Fiscal Cliff

Then what is all this talk of cutting spending? It would do the exact same thing would it not?

Not necessarily.  The question is a matter of degree.  Do you pull the band-aid off quickly (fiscal cliff), or slowly remove it, allowing the patient (economy) to get used to the sensation?

Or

The question is a matter of degree.  Do you pull the band-aid off quickly (fiscal cliff), or slowly remove it, allowing the patient (economy) to get used to the sensation  prolonging the pain while not really curing the patient?

I agree with you Kate.  The art is finding the correct balance.  I for one am nowhere near in tune enough with economic markets to know what that balance is.  

Of course, compared to the current crop of monkeys beating on typewriters in Washington, I don't know that I could do any worse.

It's a 10% across the board cut, no wiggle room.  It's not the same as cutting overall spending by 10%, it cuts *everything* by 10% and there's no discretion.  IE, a department is not allowed to decide to cut one program by 5% and another by 15% to reach a 10% overall cut.  So there's no discretion allowed/involved in what gets cut and by how much.  It's 10% across the board, period, no negotiation.

Yeah, the non discretionary cuts would be destructive in how they'd go into effect.  I am all for cutting spending, but it has to be done logically.

IMHO the more destructive piece Jan 1 is the expiration of the Bush tax cuts.  It would take thousands of dollars away from just about every middle class family and would send us into a bad recession almost immediately.

This is a fine example of how unwilling Washington is about actually doing anything. The debt ceiling is what caused this. They punted this so they would not have to do anything. I have absolutely ZERO doubt they will step in and stop this from happening and will continue to keep spending high and taxes low.

10% across the board is nothing. Nothing. It does not even begin to actually solve the problem. Yes, it will effect the recovery... but all the dooms day predictions are nonsense.

And the expiration of Bush Tax cuts... every Dem has railed against them, yet everyone has upheld them... because now is not the right time. Every Repub has praised them... yet they did nothing to trigger an "economic boom". They were done to make everyone go out and spend to prop up an economy and distract everyone from two wars going on. I mean Bush himself... even if he believed in the cuts, he also believed in the importance of the wars. All he had to do is just say, well not right now with these wars we need to pay for... that is CONSERVATIVE. That is FISCAL RESPONSIBILITY... they love to preach so much.

Letting the Bush tax cuts expire again will do nothing to solve the actual problem, but it is a very easy step in the right direction. Yet every single time they come up for expiration... they get extended.

For me, the most concerning part of all of this is the AMT.  If we go over the cliff, the AMT will kick in for a large portion of taxpayers.  

That will have a larger impact than the expiration of the other Bush tax cuts.

I thought the fiscal cliff issue was the fear of them not passing a budget.  In other words if they do not pass a budget then we do not have one.  If we do not have a budget then government can not spend any money because it has nothing to spend it against.  So it shuts down until one is passed.  Funding stops, jobs stop, projects stop, etc.....

Isn't that the issue or am I just completely off base? (totally possible)

If that is what it takes for them to fix it once and for all maybe that is exactly what needs to happen.   We have been putting off till tomorrow for way too long.

yep.  totally off base.

That happens every time a budget comes up. this is from them not doing anything to raise the debt ceiling. They could not agree on tax increases or spending cuts, so they put it off for another time. They agreed to spending cuts and tax increases to go into effect by this time if no agreement was reached by then.

I'm willing to put money on them extending the deadline, or coming up with something to not cut spending or raising taxes... just a hunch.

the fiscal cliff is just the catchy name given by the media to drum up some drama.

while reducing spending and reducing the deficit would be good...the impact on the economy would be not be ggod.  It is projected that possibly effects of the fiscal cliff would decrease the already dismal US GDP, spinning the US back into a recession.  Unemployment numbers would go up, no matter how they spin them.  And billions of dollars would be taken out of the economy.  I agree that spending and the deficit need to get under control...but the fiscal cliff would not be a good thing for most of us. 

yep we need to make sure Army gets more tanks weather they want them or not.

Yeah that's it, that's all its about, whether or not we will starve babies to buy more tanks.

The Catch-22 is that government spending -- all that money that we cannot afford to sustainably keep borrowing -- is counted as a major factor of GDP.

It's a damned if you do, damned if you don't kinda thing.

The way I understand some economists is this;  Letting the 'cliff' happen is only an (arguably)  devastating thing if we do NOTHING and the spending cuts stand.  However, if we use the cliff as an "etch a sketch" (most Repubs will understand the analogy), then both sides can come to the table and negotiate without upsetting their bases.  Dems can say "See, we got a better deal on spending cuts to social programs-Repubs can say "See, we got a better tax deal".   The end result=moderate spending cuts with moderate increase in revenue.  THAT is the best solution. 

But Grover Norquist and needs to get out of the way.

(Van Halen playing in background)

JUMP, baby let's JUMP

??yep.  and the higher the debt the closer it comes to exceeding our GDP.  I think it's over 75% right now.  Wouldn't take much to get over 100%.  Just interest rates going up slightly would probably do it.  You don't hear much talk about this.  The administration wants to pretend that it's not significant.  They would much rather talk about Big Bird.

No one is talking about this. Is Ryan out there telling everyone his plan will continue to run deficits until after he is dead? Of course not, he's a fiscal conservative.

This was an interesting thread, devoid of partisian politics until....that little bity part at the end.

Happy now?