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Why didn't Congress and Obama attempt to make a deal months ago regarding the fiscal cliff. Even if Obama weren't re-elected, the deal would already have been in place. So why did they all wait this long to come up with a deal? I can't believe (I really can but I'm still shocked) our government would literally manufacture a 'temporary deal' aka crisis, then procrastinate this long to actually do something about it. It's disgusting. I know I'm liberal and all but tax increases aren't the only thing that's needed to slow government debt, we also need to cut spending and to avoid another crisis look at CBO projections on the debt in 2016 and raise the debt ceiling to those levels. Yes, I know raising the debt ceiling to $20-21 trillion sounds bad at the moment but think of it this way, its going to get that high regardless. So we could either go through a "fiscal cliff" type crisis annually, or just raise the debt ceiling and get to work on what to cut and hopefully never reach the $21 trillion mark.
What Congress nor the President realize is these deals or better yet no deals, are a huge contributor to slow growth. Who would want to invest in a economy when they already know gov't crisis are going to happen annually? Not me, I'd rather just stock-pile my cash and keep away from investments if they are going to keep scaring the market/investors. Ideally a balanced budget would be great by 2015 but of course that would never happen. But you know one funny thing about this 'fiscal cliff' non-sense? If we do go off the cliff, some say its probably what we need but how long will that spending and tax-increase be in place? A year? Psh. Its not worth it, our gov't would cut everything for a short-period of time then get back to having a unbalanced budget so it would be pointless. Long-term solutions are needed.
Personally I think we should make a limit on how far the budget can go up, its approaching $4 trillion as of now which I believe is unsustainable: cap it at $3.5 trillion (which is still extremely high, and not adjusted to inflation for a few years). You know what that means? That's a true budget, not this non-sense we have. I propose a debt-tax as well since conservatives don't want federal tax-increases on anyone, this tax would automatically go towards paying our creditors; rather it be 5% or 10%, it needs to be implemented. I don't think anyone could complain about this tax since it does go towards are creditors and not redistribution, the military, education, etc. I even believe states should cut their income taxes (if they don't have any, implement it to 5%) by about 5%, so the federal government could increase taxes by 5% on everyone so no-one will see a tax increase on federal taxes. So essentially the federal government has 5-10% in extra taxes on everyone and it wouldn't hurt anyone, and they aren't able to go over that budget.
With what I said above about the $3.5 trillion budget cap, states having less revenue, and a debt tax, the government on federal and state levels will both be forced to live within their means a bit more and it wouldn't hurt the economy. So if the federal government ends up taking in $3.8 trillion in revenue, and the budget is still at $3.5 trillion that could automatically go towards paying off the debt not increasing the budget which is already being paid off by the debt tax.
I'm not exactly sure how much the US Treasury is supposed to have on hand at all times (I want to say $70 billion) but I suggest raising it to $500,000,000 over the course of about 10 years. So in other words every year its mandatory for it to raise its reserve fund by $43 billion for 10 years which isn't bad and the government is able to come up with that easily.
I mean there's plenty that needs to be done in Washington and these guys are being paid by us to do the job, but they aren't doing it. Washington needs the ability to look towards the future a bit better, we should've never had lower-taxes under Bush if it were going to have such a disastrous affect in the future. Now everyone is threatened with higher taxes because they've been use to living out of their means for so long. Next time the budget is looking fine, do us a favor congress and the president, don't cut taxes just leave it alone, extra revenue is always fine to pay off your creditors..
Anyways, do you guys have any proposals for what to do with the budget or to avoid yet another fiscal cliff scenario for a while?
Well, I have plenty of ideas on what I would like to see done, but they are not ideas that are exactly "bipartisan." I don't agree with most of what you've written, but I'm too tired right now to really go through it.
Anyhow, the entire point was exactly for the "fiscal cliff" to be a dreaded consequence that was unacceptable to everyone precisely so the "supercommittee" absolutely had to come up with something.
Bush cut taxes as a stimulus measure. Remember the early 2000's recession? Moreover, revenues went back up to the pre-Bush tax cut levels pretty quickly. Spending exploded. To the Democrats who talk about the idyllic days of the 90's under Clinton tax rates, I'm curious - why not return to Clinton spending as well?
Well, I have plenty of ideas on what I would like to see done, but they are not realistic.
The entire point was exactly for the "fiscal cliff" to be a dreaded consequence that was unacceptable to everyone precisely so the "supercommittee" absolutely had to come up with something.
Well elaborate on some of your ideas, imagine we're congress. There's some stuff I won't agree with you on, some stuff I will.
And I know that's what the fiscal cliff was, I'm saying we're at the point where the deal is over. Why didn't they come up with a deal before hand? Did they say, "well we cant' come up with a deal today so lets make a short-term deal that will hurt everyone unless we agree to something in the future" and they just went home after that? If so that's ridiculous. That deal should have been in place just to avoid hitting the debt ceiling, but work should still have been done right after that.
Regarding what you say about the Clinton-era spending, if we would have never cut taxes, I would have been for Clinton-era spending today. But thats not the case, we've screwed our selves. People weren't complaining about taxes during Clinton, so why did they decide to drop them under Bush? Now we can't increase them back in our time of need because it will hurt the middle class. That's all I'm saying. People have grown accustomed to what was supposed to be a temporary tax-break, now that it could end any day now it will hurt us but back under Clinton those tax-rates didn't hurt us. So instead of ever having another tax-break, keep them what they are now. I don't want Congress nor the President saying "well the budget has a surplus of $100 billion, lets cut taxes for a few years", just leave it alone. Let the surpluses continue.
Well elaborate on some of your ideas, imagine we're congress. There's some stuff I won't agree with you on, some stuff I will.
And I know that's what the fiscal cliff was, I'm saying we're at the point where the deal is over. Why didn't they come up with a deal before hand? Did they say, "well we cant' come up with a deal today so lets make a short-term deal that will hurt everyone unless we agree to something in the future" and they just went home after that? If so that's ridiculous. That deal should have been in place just to avoid hitting the debt ceiling, but work should still have been done right after that.
Regarding what you say about the Clinton-era spending, if we would have never cut taxes, I would have been for Clinton-era spending today. But thats not the case, we've screwed our selves. People weren't complaining about taxes during Clinton, so why did they decide to drop them under Bush? Now we can't increase them back in our time of need because it will hurt the middle class. That's all I'm saying. People have grown accustomed to what was supposed to be a temporary tax-break, now that it could end any day now it will hurt us but back under Clinton those tax-rates didn't hurt us. So instead of ever having another tax-break, keep them what they are now. I don't want Congress nor the President saying "well the budget has a surplus of $100 billion, lets cut taxes for a few years", just leave it alone. Let the surpluses continue.
That's not what they said. The surpluses ended primarily due to revenue decreases before the tax cuts due to the early 2000's recession.
As far as my ideas, I would like to see firm caps on both spending and taxes. I would actually favor something along the lines of 15% of GDP or lower but that will not happen. As far as taxes, I would favor about 1% higher until the mess gets taken care of. You can't just set a cap of X dollars because the population is going to keep growing and the budgets are going to need to keep growing. I would favor a simple flat tax, but that will not happen anytime soon.
We have to figure out something to do about Social Security and Medicare and obviously any type of privatization is out at this point. But this FICA tax holiday nonsense is already causing SS to run deficits. (And, yes, the FICA tax holiday is helping the economy.)
Congress has always taken its vacations. Obama and this Congress haven't been very concerned about getting much done even when they're not on vacation. Campaigining and playing politics has been of utmost importance.
The single best solution to the problem is for a growing economy with more people working (and not just at low-paying jobs either). Then tax revenue will rise regardless of whether rates increase on anyone, loopholes or deductions are closed for anyone, etc. and that would do wonders more than anything else.
Last edited by afoigrokerkok; 12-08-2012 at 11:30 PM..
That's not what they said. The surpluses ended primarily due to revenue decreases before the tax cuts due to the early 2000's recession.
