealthy, and dare Republicans to reject it.

“If you allow all the tax rates to revert, you’re talking about raising $5 trillion over 10 years,” Van Hollen said. “So Republicans will have to choose: Do they prefer $5 trillion in [new] revenue? Or something in the range of $2 trillion?”

Personally I hope Obama has learned the lesson and lets the GOP squeam after their defeat.

In their zest to say no increase in taxes, they will drown themselves in a sea of taxes, then the GOP will be in the position of needing to ask for tax cuts, instead of being in the position to deny tax increases. That to me seems to be worth taking the plunge.

However,

Quote:

In the coming days, Democrats say, Obama is likely to launch a concerted public relations campaign in support of his budget plan, continuing his call for a “balanced approach” to debt reduction.

The GOP pushed the country to the brink in the debt ceiling debate and it showed everyone how far they'd go.

Now is the time to see how far the Dems will go to get the GOP to back off a bit.

Quote:

“I love what John Boehner is saying, but I have a hard time believing Republicans won’t cave,” said GOP tax lobbyist Kenneth J. Kies. To resist Obama, “you have to be prepared to shoot the hostages. You have to be prepared to let it all expire. And it takes a lot of courage to do that.”

Some feel the odds shift to the GOP side in the New Year, but that has its risks:

Quote:

Many Republicans insist that they will regain leverage in January and February as the Treasury Department runs out of options for managing the nation’s finances without additional borrowing authority.

But after the debt-limit battle of 2011, approval ratings for the GOP Congress went into free fall and many Republicans are not eager to repeat the experience.

“I get a sense there’s still a fairly strong interest in Congress among the conservatives to use the debt ceiling as some kind of leverage,” said Heritage Foundation senior fellow Patrick Louis Knudsen, who was a top aide on the House Budget Committee to Republican vice-presidential candidate Paul Ryan (Wis.). “But they are a bit chastened about how that worked — or didn’t work out — last year.”

Grab the popcorn, this should be interesting!
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Pyrex
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RE: Now, Time To Face The "Fiscal Cliff"!

Wed Nov 07, 2012 12:42 pm

Quoting Revelation (Thread starter):

In the coming days, Democrats say, Obama is likely to launch a concerted public relations campaign in support of his budget plan, continuing his call for a “balanced approach” to debt reduction.

What budget plan? The Senate controlled by his own party has not passed a budget in how long, three years and running now?
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RE: Now, Time To Face The "Fiscal Cliff"!

Wed Nov 07, 2012 1:11 pm

Quoting Pyrex (Reply 1):
What budget plan? The Senate controlled by his own party has not passed a budget in how long, three years and running now?

And yet, the bills get paid.

Indeed, let's hope for better, but let's not be so melodramatic.
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pu
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RE: Now, Time To Face The "Fiscal Cliff"!

Wed Nov 07, 2012 1:52 pm

The deficit needs to come down. Not simply have its growth slowed, it needs to come down. Eventually debt reduction is a goal.

AND

Jobs have to be created.

....

I would say for the deficit, both sides have to compromise on spending cuts to favorite proframs...as for jobs, maybe waive taxes on all new jobs for a year, or other incentives?





Pu
 
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casinterest
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RE: Now, Time To Face The "Fiscal Cliff"!

Wed Nov 07, 2012 2:15 pm

The fiscal cliff deal will get done. At this point, the GOP can't risk angering the middle class. They will go along with a tax rate increase for the +250,000. The Budget will get worked out to push the cuts to the budget out a bit, in order to give more time for the economic recovery to take place. The GOP can't bluff Obama out anymore. Obama does not have to run for reelection.
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Newark727
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RE: Now, Time To Face The "Fiscal Cliff"!

Wed Nov 07, 2012 3:29 pm

Quoting pu (Reply 3):
I would say for the deficit, both sides have to compromise on spending cuts to favorite proframs...

I would go further. I think the only way to reform Medicare and Social Security, and make it stick, is an honest meeting in the middle that neither side can just walk back on. Even if a unilateral reform is fiscally sound and decent policy, some bright spark on the other side will twist it into "they're destroying Medicare" or what have you and leverage the retired vote to defeat the other party, before or after the reform is actually passed.
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Wed Nov 07, 2012 8:48 pm

Quoting casinterest (Reply 4):
The GOP can't bluff Obama out anymore. Obama does not have to run for reelection.

Boehner gave a strategically important address this afternoon, giving few details other than he's intending to tie allowing new revenue sources to an agreement for a revised tax code and benefit cuts in social programs.
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Ken777
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RE: Now, Time To Face The "Fiscal Cliff"!

Wed Nov 07, 2012 9:16 pm

Quoting Newark727 (Reply 5):
I think the only way to reform Medicare and Social Security, and make it stick, is an honest meeting in the middle that neither side can just walk back on.

I look at these two programs as totally different in our need to approach them.

When you look at Social Security you can see a history of responsible politicians sitting down and working out what needs to be done. Reagan and Tip O'Neill managed to work together and get the job done. The reality is that we need to keep the program with the same level of integrity that President Reagan managed to do.

Maybe one way to boost contributions to the program is to establish a Guest Worker program. Pay taxes at a level that demonstrates honesty and an ability to support you and those with you in your immediate family and you get another year.

I look at Medicare based on 8 years of living in Australia and doing business there after that. THey manage to deliver better health care (based on outcomes) at a far lower cost. Just as important, employers in Australia do not have the burden of employee health care costs on their backs.

We need to look at approaches like theirs. It can include both public and private insurance and it gives this country's employers a huge step up in growing and competing.

Quoting AeroWesty (Reply 6):
Boehner gave a strategically important address this afternoon

Boehner has been fast to act in order to avoid the White House taking all of the attention. It is important, IMO, for him to get some ideas on the table as fast after the election as possible.

The big question is if he can get his heard of wild tea partiers under control for a vote before the changeover in Congress.
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Wed Nov 07, 2012 10:49 pm

Quoting AeroWesty (Reply 6):
Boehner gave a strategically important address this afternoon, giving few details other than he's intending to tie allowing new revenue sources to an agreement for a revised tax code and benefit cuts in social programs.

I heard it, and thought it was arrogant.

I think it's time for Obama to sit back and let Boehner come to him instead of vice versa. Obama is the President, and he has a fresh term and a stronger hand in the Senate. This cliff is of the Congress's making, and it's for them to come up with a workable solution.

If Congress does its usual (nothing!) and we get to Jan 1 without a deal, then we get rid of the Bush tax cuts once and for all, and it's a whole new ball game where the GOP has to ask for things they want instead of shooting down things the Dems want.

I hope those in the Administration are ready to play some hard ball for a change.
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 12:08 am

Quoting Revelation (Reply 8):
I hope those in the Administration are ready to play some hard ball for a change.

Because ramming through ObamaCare against the will of the electorate somehow wasn't "hard ball" of them, right?   
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 12:16 am

I have a solution to avoid this so-called fiscal cliff. Whatever date Congress' winter break starts...if they can't come to an agreement, put them all on the no-fly list, and if necessary, lock down the Capitol Complex, office buildings and all until they come to an agreement. If Congress wants to act like little kids, lets treat them like little kids.

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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 12:25 am

Quoting EA CO AS (Reply 9):
Because ramming through ObamaCare against the will of the electorate somehow wasn't "hard ball" of them, right?

The electorate wanted it, in case you missed the reelection of the man you claim to be responsible.

I most certainly support "universal access to healthcare" though I firmly believe the Republican's were remiss in not working Democrats with and helping to shape the resulting legislation. What we have is unbalanced and needs some solid fixes, I am happy that it is very possible now that those fixes will occur (versus an irresponsible abolishment of the act).

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Pyrex
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 12:33 am

I started my planning way in advance so believe I should be able to neutralize the impact of any upcoming tax hikes, but will see. Have moved out of NYC to New Jersey to eliminate the ridiculous city tax, so that is 3.65% of my salary less that that proto-fascist Bloomberg has to push through soda bans and the like. Stopped all charity giving. Sold most of my investments over the past couple of weeks, and the most recent ones will in the next few weeks once they become eligible for the long-term capital gains treatment - this way I not only reduce the impact of the market collapse but harvest capital gains at the current lower rate. Will at some point reinvest most of the proceeds in tax-free municipal bonds and inflation-protected bonds.
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Ken777
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 1:00 am

Quoting EA CO AS (Reply 9):
Because ramming through ObamaCare against the will of the electorate somehow wasn't "hard ball" of them, right?

Let's see: Obama made Health Care Reform a major part of his 2008 Campaign.

The electorate voted him into office knowing full well that it would result in Health Care Reform being pushed.

Where the GOP really screwed up was in focusing on changes that would have taken the burden of employer nanny care off the backs of employers - especially for major companies. All they were left with was a campaign that was against the health of the middle class.

And an election for President lost yesterday.
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 1:20 am

Quoting Pyrex (Reply 12):
Stopped all charity giving.

And you wonder why we need to fund welfare?

Quoting AeroWesty (Reply 6):
Boehner gave a strategically important address this afternoon, giving few details other than he's intending to tie allowing new revenue sources to an agreement for a revised tax code and benefit cuts in social programs.

He has to put a position out of where to start from. Obama set his line. Let's see if real negotiations occur. I imagine the finish line is going to be really close to Obama's side of the court.
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 1:28 am

Quoting EA CO AS (Reply 9):
Because ramming through ObamaCare against the will of the electorate

At least you didn't use the "2/3rds of the electorate" line. Because last I checked, that same electorate soundly voted for Obama (and by extension, his policies) not once, but twice

Oh, but I forgot, those people really aren't true Americans. They're illegal immigrant socialists that hate the US.
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Pyrex
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 1:39 am

Quoting casinterest (Reply 14):
And you wonder why we need to fund welfare?

Spending my money in items that improve my quality of life does a whole lot more to reduce poverty (at least for the guy who provided me that good or service) than giving it to some rich white-guilt ridden trustafarian who wants to devote his "career" to non-profit after his parents spent $200,000 on his education because he believes the concept of profit is wrong. Same with investing the rest - reduces a heck of a lot more the poverty of the people who are employed in the factory I help fund. Most of my charity giving was focused on creating equal access to opportunities by promoting economic freedom, property rights and the rule of law, but since people obviously don't seem to care I reckon spending and investing my money as I see fit will have a greater effect (plus, the people I was giving it too were starting to piss me off). There is room for targeted charitable welfare, but honestly most people end up working in the space for the wrong reasons and I frankly don't have time to do the due-diligence and stay on top of them, so this is just more efficient.
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NAV20
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 3:17 am

Quoting Revelation (Thread starter):
Seems the good ol' Congress has 49 days to reach compromise or $500B of automatic tax hikes and spending cuts kick in.

Oddly enough, seems to me that this situation produces yet another very good reason for not having across-the-board elections in November.   I imagine that that date was originally selected because by that time the harvest would be well and truly in and people would be free to travel into town to vote; but the practice does tend to mean that 'not much gets done' until well into the new year........

That factor looks as if it will be especially harmful this time. As I understand the 'fiscal cliff,' a large number of 'temporary' tax concessions - some of them dating back all the way to George W. Bush's day - are due to expire before Christmas unless they are extended or replaced. There's not much doubt that agreements will be reached under which they WILL be extended in some way - but it's also pretty clear that no such agreement will be reached until Congress is very close to the Christmas recess.

That may make sense in political terms - but it's just plain crazy in economic ones. It's clear that large numbers of taxpayers - particularly, as far as I can gather, those on low incomes - will be uncertain, right up to Christmas, as to whether or not they will end up paying extra taxes. It's only natural, therefore, that they'll be cautious about their spending. So Obama's second term is virtually certain to begin with a 'consumer downturn,' whatever happens in Congress from here.

Talk about 'throwing the baby out with the bathwater.' I really think that the USA should think seriously about changing the traditional election date to a more sensible one. Not only because 'getting the harvest in' is no longer a problem nowadays - but because it would spare all those people we've seen in the newsreels from having to queue for hours out in the open in winter weather.
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Ken777
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 3:28 am

Quoting NAV20 (Reply 17):
That may make sense in political terms - but it's just plain crazy in economic ones. It's clear that large numbers of taxpayers - particularly, as far as I can gather, those on low incomes - will be uncertain, right up to Christmas, as to whether or not they will end up paying extra taxes. It's only natural, therefore, that they'll be cautious about their spending. So Obama's second term is virtually certain to begin with a 'consumer downturn,' whatever happens in Congress from here.

The poor won't have to make any changes. Their Christmas spending in covered by various programs like Toys For Tots. The Marines handle that one IIRC.

Reality is that a poor family will have to scrape hard to get each kid one toy.

In political terms, the GOP will probably work hard to come up with something before Jan 1as they would then be negotiating on the current, lower tax levels. When Jan 1 hits the negotiations will be on how new tax cuts from the Pre-Bush Rates will be cut. That will give Obama far more discretion in focusing on the middle and lower classes. The ultra wealthy will not be happy, but their candidate lost and one reason was massive tax cuts for the ultra wealthy.

One problem that Boehner will face if the Tea Party. They are so rabid that they will not be able to work out a viable compromise before Jan 1. At that point Boehner "might" be able to work out a deal with Obama that can be passed using all Democrats and any moderate (reasonable) Republican that might be left in the House.

Then the Senate can pass what is delivered. This time I have a feeling that McConnell will not be one of the main players like he was last time.
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 7:09 am

Quoting Pyrex (Reply 12):
I started my planning way in advance so believe I should be able to neutralize the impact of any upcoming tax hikes, but will see. Have moved out of NYC to New Jersey to eliminate the ridiculous city tax, so that is 3.65% of my salary less that that proto-fascist Bloomberg has to push through soda bans and the like. Stopped all charity giving. Sold most of my investments over the past couple of weeks, and the most recent ones will in the next few weeks once they become eligible for the long-term capital gains treatment - this way I not only reduce the impact of the market collapse but harvest capital gains at the current lower rate. Will at some point reinvest most of the proceeds in tax-free municipal bonds and inflation-protected bonds.

Wow. Are you running for Drama Queen of the year?
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 10:21 am

Quoting EA CO AS (Reply 9):
Because ramming through ObamaCare against the will of the electorate somehow wasn't "hard ball" of them, right?

took 'em long enough and should have happened a lot sooner (and a better law at that too e.g. single payer)
 
MadameConcorde
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 10:54 am

There is a good article here on the "fiscal cliff" for those of us who are not finance experts.

Why 'Fiscal Cliff' May Be Bigger Threat Than You Think

As the deadline for fiscal peril in the U.S. nears, Wall Street is worried that the impact could be much worse than anyone thought—while investors remain nearly oblivious to the danger.

read more:
http://www.cnbc.com/id/49478505/


Analyst Marc Faber quote:

“I think the regimes will try to keep the system alive as it is for as long as possible, which means there’s no “fiscal cliff,” there’s a fiscal grand canyon,” Faber told CNBC’s “Squawk Box.”

http://www.cnbc.com/id/49500213

 Wow!   
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NAV20
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 1:06 pm

Quoting Ken777 (Reply 18):
The poor won't have to make any changes. Their Christmas spending in covered by various programs like Toys For Tots. The Marines handle that one IIRC.

Reality is that a poor family will have to scrape hard to get each kid one toy.

Slight misunderstanding there, Ken777. I was referring to 'low-income' families, not 'poor' ones. Sure, the poor will have to go on depending on charity, they're more or less out of the game; while the well-paid ones will probably be able to go on spending - up to a point, anyway. But it's the people 'in the middle' - who sometimes have a bit of cash to spare, but at other times realise that they've 'got to be careful' - who tend most often to determine the month-to-month state of any given economy.
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casinterest
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 2:19 pm

Quoting Pyrex (Reply 16):
Spending my money in items that improve my quality of life does a whole lot more to reduce poverty (at least for the guy who provided me that good or service)

when you get out of that ivory tower in New York and move to New Jersey, you are going to be in for a rude awakening. Charities exist to take care of those that can't take care of themselves. In some cases it is self inflicted, but in many cases, battered women, mental issues, abandoned kids, high medical cases, there are external uncontrollable factors, Your view of the world is a sad one, and perhaps when you have to interact with more people you will start to understand a bit more of the world around you.
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 2:25 pm

Quoting EA CO AS (Reply 9):
Because ramming through ObamaCare against the will of the electorate somehow wasn't "hard ball" of them, right?

I think you meant to say "following the mandate of the electorate", which is what he should do now.

You may not like ObamaCare, but your Presidential candidate just lost, as did a few of your Senators.

Time for you to find a new saw. Go see what FOX News has on, I'm sure they have plenty to suggest.

ObamaCare is the will of the people, and the law of the land.

Even Etcha-Sketch Mitt had tacked back to universal coverage (of a sort) by the end of the campaign.
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Ken777
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RE: Now, Time To Face The "Fiscal Cliff"!

Thu Nov 08, 2012 11:05 pm

Quoting NAV20 (Reply 23):
I was referring to 'low-income' families, not 'poor' ones.

Low income families are poor. Under the poverty line in most cases because our minimum wage is below the poverty line.

And, in reality, minimum wage loopholes, like positions that receive tips, will generally be right at that poverty line. It is the nature of this country to have a large lower class serving those with more resources.

The people above this group will not be impacted that much by the tax law changes as they still have deductions and ta credits that will protect them.

I you look at the cliff the big news for me will be the increase in the capital gains taxes. Look for a lot of sell offs between now and December 31st as people grab the profits at the lower rates. The irony is that they will take less for their shares because the sell off will drag the economy down.

I also believe that the wealthy will prefer to keep their loopholes, even if it means that they will get a tax increase. Those loopholes will be the tilting factor when negotiations get down to the last minute.
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 12:22 am

For what it's worth:

Quote:

Even before returning to Washington from his hometown of Chicago, Obama was on the phone Wednesday with the four top leaders of the House and Senate, including Boehner, to talk about the lame-duck Congress that convenes just one week after Election Day.

...

Boehner, for his part, said that for Obama to get support for new revenues "the president must be willing to reduce spending and shore up the entitlement programs that are the primary drivers of our debt."

"We aren't seeking to impose our will on the president. We're asking him to make good on his 'balanced' approach," the Ohio Republican said on Capitol Hill.

Ref: http://news.yahoo.com/obama-gop-lead...markers-budget-deal-080338986.html

So Obama is already reaching out.

Here's hoping we don't have another long drawn-out battle.
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Ken777
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 12:33 am

Quoting Revelation (Reply 31):
Here's hoping we don't have another long drawn-out battle.

Reality is that the President really doesn't need to battle. Calm discussions can move issues forward, or he can wait until Jan 2nd when he can start at ground zero and build up from there.

I don't believe that Boehner was ever the real problem. It was the Tea Party and Cantor (working to be Speaker) that caused the problems.

So the question is really directed at the Tea Party. Are they going to be realistic about the election results? I doubt that very seriously, especially when you look at the nuts that lost their elections. Until we have a new Congress I cannot see the House being able to work with either President or the Senate.

That pretty well means that a lot of work will need to be done in January. As soon as the new members are sworn in we can get an idea of how it will go.
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 12:59 am

Quoting Ken777 (Reply 32):
Reality is that the President really doesn't need to battle. Calm discussions can move issues forward, or he can wait until Jan 2nd when he can start at ground zero and build up from there.

It'd be nice if it was that simple, but the cure may be worse than the disease.

Then again, the disease is pretty bad.
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pu
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 2:09 am

Quoting Revelation (Reply 31):

"the president must be willing to reduce spending..."




It seems to me the fear is any worthwhile cut in government spending would hurt the economy

Y E T

Any worthwhile increase in government revenue would hurt the economy



????
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 10:01 am

Quoting pu (Reply 29):
Quoting pu (Reply 29):
It seems to me the fear is any worthwhile cut in government spending would hurt the economy

Y E T

Any worthwhile increase in government revenue would hurt the economy

Maybe somebody will start listening Sen Tom Coburn MD instead of berating him for not playing ball.
http://www.coburn.senate.gov/public/...b-bccf-4579-990e-15a763532b40.html
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casinterest
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 2:45 pm

Quoting venus6971 (Reply 30):

Maybe somebody will start listening Sen Tom Coburn MD instead of berating him for not playing ball.
http://www.coburn.senate.gov/public/....html

Some of these items may or may not look dubious. However at the end of the day, on a budget of 3.5 trillion he isn't even looking at 1% of the spending.
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speedygonzales
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 3:03 pm

How about reducing military spending 25% from ridiculous to simply humongous?
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StarAC17
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 3:25 pm

Quoting casinterest (Reply 31):
Some of these items may or may not look dubious. However at the end of the day, on a budget of 3.5 trillion he isn't even looking at 1% of the spending.

The argument that this stuff should be cut and is valid and there should be a debate about it. Some of these things may bring back a larger return to the government and thus the spending while may seem like pork actually generates more revenue that it costs.

Saying that the things that the GOP has talked about cutting isn't why the US is in a huge hole.

They won't or will be dragged kicking and screaming to put defense on the table which needs some cuts and the same goes with the democrats on entitlements.

Also end the war on drugs legalize and tax at least pot, get rid of farm subsidies to grow corn and bring home the troops from places like Germany and Japan.

Quoting pu (Reply 29):
It seems to me the fear is any worthwhile cut in government spending would hurt the economy

Y E T

Any worthwhile increase in government revenue would hurt the economy

  

This is why cuts need to be made when the economy is growing and spending increased in a recession so the government has a nest egg to rely on when the next recession hits.

If Europe teaches any lessons, forcing austerity on a sluggish economy is not going to make the problem better because the decrease in growth is going to put you in more of a hole because of lost revenue.
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 3:47 pm

Quoting StarAC17 (Reply 33):

If Europe teaches any lessons, forcing austerity on a sluggish economy is not going to make the problem better because the decrease in growth is going to put you in more of a hole because of lost revenue.

Exactly, but its a catch-22, isn't it?

The deficit needs to come down but that can only happen by cutting spending or increasing taxes, both of which would damage the economy......which would in turn cause revenue to decline and increase the deficit, in a viscious circular process! Welcome to Greece!


UNLESS other ideas might help:

1. Is stopping the growth in government spending enough to reduce the deficit?
2. Maybe there is some government spending somewhere that if cut, wouldn't hurt the economy?
3. Does anyone have the balls to bring out the Laffer Curve again and argue a tax cut will actually increase tax revenue?
4. Can the Fed just monetise more and more debt (pay off debt by increasing the money supply)? So far when they've done it inflation is subdued.



The reason why Reagan and Bush love tax cuts and earned re-election is because it's the surest way to end a recession. It would be a wonderful stimulus.




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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 5:39 pm

Quoting NAV20 (Reply 17):
Talk about 'throwing the baby out with the bathwater.' I really think that the USA should think seriously about changing the traditional election date to a more sensible one.

I'm listening. How would you schedule it? There has to be a balance between giving the incoming officials time to set up their campaign and over-extending the lame duck portion of the year.
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 6:09 pm

Quoting pu (Reply 34):

The reason why Reagan and Bush love tax cuts and earned re-election is because it's the surest way to end a recession. It would be a wonderful stimulus.

I'm not so sure about that. The stimulus value is arguable, but all the tax cuts passed with the argument that they'd raise government revenue have failed to do so, and mostly just increased the net worth of the people who were rich already, and rich-getting-richer alone does not end a recession (possibly starts them instead, depending on who you ask, though I'd say that has more to do with boom-bust cycles.)
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 6:19 pm

Well Obama is putting the squeeze on Boehmer this morning. He's gonna make the House responsible for any failure to pass legislation to continue tax cuts for those earning less than $250K by 12/31.
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RE: Now, Time To Face The "Fiscal Cliff"!

Fri Nov 09, 2012 7:51 pm

Quoting pu (Reply 34):
The deficit needs to come down but that can only happen by cutting spending or increasing taxes, both of which would damage the economy......which would in turn cause revenue to decline and increase the deficit, in a viscious circular process!

The question is does the US deficit need to come down in the short term, the US is still the safest place for other countries to park money and interest rates now are at basically zero. If governments can borrow to invest in things that will have a long term effect when the private sector appears unwilling or unable to do then that makes sense but with that the real "pork" in government spending needs to be addressed such as defense and entitlements.

The long term answer is an obvious YES.

Quoting pu (Reply 34):
Does anyone have the balls to bring out the Laffer Curve again and argue a tax cut will actually increase tax revenue?

Tax cuts increase revenue if there is enough growth and rising incomes in an economy, it happened in the 80' didn't happen in the 2000's

Quoting pu (Reply 34):
The reason why Reagan and Bush love tax cuts and earned re-election is because it's the surest way to end a recession. It would be a wonderful stimulus.

They like tax cuts because it wins politically with almost everyone just like hiking them is bad politically.

Saying that a tax cut has no effect if the middle class which is the main engine of an industrial economy has no certainty if they will have a job tomorrow. Sure they do have more money but hopefully many of them will use it to build up some savings and get themselves out of debt.

Quoting pu (Reply 34):
Can the Fed just monetise more and more debt (pay off debt by increasing the money supply)? So far when they've done it inflation is subdued.

They can now because places like Europe are doing it and China has been accused of keeping its currency low that it is a zero sum game essentially at the moment as any inflation that occurs is offset with the other major economies. With everything doing this carries some risk.
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RE: Now, Time To Face The "Fiscal Cliff"!

Sat Nov 10, 2012 9:04 pm

Quoting StarAC17 (Reply 33):
Also end the war on drugs legalize and tax at least pot, get rid of farm subsidies to grow corn and bring home the troops from places like Germany and Japan.

Drugs will always be a problem, with or without a war. My preference is to keep attacking the suppliers and not worry too much about the addicted mules.

In terms of corn, I saw a lot of dead corn fields driving around the country. Went to both Michigan & Texas this summer and didn't see very much decent corn fields. We can cut subsidies, but need to keep an eye out for disasters like this past summer. We need to keep the farmers strong in the bad years and let the market keep them strong in the good years.

I also agree with you on pulling troops overseas - to a point. There needs to be troops in South Korea until North Korea becomes a non-threat. There also needs to be backup to those troops in the South. Europe needs reductions at a rat that will not cause economic problems for the locals. There will, however, be long term needs for some bases in Europe. Military hospitals in Germany are an excellent example.

Quoting pu (Reply 34):
Is stopping the growth in government spending enough to reduce the deficit?

Classic phrase, but cutting government spending to any significant degree is going to increase unemployment - in both public and private areas. That cuts tax revenues and increases other forms of spending, like food stamps & Medicaid.

Quoting pu (Reply 34):
The reason why Reagan and Bush love tax cuts and earned re-election is because it's the surest way to end a recession. It would be a wonderful stimulus.

Wonderful stimulus until the bill comes due. In Bush's case it was a massive deficit and The Great Recession.

I don't see any long term benefit for the country in the Bush Tax Cuts. Let it die December 31st and work on tax cuts that will generate economic activity at the middle class and lower levels. The Tea Party becomes pretty impotent on January 1st. They will have done their damage and will be out in the cold when it comes to negotiations. Pity.

Quoting AeroWesty (Reply 37):

Well Obama is putting the squeeze on Boehmer this morning. He's gonna make the House responsible for any failure to pass legislation to continue tax cuts for those earning less than $250K by 12/31.

All Obama has to do this week is have some easy discussions with Boehner. Let the Tan Man deliver all the BS that the Tea Party will be demanding. Might even invite Botox McConnell and let him huff & puff for a while. The current Congress is going to end pretty soon. They're lame ducks to a large degrees - especially the wing nuts who were voted out of office. Let them flap their wings on their way out, then we can get moving in an intelligent direction after they're gone.
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Sat Nov 10, 2012 9:17 pm

Quoting Ken777 (Reply 39):
Drugs will always be a problem, with or without a war. My preference is to keep attacking the suppliers and not worry too much about the addicted mules.

