Congress And The Fiscal Cliff
http://thedianerehmshow.org/shows/2012-10-29/congress-and-fiscal-cliff
Under current law, major tax policies implemented to ease consumers through the financial crisis are scheduled to end January 1, 2013. Income and payroll tax rates will rise, and many relying on extended of unemployment benefits will be cut from the rolls. In addition, federal discretionary spending will be slashed. Almost everyone believes the scope and magnitude of these changes, if they go through as planned, will trip up U.S. economic growth. After the election, the lame duck Congress could act to delay the cuts, but much will depend on who wins the presidential election. Please join us to talk about Congress, politics and the tax and spending policy choices between now and January 1, 2013.
Guests
Ruth Marcus
columnist and editorial writer for The Washington Post.
David Wessel
economics editor for The Wall Street Journal and author of "In Fed We Trust."
Alice Rivlin
senior fellow, Brookings Institution, vice chair, Board of Governors, Federal Reserve System (1996-99); director, White House Office of Management and Budget (1994-96); and founding director, Congressional Budget Office (1975-83).
Comments
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Probably the biggest question mark of the Obama presidency is why he totally ignored his own debt commission report and recommendations, Simpson Bowles. The easiest answer of course is inexperience and lack of personal initiative, a deeper answer could only indicate something entirely sinister.
There's no mystery here, and certainly nothing sinister. Simpson-Bowles and all other deficit reduction plans involve painful cuts to many programs. What president wants to go on record a year before the election proposing cuts not progress?
Besides, anything the president supported (including the balanced approach of the Debt Commissions) would be treated as only the baseline of cuts for the smaller-government right wing Republicans. Until the R's come to their senses about raising revenue, the president has no business getting out in front of this discussion. He's been rolled over before by trying to meet in the middle; it's a no-brainer to wait until the pain is sufficiently great for the R's (read: letters from 150 business people, etc.) that they come to the table ready to deal effectively for the good of the country and not just for their ideological purity and Grover.
Why are the basic facts mentioned below never uttered?
Pascal-Emmanuel Gobry, a Conservative, writing for Forbes:
If there’s one article of faith in Washington (and elsewhere), it’s the idea that the United States might get into a debt crisis if it doesn’t get its fiscal house in order.
This is not true.
The reason why it’s not true is because we live in a fiat currency system, where the United States government can create an infinite number of dollars at no cost to meet its obligations. A Treasury bill is a promise that the government will give you US dollars–something that the United States government can produce infinitely and at no cost.
But waaaaaaait, you shout, what about inflation? If the government prints money like crazy, won’t that create inflation?
Well, in theory, yes. But probably not. Why is that? Because the US has an even bigger advantage than just being sovereign in its own currency (hi Greece), it also holds the reserve currency. The US dollar is the main currency that is used in most international transactions, it is held by all of the world’s central banks, and so forth...
It’s especially distorting it on the Right, where hysteria about deficits, and debt, and becoming like Greece has reached a fever pitch. Paul Ryan, especially, has framed his entire message on entitlement-cutting on the flawed premise that the US needs to cut its entitlement or it will suffer a debt crisis. This message, in turn, has infected broad swathes of the conservative movement (including very smart people in it), a movement that I consider myself a member of and want to see in strong intellectual health. But very few liberals–certainly no Democratic elected officials that I’m aware of, certainly not the President and the Vice President–are disputing the premise that the US is in any danger of a debt crisis.
http://www.addictinginfo.org/2012/10/22/the-entire-gop-debt-crisis-myth-...
cp7heaven wrote:
"There's no mystery here, and certainly nothing sinister. Simpson-Bowles and all other deficit reduction plans involve painful cuts to many programs. What president wants to go on record a year before the election proposing cuts not progress?
Besides, anything the president supported (including the balanced approach of the Debt Commissions) would be treated as only the baseline of cuts for the smaller-government right wing Republicans. Until the R's come to their senses about raising revenue, the president has no business getting out in front of this discussion. He's been rolled over before by trying to meet in the middle; it's a no-brainer to wait until the pain is sufficiently great for the R's (read: letters from 150 business people, etc.) that they come to the table ready to deal effectively for the good of the country and not just for their ideological purity and Grover."
Here's the problem with that theory. If additional revenue were generated (and that's a big IF), it will not go to reduce the debt or even the deficit. It too, will be spent. There is a basic principle at work that I have realized for a long time; it's at the heart of the Tea Party and it's at the heart of any Grover Norquist pledge, and it's this: "The government has enough money". Our elected representatives - at every level, executive and legislative, have grossly mismanaged our money. If they were a Financial Planner type, they'd be in jail for what they have done with our hard-earned dollars.
Besides, the President has NEVER tried to "meet in the middle". His position is, "you are entitled to my opinion" and he calls that compromise. Remember "we won the election, we write the bills"? Which is why his attempt to compare himself to Clinton is such a joke. And he's not even the worst of the lot! That would be Harry "my way or the highway" Reid. The man would cut off his nose to spite his face. I've never seen anyone so stubborn or ineffective.
Mythos Mekarios wrote:
"Why are the basic facts mentioned below never uttered?"
Because they are flawed.
But thanks for the interesting post just the same.
I've read these theories before, that the U.S. can "print" dollars indefinitely because it is a sovereign currency and the world's reserve currency. Gobry is right, we are not Greece. Greece does not hold a sovereign currency, it cannot print its own Euros, and the Euro is not THE reserve currency either. Think of Greece as a "state" in the EU. Its going bk is equivalent to say, CA going bk - it cannot print its own money either. And just like the FG would not let that happen, the Central Bank is trying to keep it from happening in Europe as well.
So what's the problem? The problem with the theory is, the U.S. dollar, even though it is the world's go-to "reserve" currency, has value relative to other world currencies. Print too many dollars and it begins to deflate their value relative to other sovereign currencies ... including gold ... the world's TRUE, ETERNAL, reserve currency. It's an attractive idea, but it violates the economic first law of thermodynamics ... there's no such thing as a free lunch.
What is really wrong with across the board cuts?
You want to know when we'll know when the deficit is REALLY a major issue? That will be when the right wing in this country demands that taxes be raised on the rich. Until then the deficit is just a tool they use to get rid of programs that they have wanted to get rid of for decades if not generations.
What they did with the Bush tax cuts was their "Starve the Beast" tactic. Cut taxes, and fight wars on credit to run up huge deficits then say they only way to fix the problem is to cut social programs, hoping that people will forget about the tax cuts that were a major cause of the current problem.
Sadly that appears have worked quite well in our United States of Amnesia. As a culture we cant seem to remember what happened last month let alone 10 years ago.
I believe in a strong DEFENSE ... but the USA's over-the-top OFFENSIVE military budget is simply unsustainable. Ours won't be the first empire destroyed by such spending. So it goes.
Two years ago, the Speaker of the House stated that the only job the republicans were interested in was to make sure that Obama was not re-elected. (paraphrase... not an exact quote) Since this will be a moot point, irregardless of who wins next week, can Congress now work together and get something done? P.S. Why is compromise such a "dirty word"? After all, this country was founded based on compromise!
. If the deduction for mortgage interest comes up:
Please do not represent that it must be an all or nothing cut to the deduction.. For instance there could be a cap on the mortgage interest that can be deducted.
Say 50,000 per year as the upper limit on the interest deduction.
To say that the(entire) mortgage interest deduction will be eliminated in a bit like fear mongering.
. And re charity: Charity should be charity. Why should a gift be a tax break? If the only reason one gives is to get a tax break, well that is not charity. is it. It is a quid pro quo.
. And I too am puzzled why across the board cuts do not work: They provide immediate certainty without kicking the can down the road. And subsequent adjustments can always be made under separate legislation.
I am an independent married female voter that beleives We have been over the cliff for over a decade or so.
Voters who like to forget where the debt came from and who is not working for the nation and its people. They Choose to forget because they have their own agenda..
But the Majority, the 99% remember Newt Delay stating America will do well sending corporations off shore. We remember our surplus.
We remember how the debt was created borrowing money from China to line the pockets of Haliburton Bentel and Iraq oil.
A war that lost track of BinLaden while reaping profit
Norquest and the signers have no allegance to the voter anymore.
Misrepresentation and photoshoped events are how they challenge this POTUS.
So this means the majority in Congress needs to be voted out Nov 6.
Kathleen - good question. I think that the certainty of the cuts, if they are indeed across the board, means that they do happen. And our political leaders - and maybe us as well - may not have "the stomach" for the cuts.
To paraphrase Churchill's comment on democracy: "across the board cuts are the worst kind of cuts, except for all the other kinds of cuts."
NC-TOm wrote:
" hoping that people will forget about the tax cuts that were a major cause of the current problem."
Hope you're staying dry, Tom.
A popular meme of the left - patently false. After the Bush tax cuts, revenue to the Government increased. That is a simple fact and the link at bottom has the data. At the same time deficit spending continued to increase the debt, true, but that is dwarfed in comparison to what decades of borrowing against the SS trust fund has done. This confirms once again, that tax cuts increase revenues, but it is over-SPENDING that increases deficit and, therefore debt. Both parties have been guilty.
http://www.forbes.com/sites/beltway/2012/02/22/after-bush-tax-cuts-payme...
Let's not forget the huge tax break that the Republicans want to eliminate the tax on capital gains. This elimination must happen if the estate tax is eliminated and no increase in tax basis upon death is provided for.
@cp7heaven: Does the statement "Republicans will need to sit in the back of the bus" sound familiar? You also stated: " He's been rolled over before by trying to meet in the middle". This president, with his arrogant and naive attitude towards business and legislative cooperation is what has slowed down the work. Add to that Harry Reid and Nancy Pelosi and you have a losing combination. We can wallow in the minutia of he said/did that and they said/did that all you want to but the bottom line is... he/they lost the confidence of over 1/2 of the US population/businesses. Real growth and turn around will only come when that confidence is restored, regardless of the source.
Hate to sound like an idealog but thanks, I think, to people like Grover Norquist and Rupert Murdoch, the country has lost any respect for "compromisers." Democrats and President Obama have been seeking compromise during his first term and it has gotten them nowhere. Maybe becoming a "diver" is not such a bad idea at this point.
Forgive me if I attribute this to the wrong person but I think it was Thomas Jefferson who said, "Democracy exists in direct proportion to a healthy self restraint." That's a disturbing thought in a time when self-restraint is missing from so many members of Congress.
What would be the impact if the earnings cap on social security contributions were removed?
50 K would kill us nder 100K
Pls give us a 101 on the national debt . Didn't we have a surplus after Clinton?
The POTUS mee\t with Congress until he relaized and heard Mr. McConnel state no matter the consequence Congress will not work with this POTUS. So he did all he could without them.
Congress has prevented jobs to repair our crumbling infrastructure which would create innovation and creativity and revenue !
So the Blame falls to Congress at 100%
Since the 2010 election and the shakeup at National Public Radio with the corporate CEO from Newsweek, listeners of NPR and APM have only been able to hear from corporate politicians and their fiscal solutions. Alice Rivlin is a Third Way corporate politician who was apart of the Clinton Administration and worked to end Glass \Steagall with the intent of creating these mega-corporations everyone know would create massive wealth inequity and unaccountability. She is not a Democrat. The Clinton Administration is Reagan in its fiscal policy as is the Brookings Institution at which Rivlin works. Clinton ended the Poverty programs of the Johnson/Kennedy era with Welfare reform setting off the massive decline of black families as third world poverty and black market income forced people into drugs and prostitution. Rivlin says its about taking responsibility, just as Republicans do.....because she is Republican.
Second part of comment:
So, when NPR allows only this Brookings/Clinton fiscal view that is identical to Republicans be the only point given in fiscal discussions they are introducing bias that will devastate the middle/lower class. A fiscal progressive would point out that 2/3 of Americans want the income inequity addressed and as many want the banks, corporations, and rich to pay. They would say that middle.lower class has paid enough and that the deficit needs no spending/program cuts that have a shared sacrifice.....because there has been no sacrifice from the corporations/rich as they are rolling in profits. So when Rivlin speaks of the Bowles/Simpson plan.....Bowles being a Clinton Reagan Republican, so this is not a bipartisan agreement, she is falling to propose things like hiring millions of unemployed to investigate, audit, prosecute fraud across all business sectors as the $14 trillion deficit could be paid entirely from retrieving that much in financial, health care, and defense industry fraud. You would hear that in order to reverse income inequity we need a 70% tax rate of the top and 40% tax rate on corporations as was the case in the 1960-1970s when real democrats had the office. So, you would not be suggesting corporate taxes being lowered in a deal that would have those subsidies removed right back in a few years. You wouldn't have capital gains and dividend taxes at 30%......that is obscenely low. You would argue that entitlements have been gutted with fraud over two decades and the money must come back before you cut people's benefits. Letting Bush Tax cuts end would be what you shout loudly for because once those taxes increased you could go back and give middle/lower class people tax cuts.
You would know that the Bowles Simpson deal and the Grand Bargain both protect wealth and corporations at the expense of the 95% of people who are being allowed no voice in this debate.
What a crock from David Wessel.
It's Obama's fault because he didn't kiss the Republicans' butts enough? Sure - how did that work out when he gave in on almost everything to get any GOP votes for the health care bill?
As a president Obama has been the absolute worst thing that could have happened to our deficit and debt problem. No one can name one thing that he or any democrats have improved over the last four years, in fact they could not have made things worse even if that were their goal. The "unaffordable care act" if allowed to stand is the worst thing to happen in more than a generation.
Sunfish76 wrote:
"The POTUS mee\t with Congress until he relaized and heard Mr. McConnel state no matter the consequence Congress will not work with this POTUS. So he did all he could without them."
The POTUS had both houses for two years.
"Congress has prevented jobs to repair our crumbling infrastructure which would create innovation and creativity and revenue !"
That's what the stimulus was supposed to fix. Remember "shovel-ready" jobs? The same idea that the President thought was so funny when he laughingly said, "they weren't so shovel-ready after all"? Why would Republicans throw good money after bad?
Brian Lupiani wrote:
" Sure - how did that work out when he gave in on almost everything to get any GOP votes for the health care bill?"
No. He didn't. The revisionist history on this board is just astonishing. Obama bought just enough votes to pass PPACA. It should have and could have had strong support from both houses as the entitlement programs of the 30's and 60's did. Republicans wanted to introduce Tort reform, but Obama would not allow it because of the trial lawyers. