Over the Cliff?

I don't call it leadership. Guts, maybe, but leadership, no. And bipartisanship, definitely not- he has been one of the more partisan Presidents of recent times despite what he likes to say.

If the GOP crumbles on this one though, let's hope it doesn't set a trend.

Wait a minute. The U.S. has already fell off the fiscal cliff: $16.4 trillion debt and $121 trillion in unfunded liabilities and expenditures. This whole idea that tax increases and automatic spending cuts to future increases (not real cuts) is the fiscal cliff befuddles me.

Another aspect of the fiscal cliff is the $2.8 trillion balance sheet of the Federal Reserve, which is expanding it by $1 trillion next year. The debasement of the U.S. dollar in order to attempt to stave off the inevitable is the (second) real fiscal cliff.

Don't worry, though, the president's plan will fund the federal government for an extra week, perhaps even 10 days, but that's all it will do.

The debt is still manageable because on the aggregate, the market trusts the US. Just look at Treasury rates.

And the Fed has done what it has done to avoid deflation. It is buying Treasuries as a way to push down on rates against the zero-lower-bound. Inflation has actual been below 2% for a while now (which leads me to wish the Fed would buy MORE).

tecoyah said:

"
Treasury Secretary Timothy Geither told CNBC Wednesday that Republicans are "making a little bit of progress" in "fiscal cliff" talks but said the Obama administration was "absolutely" ready to go over the cliff if the GOP doesn't agree to raise tax rates on the wealthy.

"I think they're making a little bit of progress," Geithner said. "They're clearly moving and figuring out how to try to move further."
But Geithner said the White House would "absolutely" go over the fiscal cliff — triggering over $600 billion in automatic spending cuts and tax increases — unless tax rates increase on the top 2 percent of wage earners.

Geithner to CNBC: 'Little Bit of Progress' on 'Cliff'
In an exclusive interview on CNBC, Treasury Secretary Timothy Geithner assesses the current state of the "fiscal cliff" negotiations in Washington.

"What we're trying to do is put in place a comprehensive, balanced set of fiscal reforms that put us back on the path of living within our means," Geithner told

Okay, so it looks like Obama and Co. have grown a set. There seems to be a little hint from the GOP that there is a chance of compromise so there is hope.

Personally, I see the stance from Obama as a sign of leadership, something sorely lacking in his first term as far as taking on the opposition.

What Say You?

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I agree. And I supported Obama's attempts to raise taxes (on the rich) some months ago, in his jobs bills which were absurdly obstructed by the Republican House. If those had passed and lots of government jobs had been created, the consumer spending they would have generated would have boosted the economy greatly, from where it should be boosted - from the bottom up >>> PERCOLATE UP ECONOMICS.

I don't see as a savior either, but rather just someone who is going in the correct political direction. On economics, anyway.

Definitely just guts. This isn't at all being a leader. That's just not right

tecoyah said:

Though I agree this result would have been fantastic, I understand the risk i doing so. Just because the automotive and bank bailouts worked...does not mean Obama is some kinda savior.

This is some hardcore stuff...

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How would you discern the Obama job bills (and tax hikes) as a "risk" ? Just wondering.

This is what I'm thinking Obama and the Dems are planning.

Force us to go over and blame the Repubs for obstruction. As hated as they are, most people will go along with it. Then as the initial shock wares off, point to the higher taxes and reduced spending as a deficit busting victory courtesy of Bill's party (Bill will be the poster child due to his balanced budgets). The fact that this was due to going over the fiscal cliff that is supposedly the Repubs fault will be glossed over and any attempt at pointing it out labeled as Repub propoganda. Result? The Dems reestablish 1 party rule and we have another 40 years of no Repub controlled gov't.

If it works (and it probably will, the TP has done the Repubs no favors) it will be the greatest propaganda victory sense Hitler* talked his way into ruling 1/2 of Europe without firing a shot.

*Not a Godwin.

David said:

This is what I'm thinking Obama and the Dems are planning.

Force us to go over and blame the Repubs for obstruction. As hated as they are, most people will go along with it. Then as the initial shock wares off, point to the higher taxes and reduced spending as a deficit busting victory courtesy of Bill's party (Bill will be the poster child due to his balanced budgets). The fact that this was due to going over the fiscal cliff that is supposedly the Repubs fault will be glossed over and any attempt at pointing it out labeled as Repub propoganda. Result? The Dems reestablish 1 party rule and we have another 40 years of no Repub controlled gov't.

