Higher taxes cause a drag on the economy!?!? Say it isn’t so!
But President Obama’s first offer to avoid going over the “fiscal cliff” holds out the hope of at least some stimulus. This would include extending the 2 percentage point Social Security payroll tax cut, boosting a tax incentive to businesses, establishing a $50 billion bank for long-term infrastructure projects, and extending unemployment benefits.
The total bill: about $255 billion out of the federal government’s pocket – an amount the GOP would likely say needs to be offset by spending cuts elsewhere.
The argument in favor of such stimulus? The tax measures, at least, could minimize the drag on the economy from Mr. Obama’s proposed tax increases on the wealthy.
“The increases in the top two income tax brackets would put a drag on consumption, so I think, from the Obama point of view, the spending or tax cuts are designed to offset that drag to consumption,” says Michael Brown, an economist at Wells Fargo Securities in Charlotte, N.C.
Let’s go off the cliff. Democrats have been fighting for increased revenues. Republicans have been fighting for cuts in government spending. With the Budget Control Act of 2011, that the Republicans sponsored, the majority in the house Republicans, including fiscal hawk Paul Ryan, voting for, and signed into law by President Obama, it looks like both parties get their way to a situation that both parties created.
1. Time for Something Radical.
It’s been a long time coming. Republicans have been advocating for cuts in government spending for as long as I can remember, and Democrats have been fighting to increase revenue at least since the recession. So maybe it’s time both got their wishes. The cliff is a radical, extreme jump — a fundamental shift in public policy, and will significantly change the way we address budgeting in this country.
We got to this point because Congress decided that if we kicked the can down the road a bit, that we’d come to some kind of consensus in the future. But nothing has really changed, and maybe something radical like jumping off the cliff will force politicians to work together (or lose their next elections to moderate candidates).
2. We’ve Been Jumping Off Cliffs this Entire Decade.
People who choose to base jump have a hard time finding insurance because of how dangerous it is to jump off of cliffs. But we’ve been jumping off cliffs for the last decade. The home mortgage crisis, financial engineering, multiple wars and bailouts, these were just some of them. A combination of private and public factors have brought us to this point. We elected those who chose to bailout entire industries and start wars abroad. Many private citizens participated in clever financial schemes. Now we have to bear the burdens of those decisions, even those we individually may have opposed.
3. It’s Going to Hurt, but Maybe in a Good Way.
Sometimes when you jump, you get injured and it hurts. Sometimes the treatment for the injury is also painful, but often necessary. Could this plunge us into a recession again? Yes. But the pain of depressed economics is far less than the pain of continued irresponsibility that has gotten us into this mess. Finally we’re owning up to the decisions that we collectively and individually made and this medicine might be just what it takes to get us thinking clearly again so we don’t make the same mistakes in the next decade.
4. There Is No Going Back.
- We’ve kicked the can down the road for long enough. The previous fiscal cliffs we’ve jumped off of already, though much smaller by comparison, have lead us here and there is no going back to undo what has been done. We’ve stepped off, now all we can do is control where we land to the best of our abilities. By intentionally leaping off this fiscal cliff Obama and Congress will be taking a real step toward getting the budget back under control, there is no real choice left at this point.
5. At Least There’s a Parachute.
Things can and will go wrong, but at least we’ve got an economic parachute. American creativity, ingenuity and entrepreneurial spirit will ensure that we won’t leave a disastrously indebted nation to future generations, and we will recover from this painful, tumultuous economic period. We’ve got each other too, and that’s something important. while Americans will bicker, complain and disagree with one another, we will all endure this pain together and probably end up closer, and hopefully wiser as we look to the future.
You have got to love just how ideologically steadfast Obama is here. He knows the tax increases are going to be a drag on the economy, but he is so deep in his ideology that he is going to create that drag by doing the tax increases anyway.
Secondly, I am surprised that this article was even posted on Yahoo. Yahoo, mostly through ABC News was completely in the tank for Obama during the election. They had daily stories pushing all the Romney attack lines so it is somewhat strange that they let this slip by.
Lastly, if the Republicans relent on anything, it should be the $200/$250K rates only. Taxes are going up if Obama wants them to because all Obama has to do it what his is really good at doing, nothing. The Republicans cannot stop the auto increases if that is what Obama wants. Try to protect the middle class if possible. If Obama does not negotiate in good faith, start warning the public that the President has decided he wants to go over the fiscal cliff and he does not need us to do that.
Boehner needs to stand there in front of the cameras at a news conference and tell them, “We aren’t all that concerned about what you folks are calling a ‘fiscal cliff.’ In fact, sequestration is our minimum offer. Anything less won’t have the votes to pass the House of Representatives. Mr. Obama needs to tell us what other additional spending he can cut to further reduce federal expenditures to the point that our country spends no more this year than it did last year.”
Let the Campaigner in Chief figure it out, instead of his usual repertoire of community organizing.
After a wild and bumpy ride, the Republican-controlled House of Representatives passed Speaker of the House John Boehner’s Budget Control Act Friday evening. The vote fell along party lines at 218–210, with 22 Republicans voting against the bill.
And now Boehner says
“But going over the fiscal cliff is serious business. I’m here seriously trying to resolve it, and I hope the White House would get serious as well.”
If Republicans didn’t want to go over the so called “cliff” why did they create and pass a bill to do just that?
Rueters, in case anybody missed it, summed it up best with (Obama wants)
authority to unilaterally raise the U.S. borrowing ceiling
Aside from Obama issuing 139 Executive Orders (compared to Clinton-15 in 8 years) and making up laws like the Dream Act that Congress would not pass, now he wants a blank check on spending.
You (whoever voted for Obama) elected a Socialist Dictator. Enjoy.
Lets see, Increase taxes on some and give a stimulus to others. Seems a little like “Wealth redistrbution” no?
‘Reaper’ has at least captured the essense of carbon credit cap-and-trade, if/when it becomes a reality.
Cap-and-trade will make everything- but especially energy derived from hydrocarbons- more expensive.
And since poor people won’t be able to afford it, Energy Assistance programs will inevitably be expanded (thus creating yet another constituency for more government).
And who’s to say Energy Assistanc e won’t expand (as Obamacare already has) to include subsidies to familes with incomes up to $93,000?
Perhaps it’s crass to cry “socialism!”, and “from each according to his ability, and to each according to his means” but, isn’t this essentially where all this is headed?
It’s somewhat understandable why some championed socialism in, perhaps, 1934. But by now, haven’t we all seen all too much evidence that, economically, it just doesn’t work?
Why not have the military do infrastructure? Hell, it is exactly what we were paying them to do in Iraq. Why increase the unemployment rate of 20-30yr olds by reducing the military payroll? Don’t add 50 billion for infrastructure projects and reduce the military. You have dedicated, disciplined workers who even have experience in the work. Just re-allocate your assets…