You'll win a war on terror the same way. Just keep killing terrorists until we're all out of terrorists. Works like a charm, right?

Oh, wait...

If there is demand, there will be supply. Simple law of human behavior. If you keep trying to cut the supply, the demand will stay the same, so the price goes up. The price goes up, so people have to steal and commit violent crime to pay for their fix. Because it's illegal, the supply is tainted with all sorts of nasty things and so people suffer more harm.

Let the megacorps provide the drugs legally. Regulate it. There is no evidence that this increases use and there is even evidence that it might decrease it. Watch the prices plummet and suddenly all of the suppliers in South America have no job, just like the bootleggers were suddenly out of work when Prohibition ended.

Quoting Ken777 (Reply 39):
All Obama has to do this week is have some easy discussions with Boehner.

No, he needs to lay down the law. "I'm not signing anything until..."

Look, this is not a "cliff." It's a slope. Most of the "cuts" are actually not cuts, but a lack of increase. The tax increases won't become relevant until 1/15/14 when the taxes actually need to be paid. We have some time to deal with this.

This is a lame duck President. So he needs to use that. Both Mr. Obama and Mr. Boehner know that continued GOP obstructionism is not going to be viewed as the Democrats' fault by the American people. This is Mr. Obama's fight to lose, not Mr. Boehner's to win.
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RE: Now, Time To Face The "Fiscal Cliff"!

Sun Nov 11, 2012 1:39 am

Quoting DocLightning (Reply 35):
I'm listening. How would you schedule it? There has to be a balance between giving the incoming officials time to set up their campaign and over-extending the lame duck portion of the year.

Difficult to say without knowing your system in much more detail, DocLightning. As you'll no doubt know, the British Commonwealth electoral system is very different - and arguably much more flexible. Basically the party which gains power can, if it wishes, govern for up to five years; but within that period the prime minister can call the next election at any time. There is no separate election for the PM, either - effectively, the leader of the winning party becomes prime minister the moment that the votes are counted, defeated MPs step down, and the new parliament usually meets within a week or two. Nor are there any complex changes in the bureaucracy, by and large the existing civil service appointees move straight on to serve the new government, at first anyway. So there is no 'lame duck period' - the changeover is much quicker.

It's customary, though, in setting election dates, to avoid the summer holiday period and Christmas (which, of course, both occur at the same time in Australia), and usually also to avoid the depth of winter (particularly in places like the UK). So Commonwealth elections tend to be called in spring or autumn.

The USA seems at the moment to have the worst of both worlds - a fixed election date in winter weather, a month into the new financial year, and so close to the Christmas period that the new government and Congress is unlikely to be 'up and running' until about February?

Off-hand, therefore, I'd reckon that some date in the Northern spring (April or May) would be much more suitable? People would have better weather for voting, and Congress would be 'up and running' in plenty of time for the new president to get changes through which would take effect in the next financial year instead of the second one of the term?
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RE: Now, Time To Face The "Fiscal Cliff"!

Sun Nov 11, 2012 2:05 am

Quoting tugger (Reply 11):
Quoting EA CO AS (Reply 9):Because ramming through ObamaCare against the will of the electorate somehow wasn't "hard ball" of them, right?

The electorate wanted it

Not the 2010 Affordable Care Act; the majority of Americans were against it when the President forced it through Congress, leading to the 2010 GOP Election Day victories:

http://www.cbsnews.com/8301-250_162-...ic-opinion-of-the-health-care-law/

Overall opinions of the health care law have barely wavered since its passage in March 2010, and support for it has never reached 50 percent in CBS News Polls. Back in May 2010, two months after it was passed, 43 percent of Americans approved of the law - that's the highest percentage to date.
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RE: Now, Time To Face The "Fiscal Cliff"!

Sun Nov 11, 2012 2:44 am

Quoting DocLightning (Reply 40):
Let the megacorps provide the drugs legally. Regulate it.

And tax it heavily to help pay for some of the problems it causes.

Quoting DocLightning (Reply 40):
The tax increases won't become relevant until 1/15/14 when the taxes actually need to be paid. We have some time to deal with this.

The IRS is going to need to have tax tables for employers Jan 1st. They need to make it available for the first payday.

Quoting DocLightning (Reply 40):
Both Mr. Obama and Mr. Boehner know that continued GOP obstructionism is not going to be viewed as the Democrats' fault by the American people.

That didn't happen in 2012 and I don't believe it will ape in 2016. In 2016 the percentage of voters being people of color will increase - I read somewhere that 10,000 Hispanics reached voting age every week. The GOP will not be able to admit that they were very wrong in this past election so they will end up with the same 30% of the voter. They GOP will still be running to the orders of the Tea Party, causing them to miss out on more of the moderate and/or independent voters.

And, in reality, the Party of No will loose a huge amount of power (or leverage) on January 1st. I believe Obama is going to have a long term deal on taxes before he takes the oath of office on Jan 26th.
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Sun Nov 11, 2012 3:06 am

Quoting Ken777 (Reply 43):
That didn't happen in 2012 and I don't believe it will ape in 2016. In 2016 the percentage of voters being people of color will increase

I think you missed the "not" in my post. I said that GOP obstructionism would NOT be viewed as the Democrats' fault by voters and Mr. Boehner knows that now because he already tried that stunt and it didn't work so well.
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RE: Now, Time To Face The "Fiscal Cliff"!

Mon Nov 12, 2012 12:19 am

The best thing may be for the Congress and Senate to do nothing.
The tax breaks will expire, thus raising taxes which the democrats in general want, seques will cut government spending which the Republicans in general want.

So far the only plans getting any traction involve can kicking, stimulus spending has been huge with minimal effect - at least what was expected - so everyone can duck for cover and point fingers, if the result is not pleasant and moving the economy then the Congress and Senate will have incentive to get something done.

I must admit that I am disappointed in the Senate, they have acted more like the Congress rather than show leadership based on their longer tenure. So many years without a budget cannot all be down to the Tea Party in Congress.
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Mon Nov 12, 2012 3:02 am

Quoting par13del (Reply 45):
The best thing may be for the Congress and Senate to do nothing.
The tax breaks will expire, thus raising taxes which the democrats in general want, seques will cut government spending which the Republicans in general want.

Yeah, but no one in the current government wants to get blaimed for causing another recession, which is what woulfd happen if all the tax cuts expired at once and Government spending was lowered. The funny thing about Government spending, is that many private employers benefit handily from that very spending.
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RE: Now, Time To Face The "Fiscal Cliff"!

Mon Nov 12, 2012 3:20 am

Quoting casinterest (Reply 46):

One of the downfalls of the American system (versus the parliamentary system) is that instead of compromising on spending initiatives between parties its just as easy to agree to everyone's spending plans....because borrowing is so easy.

There is no upper limit to spending for the US Congress, so why should either party agree to cut their pet projects?

They have for years effectively agreed to scratch each other's backs: Republicans get defense luxuries and Democrats get entitlement expansion. Will financial prudence ever rule?





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Ken777
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RE: Now, Time To Face The "Fiscal Cliff"!

Mon Nov 12, 2012 3:44 am

Quoting DocLightning (Reply 44):
I think you missed the "not" in my post

Oooops! Computing with bifocals is my excuse.   

Quoting par13del (Reply 45):
stimulus spending has been huge with minimal effect

What we don't know is how things would have gone without the stimulus.

Quoting par13del (Reply 45):
So many years without a budget cannot all be down to the Tea Party in Congress.

Nope. The Party of No was alive and well in the Senate. Remember McConnell's pledge to do everything possible to make Obama a one term President? That's where your un-passed budgets are.

Quoting casinterest (Reply 46):
The funny thing about Government spending, is that many private employers benefit handily from that very spending.

Of course they do. The Government puts up the money (often borrowed from the Social Security Trust Fund) and the private companies build the roads and bridges and airports. Pretty effective IMO, especially when those government dollars trickle down through the contractors hands into the community at large. A real trickle down economy.
 
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RE: Now, Time To Face The "Fiscal Cliff"!

Mon Nov 12, 2012 2:27 pm

Quoting casinterest (Reply 46):
Yeah, but no one in the current government wants to get blaimed for causing another recession,

I look at it differently, both sides will be able to blame the other equally for not coming to an agreement, but neither will take responsibility for the cuts and raises since they are "automatic"
Of course the administrator will be in the same boat, I guess it is like Flo and co in the Progressive commercial, all three have each other covered with their price / tax/ spend wands.

Quoting Ken777 (Reply 48):
Nope. The Party of No was alive and well in the Senate. Remember McConnell's pledge to do everything possible to make Obama a one term President? That's where your un-passed budgets are.

I also think the Democrats in control of the Senate would not pass a Republican controlled House bufget without placing a major "Democratic" stamp on it, at the end of the day, enough blame to go around. Whether they were passable by the Senate is debatble, but the House Responsibility is to proposse and pass budgets, they did that, the Senate is supposed to be the adjudicator and for whatever reasons, they have not been living up to that promise.
Personally, I don't think it is the duty of the House to propose a budget that they know the Senate will pass, that would defeat the purpose of the adversarial system, which I actually believe in, too much power corrupts absolutely.

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