If it works (and it probably will, the TP has done the Repubs no favors) it will be the greatest propaganda victory sense Hitler* talked his way into ruling 1/2 of Europe without firing a shot.

*Not a Godwin.

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No offense but this looks like a self-serving scenario. Ever think that just maybe the Republicans DID obstruct what could/would have helped the economy ? Of course they did. And as long as they put protecting the rich from just simply NORMAL taxation, we will always have economic problems.

You can't push Reaganist policies (which were never meant to do anything but protect highly paid movie stars from taxation), and continue them for 30 years, and not expect your whole economy to crumble.

Protectionist said:

No offense but this looks like a self-serving scenario. Ever think that just maybe the Republicans DID obstruct what could/would have helped the economy ? Of course they did. And as long as they put protecting the rich from just simply NORMAL taxation, we will always have economic problems.

You can't push Reaganist policies (which were never meant to do anything but protect highly paid movie stars from taxation), and continue them for 30 years, and not expect your whole economy to crumble.

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The whole one side is evil and the other is good narrative is old and lacks the facts to support it. Such an absolute conspiracy is a tremendously hard thing to pull off. It is very unlikely. And even if it did exist, alienating a major party and their base is hardly the way to go about getting things done or convincing others. It weakens your argument.

That aside, economically, your argument is not sufficient. For one, there is no such thing as "normal" taxation. What do you mean by that? Also, "Reaganist" policies isn't an economically significant term. What I think you mean is supply-side economics, but I am not sure. Do you understand the academic work behind those theories though? Do you even know what the basic premise and underlying foundation of the intellectual work there is? The studies that make up the core of that theory? It is hardly a protection of the wealthy- to suggest so is to yet again, make a political argument of conspiracy. I don't buy it.

1. Supply-side economics is nothing but a silly con job (and you fall for it it sounds like) designed to protect the rich from taxation. Reagan started it because he was a very high income movie star. Are you one of those ? I don't care how many supposedly scientific analyses you can dredge up to support it, and I'm sure there are many, Reaganomics was designed by Reaga, for Reagan and his movie star buddies who have perhaps the highest employee incomes in America (and the individual tax was 70% when Reagan took over). Sorry to disillusion some, but there is no such thing as supply-side economics, Reaganomics, trickle down economics, or whatever other name one wishes to plaster on it. Now, PERCOLATE UP ECONOMICS - THAT is real. The money there is flowing from poor people back up into the economy, when they go to the store and buy things, in America (not Europe & the Caribbean)

2. As far as good guys and bad guys, again sorry to disillusion but YES, there are those. On economics in general, the Republicans are the bad guys representing the rich, while the Democrats favor the poor and middle class. On many other issues, the Democrats are the bad guys, and the Republicans generally are more supportive of the American people overall. These would be immigration, affirmative action, Islamization, foreign wars & the military, homeland security, gun control, death penalty, et al.

3. One defense for the Democrats may be that even though they tend to have awful positions on these issues I just mentioned, the Republicans tend to damage their better positions by opposing revenue raising (by tax increases on the rich) which winds up producing shortages of the manpower they need for the things they want (ex. ICE agents, CBP officers, build the Mexican border fence, create immigration courts & jails, court $$ to fight Muslim Brotherhood lawsuits, military hardware, build/staff prisons, etc.

4. YES there is a such thing as normal taxation. Normal is often described as that condition which exists more often than other conditions. In the case of taxation of the rich in America, normal would be 70-94% tax. Why ? Simply, because this is what that tax has been for MOST of the past 95 years. So Republicans, by opposing tax increases on the rich, they are supporting the maintainance of the current, ABNORMAL 35% top bracket tax, which is less than half of the NORMAL tax (of the past 95 years)

http://www.ntu.org/tax-basics/history-of-federal-individual-1.html

You are giving Reagan way too much credit- he was a politician, not an economist. Furthermore, supply side theory is not dead- it has not been wholly discredited in anyway. I am not sure you understand the academic work behind supply side to begin with though.

I don't really consider myself a part of any school, so no I do not consider myself a supply sider or a supporter of supply side economics- but I do believe in intellectual honesty.

This thread is in the economics section for a reason. I kindly ask you to take your political conspiracies elsewhere. Thanks.