As far as my ideas, I would like to see firm caps on both spending and taxes. I would actually favor something along the lines of 15% of GDP or lower but that will not happen. As far as taxes, I would favor about 1% higher until the mess gets taken care of. You can't just set a cap of X dollars because the population is going to keep growing and the budgets are going to need to keep growing. I would favor a simple flat tax, but that will not happen anytime soon.
We have to figure out something to do about Social Security and Medicare and obviously any type of privatization is out at this point. But this FICA tax holiday nonsense is already causing SS to run deficits. (And, yes, the FICA tax holiday is helping the economy.)
I know they didn't say that, I'm saying in the future it shouldn't happen. If the budget is in good shape, don't settle for a revenue loss just keep it the way it is. And I believe the government is spending unnecessarily most of the time, so putting a temporary cap on spending (you don't believe $3.5 trillion annually could get the job done for a few years even with population growth?) wouldn't hurt in my eyes especially since everyone seems on board to cut spending. So the first step to that is actually create a budget. With a $3.5 trillion cap on the budget, wasteful spending will have to slow down a bit. Congress will be forced to budget, just as we are. We don't go around saying "I have $500 in my bank account, but I'm willing to spend $2000 on a new TV", so Congress should do the same. $3.5 trillion is a hefty amount to work with and is still by far the largest budget on the world. Plus it will only be in place for a few years, maybe up to 2016.
So here's some basic math on that, the government is able to spend up to $10.5 trillion by 2016. Say revenues by then hit $3 trillion annually (I def believe it will be there by 2014), that's $9 trillion in revenue by 2016. So all together that's $1.5 trillion added to the debt which stands at a little over $16 trillion today. Or in other words, the debt increases to $17.8 in 2016, and the debt ceiling is still at $20-21 trillion. I mean I want the budget capped at $3.5 trillion, but I'm willing to negotiate. Maybe a realistic $3.8 trillion budget cap, but the whole point of the cap is to insure they won't exceed their budget.
And yeah 15% seems a little too low but it would be nice if it were to happen. Can you explain what the FICA tax holiday is? I believe I've heard about it, but I'm not sure what it is.
Bush cut taxes as a stimulus measure. Remember the early 2000's recession? Moreover, revenues went back up to the pre-Bush tax cut levels pretty quickly. Spending exploded. To the Democrats who talk about the idyllic days of the 90's under Clinton tax rates, I'm curious - why not return to Clinton spending as well?
Spending exploded because the United States became involved in two decade long wars. Those unpaid for, debt fuelled wars were a form of stimulus, and there doesn't seem to be any political will to demilitarize in the wake of those wars. Let's be fair here, there weren't a ton of new social programs coming on line in those years, it was corporate welfare and war that cost a lot of money, and if revenue came back to pre-cut levels quickly, that was insufficient considering all of the unfunded liabilities soon to come due and the costs of the war. Obama's in a bind because the world has collapsed into a brutal recession and everyone's in deficit, he worries if he cuts stimulus too much it will shock the economy too much and the USA will enter a death spiral.
As far as the short-term solution, spending and taxes seem to be the biggest issues. I agree that, once a solution is in place, it might be wise to set a higher debt ceiling so that it doesn't have to be raised for several years - but perhaps it should come with the caveat that the debt doesn't end up growing more than forecast by X date and then by X date and then by X date, etc.
Here is my "bipartisan" solution (this is NOT what I want, but it's what I would offer as compromise if I was a member of Congress):
Eliminate the FICA tax holiday.
Raise taxes on those making over $500,000 per year to the Clinton-era rates, but then allow deductions (to determine AGI) for 100% of business expenses for small business owners.
Stop sequestration, but go through every agency (yes, including defense) and cut 2-3% of non-employee costs. This could include things like cell phones or even really cheap things like free coffee for employees, but not pay or health benefits. It could include costs of paper, electricity costs in offices, water bills in offices, travel expenses, etc. Go through every agency budget with a fine-tooth comb, a VERY fine-tooth comb. Then put together a very attractive early retirement package and reduce the number of employees through attrition (including those who would retire anyway). Try and get a good 7-8% reduction in employee costs over a few years just from this, for a total of 10% from every agency (not to include the military itself, but to include defense agencies).
Then go and eliminate/consolidate some agencies.
Absolutely no new spending in terms of growth compared to revenue/population (other than mandatory spending for SS/Medicare, which will be necessary as more boomers retire and get older) unless it is needed due to some kind of dire emergency.
For those born in 1958 or later, raise the Medicare age to 67 and the SS age to 68. For those born in 1963 or later, raise the Medicare age to 68.5 and SS age to 69. For those born in 1968 or later, raise the Medicare and SS ages to 70. For those born in 1968 or later, implement some means-testing.
Last edited by afoigrokerkok; 12-08-2012 at 11:58 PM..
Spending exploded because the United States became involved in two decade long wars. Those unpaid for, debt fuelled wars were a form of stimulus, and there doesn't seem to be any political will to demilitarize in the wake of those wars. Let's be fair here, there weren't a ton of new social programs coming on line in those years, it was corporate welfare and war that cost a lot of money, and if revenue came back to pre-cut levels quickly, that was insufficient considering all of the unfunded liabilities that had been raided and were coming due and the costs of the war. Obama's in a bind because the world has collapsed into a brutal recession and everyone's in deficit, he worries if he cuts stimulus too much it will shock the economy too much and the USA will enter a death spiral.
The wars in their totality have cost about $1 trillion. As far as corporate welfare, what exactly are you talking about? TARP? Solyndra, etc? Democrats favored TARP more than Republicans. A lot if not most of Obama's stimulus spending was basically corporate welfare.
As far as the short-term solution, spending and taxes seem to be the biggest issues. I agree that, once a solution is in place, it might be wise to set a higher debt ceiling so that it doesn't have to be raised for several years - but perhaps it should come with the caveat that the debt doesn't end up growing more than forecast by X date and then by X date and then by X date, etc.
Here is my "bipartisan" solution (this is NOT what I want, but it's what I would offer as compromise if I was a member of Congress):
Eliminate the FICA tax holiday.
Raise taxes on those making over $500,000 per year to the Clinton-era rates, but then allow deductions (to determine AGI) for 100% of business expenses for small business owners.
Stop sequestration, but go through every agency (yes, including defense) and cut 2-3% of non-employee costs. This could include things like cell phones or even really cheap things like free coffee for employees, but not pay or health benefits. It could include costs of paper, electricity costs in offices, water bills in offices, travel expenses, etc. Go through every agency budget with a fine-tooth comb, a VERY fine-tooth comb. Then put together a very attractive early retirement package and reduce the number of employees through attrition (including those who would retire anyway). Try and get a good 7-8% reduction in employee costs over a few years just from this, for a total of 10% from every agency (not to include the military itself, but to include defense agencies).
Then go and eliminate/consolidate some agencies.
Absolutely no new spending in terms of growth compared to revenue/population.
So you do support my budget cap then? You believe that $-3.5-3.8 trillion annually is enough to work with? I don't want congress going around hitting the cap annually but instead begin making cuts with the cap, so one year I can understand a $3.8 trillion budget but the next I expect cuts while the budget cap still remains at $3.5-3.8 trillion. If they don't limit themselves on the budget, it will only keep increasing and all these talks of deficit reduction will be bologna. I know the 2014 budget hasn't even been thought of, but I'm absolutely positive it will be at $4 trillion. So where does the increased spending stop? I understand population growth but I know $3.8 trillion annually up until 2016 is enough to work with. And with that spending cap so large, nothing will be reduced too fast because lets admit it, no one wants to really slash the budget by a $1 trillion annually to put it into balance.
Something I didn't mention was federal employee pensions. Those have to be addressed, but I'm not sure exactly how we should go about that.
As far as the budget cap, yes I would agree but I would still do it as a percentage of GDP with an exception for dire emergencies.
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