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The fiscal cliff

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KI4MVP

formerly LJ4MVP
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I thought I would split this out of the election thread as it's really a separate topic.

a summary from wikipedia

The United States fiscal cliff refers to the effect of a series of enacted legislation which, if unchanged, will result in tax increases, spending cuts, and a corresponding reduction in the budget deficit.[1] These laws include tax increases due to the expiration of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and the spending reductions ("sequestrations") under the Budget Control Act of 2011.

The year-over-year changes for fiscal years 2012-2013 include a 19.63% increase in revenue and 0.25% reduction in spending.[2]

Some major domestic programs, like Social Security, federal pensions and veterans' benefits, are exempted from the spending cuts. Spending for federal agencies and cabinet departments, including defense, would be reduced through budget sequestration.

The deficit for 2013 is projected to be reduced by roughly half, with the cumulative deficit over the next ten years to be lowered by as much as $7.1 trillion. The Congressional Budget Office reported an increased risk of recession during 2013 if the deficit is reduced suddenly, while indicating that lower deficits and debt over time improve long-term economic growth prospects.

The Budget Control Act of 2011 was passed under the political environment of a partisan stalemate, in which Democrats and Republicans could not agree on how to reduce the deficit. It was thought that the blunt cuts of budget sequestration and sharp revenue increases would be mutually undesirable to both parties and provide an impetus and deadline to bring the sides together to solve the deficit problem.

The projected effects of these changes have led to calls both inside and outside of Congress to extend some or all of the tax cuts, and to replace the across-the-board reductions with more targeted cutbacks. It has been speculated that any change is unlikely to come until the period roughly between the 2012 federal elections and the end of the year. Additionally, the debate may be exacerbated by the expectation that the debt ceiling is expected to be reached before the end of 2012,[note 1] unless "extraordinary measures" are used.[3]

Nearly all proposals to avoid the fiscal cliff involve extending certain parts of the 2010 Tax Relief Act or changing the 2011 Budget Control Act or both, thus making the deficit larger by reducing taxes and/or increasing spending.

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

Nobody agrees that we should let this happen. The problem is it will all happen unless action is taken. I believe there is a deadline for action to be taken to avoid the sequestration part of this, but I can't find it. Will the two parties finally be able to work together to prevent this economic disaster which has been left hanging over our heads heading into the election. This all has to be addressed before the new congress takes over.
 
You make this fiscal cliff sound like a good thing, MVP.
 
Except the part where a sudden deficit decrease would plunge us back into a recession.

If we have to print and borrow trillions of dollars every years to stay out of a recession, are we not already in one? Or do you find this to be sustainable economic growth?
 
The year-over-year changes for fiscal years 2012-2013 include a 19.63% increase in revenue and 0.25% reduction in spending.

LOL. Such draconian cuts. Remember the budget increases by 5% or so next year automatically. So now it will only grow by 4.75%. Granny will be starving in the streets eating from trash cans. What are we going to do to stop this?
 
If we have to print and borrow trillions of dollars every years to stay out of a recession, are we not already in one? Or do you find this to be sustainable economic growth?

I don't want to sustain it, but I don't want all of the cuts to come at the same time either. It's like weight loss, someone may want to drop 30 pounds but it's not healthy to do it all at once.
 
^^ I think it means an actual reduction in spending vs a reduction in growth of spending.
 
Nothing they say means an actual reduction in spending.

it's not a politician, it's wikipedia, so I think it means an actual reduction. The 20% increase in taxes is what would trigger a recession.
 
I don't want to sustain it, but I don't want all of the cuts to come at the same time either. It's like weight loss, someone may want to drop 30 pounds but it's not healthy to do it all at once.

Cutting spending by 0.25% isn't cutting it all at once.
 
it's not a politician, it's wikipedia, so I think it means an actual reduction. The 20% increase in taxes is what would trigger a recession.

The Budget Control Act imposed caps on discretionary spending and provided a mechanism for achieving an additional $1.5 trillion in deficit reduction over the next 10 years through the Joint Select Committee on Deficit Reduction (the so-called supercommittee). The failure of the supercommittee to find that additional deficit reduction will cause a $1.2 trillion spending reduction over 2013-2021 through an across-the-board process known as sequestration. The sequester will achieve $492 billion in savings from defense, and an equal amount from the remaining 5/6 of the budget, which covers non-defense discretionary spending and entitlement programs. This will result in a total of approximately $1 trillion in defense cuts relative to the president’s request over the next 9 years.

Under the fallback sequester, defense spending will increase by 2 percent over the next 9 years relative to the president’s request for 2012. (This is sharply below the rate of inflation, which will increase by 21 percent over the same period.) By contrast, the other 5/6 of the budget will increase by 68 percent. A comparison to the CBO baseline produces a highly similar result. In real terms, this represents an approximately 20 percent net reduction in defense spending and an approximately 50 percent net increase in cumulative non-defense spending.

http://budget.senate.gov/republican...5f761e318&SK=E88C50B78417C8715E0A78FE47ABD71D
 
Why shouldn't this happen now? Gridlock started this path. If we would have had a budget in the past 3 1/2 years we wouldn't be where we are at right now. This issue got thrown around the campaign trail for months instead of it being resolved like it should have been. The American people say they want congress changed and bipartisanship, but then turned around and voted 90% of the same people in to both the house and senate. Now the day after the election is over, play nice and get this shit done? That is exactly wrong with politics.
 
The tax increases are a travesty, but if they don't raise taxes they will just print the money and take it from us that way by increasing our cost of living. There are no spending cuts. The whole thing really is a non issue. The fact that the media is whipping everyone up in a frenzy over nothing shows how much control they have over the sheep. They will never make any actual spending cuts if this "fiscal cliff" is some national tragedy.
 
What needs to occur is an across the board analysis of federal departments, a cut of funding, and consolidation.

There are so many redundant departments, with a majority of funding going towards the management of these departments. Careful consolidation would eliminate a considerable amount of managerial costs, as well as numerous other costs.

Now people may be saying "Caf, cutting jobs is the last thing we need". Which is somewhat right. Cutting jobs in the private sector is the last thing we need. However, the government shouldn't be in the business of having jobs that do not affect private sector growth.

For instance, NASA should not be getting budget cuts where other bullshit departments are seeing budget growth. NASA's collaboration with the private sector allows for more openness in the scientific community allowing for more progress in terms of technological advancement as well as financial growth in the private sector. Defense budget also allows for much growth in the private sector. Defense funded research is one of the biggest catalysts for technological advancement.

However, both these departments can use consolidation and careful inspection of it's budget. A lot of this money gets thrown out on garbage research. There are a lot of people that live very comfortably exploiting the government. Perhaps one of the biggest things that needs to change is the idea that if you don't use your full budget, your budget gets cut the next year. Therefore people purposely waste money in order to ensure their budget does not get cut. Budgets need to be more efficient and done in good faith. If you don't need as much money this year, that should not affect how much money is awarded next year. Monies should be awarded on need, not on a precedent.
 

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