We a
pprehensively advance through this nail biting moment in history as a great Nation floats, uncertain, caught in a holding pattern, hoping its leadership will find wisdom enough to avert the so called Fiscal Cliff, even if most of us don’t fully comprehend what such a cliff entails, or even if such a thing exists. We’re too busy struggling, hanging on to whatever we have, hoping for stability, and hoping that tomorrow brings some relief to our stress.
So let’s look for a little insight into what astute and gifted minds are really doing deep in the core of the negotiations apparently so critical to the very future of the Nation. Let’s dig for a sign of prescient coherence determining the very nature of our future.
Here is a discussion/interview which John Mauldin recently conducted with Rob Lehman and David Krone, the chiefs of staff for Senator Rob Portman (R-OH), and of Senate Majority Leader Harry Reid (D-NV), respectively. Lehman and Krone are two very key individuals in the current budget negotiations. Mauldin, who writes on economics and investments, usually refrains from using an ideologically tempered pen. Late in the somewhat non-descript forty minute discussion, a head snapper gets dropped by Lehman, who works on the Republican side of the negotiating table.
At minute 37:00 of the linked video Lehman (R) makes a statement about spending. “We’re talking about reductions in the growth of spending.” He confirms that there will be no reduction in spending. Krone (D), sitting next to him, is drooling out of camera shot. Washington does not spend less year-to-year. Ever. Is that clear? Negotiators are only negotiating amounts of spending increases and areas of such increases in spending. That’s it. Don’t believe anyone standing at a podium performing waffling prevarications in Washington while making claims of imminent spending cuts.
Oh, but wait, you say, what about that the $16.2 trillion in debt which we cannot ignore? When you spend $3.6 trillion, but receive $2.3 trillion, you have to cut over a trillion from your annual expenditures somewhere along the line if you harbor any hope of getting ahead of the backlog of debt and the corresponding overwhelming interest. What about that looming additional commitment in entitlements which will more than quadruple that debt? Hmm. Well, forget about it. Ignore it. Have a good Christmas, and Happy New Year. You’ll never be able to endure that burden, so why worry? We’ll just crank up the presses. Isn’t that how you pay back what you owe? Just print money?
Obama continues down the seemingly never-ending campaign trail, arrogantly pretending that he is providing tax cuts to the middle class and further pretending to demand a “balanced approach.” He has repeated his limited talking points at every recent use of the teleprompter. Someone might explain to him that retaining the Bush tax cuts which are due to automatically expire at the end of December, does not mean reducing the middle class tax rates. He either has no grasp of what he is claiming, or is knowingly lying to the taxpayers.
There are no tax cuts on the horizon and there are no expenditure reductions coming. Spending is out of control, and the truth is that tax increases are coming for all levels of society.
Everyone knows that the mantra “tax the rich” is just demagoguery, . . . well everyone except those with a paucity of common sense. Tax increases for the so-called rich will not put a dent in the deficit. And Obama’s claims of the approximately $10 billion in revenues anticipated from the rich is annoying. He still won’t acknowledge that such supposed anticipated amount is over 10 years. Please, someone tell him. The very rich probably don’t much care, since the increases will simply mean less real redistribution of wealth, but the increase will not impact their lifestyles.
Obama professes that only agreeing to his demands would avoid the ‘fiscal cliff’, and doing otherwise, “would be bad for the economy, it would be bad for those families (supposedly the whole middle class), in fact it would be bad for the world economy.”
He’s getting ahead of Republicans on the “message,” so that no matter what happens, Boehner and the Republican controlled House of Representatives will eat the negative fall-out. And the fall-out is coming, but what is not coming is spending reductions.
A constituent of the vast baby boomer generation with a career which has been fortunate to know the ponderous corporate worlds, as well as the intimately pressurized, and invigorating entrepreneurial domains of high tech and venture capital, I have harvested my share of mistakes meandering through corridors of enterprise from Silicon Valley, to London and endless, colourful, sometimes praetorian points in between. The voyage has provided an abundance of fodder for a pen yielding to an inquisitive keyboard, a foraging mind, and a passionate spirit.
Whether political or business or social or economic or personal, is it not all political? It is a privilege to write, and an even greater privilege to be read by anyone, and sometimes with the wind at my back the writing may occasionally be legible. I do not write to invite scorn, nor to invite respect, but if I get really lucky the writing can stimulate thinking. I also write for the very selfish purpose of animating my own processes, and engaging the best of what life offers. Above all, whether biting fire or swatting shadows, I am grateful to be gifted the freedom to write and publish whatever flows down to the keyboard. To all those who enabled this freedom, and to all those standing guard to preserve it, I am indebted.
@Richard Wheeler:
Richard, tell me, what’s the going rate for a spell checker these days? Obviously, not enough for you to honor your debts as you agreed to.
Wells Fargo? You mean the bank that took BILLIONS from the taxpayers at ZERO percent interest, used that money to make a tidy profit, and then bragged about how it paid back the TARP billions when they first claimed they didn’t need it and then saw a prime opportunity to makes tons of cash using taxpayer dollars?
Figures; a weasel borrows from a weasel company.
Of course, you admit that your orignial loan was with World Savings, created by Herb and Marion Sandler who were infamous for pushing loans on people who could never possibly have any hope of paying them back. They got rich, dumped World Savings on Wachovia, which was bought out by Wells Fargo.
Seems weasels stick together.
Retireo5 Now you hate banks. Hell, you hate everybody.You probably hate Santa and the Easter Bunny. Sad old lady.
BTW It’s not my fault you can’t spell.
@Richard Wheeler:
No, I don’t hate Santa or the Easter Bunny. I also don’t hate banks, even big banks. What I do hate are banks that run their businesses into the ground and then let the taxpayer bail them out. That’s why I do business with a small town bank that has one of the highest ratings in the state, and because I am a face with a name to them, not just some account number. I also deal with a small town bank that refused to take TARP money, although the government was trying to push it on them.
And it’s not my fault you’re a loser who couldn’t make your house payment without the help of taxpayers. But golly gee, I still get to pay income taxes that will go to helping you.
The reason Democrats want Republicans to come up with the cuts, is their standard modus operandus, so they can use that against the Republicans to continue to demonize them in the press. As stated, Ryan and other Republicans have already provided numerous cuts that can be made, so what really needs to happen is for Harry Reid and the Dems to stop grandstanding, tear themselves away from the MSM microphones and sit down with the Republicans to seriously talk discuss the cuts. (IE. do their flipping jobs). As usual Obama will sit back or golf and let others do the real work, then take any possible credit afterwards.
But the truth is, this is little more than a pathetic circus sideshow. The Democrats wont allow any actual cuts unless it involves the military. Any deal reached will not do anything to reduce the deficit. We are going off the cliff. IMO that is the Democrat’s intent, and secretly what the progressive Republican establishment wants as well. I don’t believe it is any mistake that Bohner lay down all his cards as soon as they were dealt. Both sides want to keep up this insane ride, I suspect because each thinks that they will be who the public turns to when the train-wreck comes.
Eventually we are going to need a whole lot of tar and feathers.
@Skookum: The ‘free market’ is an anachronism—like ‘libertarianism’.
@retire05: There’s no doubt that the tax law needs to be changed so such iniquities don’t exist.
If my memory serves me I recall during the Bush years when the tax cut proposals were debated all Democrats could say is the proposed Bush tax cuts were just for the rich. The rich could buy a Lexus with their tax cut while the middle class could barely afford to buy a muffler with theirs was one of the demonstrations. So as it was portrayed the middle class and poor got virtually nothing. Now that those very tax cuts are set to expire and Democrats love them and are fighting hard to protect the very ones they hated when they were proposed. Hypocrisy is Democrats sidekick it seems and no one in the main stream media bothers to point this out.
If my memory serves me I recall during the Bush years when the tax cut proposals were debated all Democrats could say is the proposed Bush tax cuts were just for the rich. The rich could buy a Lexus with their tax cut while the middle class could barely afford to buy a muffler with theirs was one of the demonstrations. So as it was portrayed the middle class and poor got virtually nothing. Now that those very tax cuts are set to expire and Democrats love them and are fighting hard to protect the very ones they hated when they were proposed. Hypocrisy is Democrats sidekick it seems and no one in the main stream media bothers to point this out.
If we go over the so called fiscal cliff we will end up with the Clinton era tax rates, which Democrats thought were so wonderful, so why aren’t they out in force telling everyone how wonderful it will be to get back to the good old days of Clinton tax rates? Instead Obama is working hard not sitting down to hammer out a deal with the Republicans. Meanwhile the press can’t muster up a question with any sense of history, irony or reality.
It’s all in who will get blamed and how it will look politically. He knows the media has his back.
This little video I found interesting concerning the current debate.
@Greg:
The amount of people making $20.000.000 annually in income is pretty small. The income tax only covers income. Even $10 million a movie, movie stars would have to make two movies a year to bring that in. CEOs typically take a huge amount of their compensation in stocks, just so they don’t have a huge income tax bill.
As for the GOP offering no cuts, that is blatantly false. Corker has presented cuts, Coburn has presented cuts, and Eric Cantor has been running the You Cut website for three years. Whether you like Ryan’s budget or not, at least he put one forward. We cannot cut anything, anything until the democratic senate puts a budget in place. Do you know how much waste they could reduce if they went through an actual budget process?
Now Obama has offered $1.6 Trillion in revenue, no debt ceiling, and $400 Billion in cuts. Now that is balanced.
Mully
that’s a great link, very good to read the real truth, and is not to be neglected by the half majority who vote on lies his father told him,
bye
Each time Obama has sent up his budget (wish list of liberal wet dreams) the Senate has refused it, often all or almost all DEMOCRATS have rejected it.
This fiscal cliff-avoidance plan by Obama is just another one of his fantasies.
He wants Congress to ABDICATE their position of purse string holder and allow HIM to take over (USURP) all debt-limit control!!!
He wants MORE “STIMULUS!”
(That’s more spending for those who are slow.)
He only wants to raise the taxation RATES.
He wants all those making more than $200,000 to pay more as if that equates with being ”the rich.”
His fantasy of math is even worse.
He supposes his higher tax rates will bring in $1.6 trillion in ten years.
He ASS u ME s that no ”rich” or well-paid middle class taxpayers will adjust their incomes whatsoever!
(Those who saw what EXTRA 2012 dividends were handed out by Obama Tax Avoider companies know this is false.)
I think he watched too much Disney as a child:
He thinks we live on Pinnochio’s Fantasy Island.
He thinks if we all believe it will happen (like Peter Pan).
He has Dumbo ears.
And a Goofy baseball toss.
Typical comments from the lefties, especially Greg.
“Balanced approach”. What?!?!?
Let’s make this as simple as possible, shall we? Let’s assume a starting budget of $3.8 Trillion. Revenues will be $2.5 Trillion, resulting in a deficit of $1.3 Trillion.
The latest Dem proposal is $1.6 Trillion in new revenue and $400 Billion in spending cuts, but that is over ten years, so that the revenue garners only $160 Billion per year, and the spending cuts tally $40 Billion per year.
All that sounds good and many people would be apt to combine the two to get $200 Billion reduction in the deficit for the next year. But that isn’t correct. That $40 Billion in spending “cuts” only applies to the “rate of spending increases” that automatically go into effect every year. Currently, those tally around 4-7%, depending on the year. Let’s be a little conservative, therefore, and assume a 5% increase per year in spending. 5% of $3.8 Trillion is $190 Billion. Take away $40 Billion and you are left with $150 Billion in increased spending, for a spending increase the next year to $3.95 Trillion. Correct?
Now, annually, given no changes, federal revenue generally increases at around the same percentage as GDP. So, if GDP increases by 3%(considered good by most people), then revenue also jumps by around 3%. For the purposes of this example, I’ll increase it by the same exact percentage. Given that, we could therefore assume that revenue, for the next year, will increase to$2.575 Trillion. Add in the assumed revenue increases from higher taxation, and we get $2.735 Trillion.
Subtract the revenue from the spending, for that next year, and the deficit is cut to only $1.215 Trillion.
Sounds good, right? I mean, that’s $85 Billion less we have to finance, correct?
Not so fast there, friends. Because when you look at the years beyond that first year in, with new revenue and spending “cuts”, the deficits start to climb. Alarmingly so, in fact. Extrapolated out, at the end of that tenth year, the deficit will have risen to over $2.6 Trillion per year. And all of that assuming a constant 3% GDP increase, with no adverse effects from a tax hike neither of which is very likely.
Why is that? Because the automatic increase in the budget from the auto increases on the baseline budget far outstrips the increase in revenue, both from higher taxation and the annual increase due to GDP increase, and that measely little $40 Billion annually in spending “cuts”, that only come out of the spending increases, still leave the government with higher spending increases over that ten year period than they could ever hope to overcome with any amount of taxation.
IT’S THE SPENDING, STUPID!
And anyone telling you any differently isn’t really looking too closely at the issue(s) at stake here.
Richard Wheeler
don’t pick on retire05,
you have a spelling problem yourself,
and we where to graceful to tell you before you attack another.
W T Sherman
let it burn you said,
and that is a very wise advice, if we know when the big wood fires occur this year and last around the COUNTRY,
they worked so hard to save the houses and PEOPLE, and then they let burn the back part to save lives,
but they where experts they knew what to save and what to let burn,
but OBAMA don’t have any expertise in the problem, otherwise he would have started in the previous years of his term to slowly dis-inflate the balloon of entitelements, so to not wait for the last minute like we are now to know that the REPUBLICANS DEMAND HIM TO ENGAGE AND CUT THE HEAD OF THE OBAMA’S HEALTH CARE DRAGON AND LET IT DIE, OR LET GO the many unionize government employees
doing nothing but destroying the businesses will to continue .
they ignite the fire and are crying to the REPUBLICANS for help saving his house
Ah, well. There’s a default plan already. It’s what we’ll get if no other agreement is reached. Here’s how the White House would implement sequestration: OMB Report Pursuant to the Sequestration Transparency Act of 2012
I suppose it’s one way to get some of the spending cuts we need.
@retire05:
The two plumbers analogy was spot on. It’s going to remove incentives for both individuals and businesses to work and grow wealth.
This kind of policy is a disaster for our nation and for all people. Not just rich people…everybody. When they start feeling the pain of this…they are going to ask “why” and who did this to me. And Obama will wave his hand and they will all blame republicans for the “very” policies that Obama himself pushed for, advocated, fought for, and won and election on that THEY themselves voted for.
When they finally wake up…and realize Obama’s policies are punitive to Americans and families…there’s’ going to be a lot of angst and woe. Hopefully Anderson Cooper will be there to bare witness to it. And if they are successful in blaming republicans for this …and they will be, ALL of the republicans and moderates will be washed out of the house and senate over public anger at their higher taxes, etc…and there will be no opposing voice left in gov….kum-ba-ya. THEN the veil will be lifted. There will be no one left to blame. No one left to pass responsibility off on to except each other. And as the people, angry and tired from these policies, stripped of their personal wealth and choices turn to Obama to save them…he will once again wave his hand to make them all go blind…and it won’t work.
But, Obama’s legacy will go on. The media will continue to protect him and liberal/progressive policy/ideas and their legacy at all cost. And Oliver Stone will re-write it all after he’s gone (maybe before) and make a feature length movie starring Warren Buffet to educate people and promote unity and posit Obama as the great leader who rebuilt our nation from the ground up. Of course..he didn’t “really” build that.
It’s a perfectly executed self-immolation of our nation.
But, there’s one thing the president (and our liberal friends) didn’t count on. There is only so much forcing you can do with people. And assumptions that people will continue to push the wheel for you….are just that…assumptions. The lesson has been played out economically over and over and over all around the world. And those policies have never been successful at doing anything but producing a crumbling nation of alcoholics (for those that can afford it or make their own anyway) and starving people who have zero motivation, zero imagination and who simply “exist” to work for the state who continue to take more and more from their people.
@Dc:
it’s even worse than my two plumber’s senario. ZeroHedge has a great article, with links, on how a single mother with one child who earns $20,000/yr has greater buying power and greater disposable income than a single mother with one child that earns $60,000/yr. The $20K/yr mother is eligible for Section 8 housing, food stamps, subsidized utilities, Medicaid, free cell phone with minutes, TANF and a check from the IRS for her EITC. The $60K/woman has none of those benefits, and without having to pay for the basics, the $20K/yr woman is free to spend her money on large screen TVs, lottery tickets, or any other foolish purchase because she actually has more disposable income. And unlike a woman on unemployment benefits, she will pay no taxes on her free stuff from the taxpayer.
Now, liberals will say “ugggghhh, who wants to live in a housing project?” but the government is getting away from those and allowing Section 8 housing which you will find in some of the nicest neighborhoods in the nation.
The federal government actually discourages working, and damn sure discourages working full time.
@Greg:
Greggie, are you not disgusted by the number of agencies that we support that are useless? How many of those 200 pages of agencies do you think we could get along without?
@retire05, #68:
Actually, the list of U.S. Government Departments and Agencies, presented online by alphabet, requires 24 pages. There’s a separate page for each letter from A through W, and a single page for X through Z. While the letters D and F might take 2 typed pages each to list—Department and Federal being rather popular beginning words—most letters would take far less than a full typed page. That being the case, “200 pages of agencies” would be at least a 10-fold exaggeration of the actual number. I realize that republicans tend to be fond of exaggeration, but multiplying by 10 does seem a bit excessive.
Please feel free to print out those 20 or so pages. You can then line through any departments or agencies that you believe to be particularly useless or reprehensible with a No. 2 pencil and mail the results to Jon Boehner. You might want to consider leaving the U.S. Postal Service untouched, if there’s any chance you might want to mail him something else in the future.
retire5,
They are going to find out when the tax revenue comes due. There projections about how much is going to be “paid” coming in on revenue earned…is WAY off. Our income dropped by 1/2 this past year. Most people in same boat…either one or other spouse loosing job or can’t find full time employment. And more and more people are working for cash, odd jobs. They are depending on the very people they are screwing (self employed 6 figure and up) to make up the difference. And they aren’t going to get it.
People have no incentive to expand their business…when the next dollar they earn will be taxed at much higher rate. They’d rather spend the little free time they have with their families…given they are otherwise financially ok…than to work another shift just so Uncle Sam can take a bigger chuck out of it.
@Greg:
Greggie, I don’t have to print anything out. As an example, I will give you a clear case of useless agencies.
We all know about the Bureau of Indian Affairs (BIA), but there are FIVE other agencies that are designated to do EXACTLY what the BIA does. But because of the redundancy of agencies, nothing gets done. So let’s just cut those agencies out completely, then add to the cut the Department of Education which has done NOTHING to uncrease test scores in American students.
@Greg:
Greggie, why do I need the USPS to contact John Boehner? He has a wonderful invention in his office called the “telephone” as well as email. Guess you never heard of those methods of communication.
I’d say that the agencies and departments in the US government must prove to We, the People, that they are viable entities within the government that deserve to have continued funding, rather than it be that We, the People, must prove they don’t. After all, it’s OUR government, is it not?
GREG
the ugly-est is cutting the MILITARY by billion on a time of war,
when the WARRIOR are being shot in the back by those they trained,
and further more, keeping a minimal even less than less military after 2014,
this is most dangerous specially with those enemies tactics of bury clusters bombs,which is awful,
they can’t get that war finish? what is wrong with OBAMA?
didn’t he killed enough of the BRAVEST already?
don’t he and anyone know this is a snake nest?
Obama likes to tout his mass of economists who see it his way.
Paul Sperry at IBD shows that Obama’s OWN economists side with his opposition.
Bush’s tax cuts should ALL stay!
White House Data Debunk Myth Bush Cuts Built Deficit
Sadly for the C- average student, Obama, you actually have to READ the White House full report to get to the guts.
Like on pages 411-413.
The tax cuts WORKED!!!!
Not only this, but those Bush tax cuts didn’t ”cost” the Treasury a penny!
AND they also did not increase ”income inequality.”
@Nan G: #75,
Unfortunately, I’ve noticed that economists fear making statements on Real Spending Cuts. This may explain attitudes on the Hill such as Rob Lehman’s as noted in the above article. They’re falling in the same line Krugman is standing in which doesn’t want to consider actual cuts in government spending. The Fear Factor has spread the disease. None of this is good news.
Someone, somewhere has to begin reducing the spending, not just reducing rate of growth in spending.
Imagine , the LATINO vote 78/cent OBAMA because he gave them the dream act
right before the election, AND GERALDO said IF MITT ROMNEY WOULD HAVE GET ONLY 7/CENT more LATINO VOTES HE WOULD HAVE WON THE POPULAR VOTE,
IT’s ironic to add that MITT ROMNEY know more than OBAMA, THE LATINO PROBLEMS, HIS PARENTS LIVED IN MEXICO AND HE WAS MORE INFORM AND ABLE TO HELP THEM BETTER THAN OBAMA
PLUS GETTING THE COMPANIES BACK TO CREATE JOBS FOR ALL AMERICANS,
which won’t happen now, because nobody trust OBAMA INTITELMENTS TO COME
AND SEND THE THUGS TO THEM, TO HARASS THEM,
GREG
the STATEN ISLAND PEOPLE ARE VERY DISAPPOINTED
WITH THE FEMA agency performance, seem to be a big failure
to help them the right way they are suppose to, he told it PUBLICLY,
and rightfully,
and they probably add up more pages and more agencies,
since the last time you counted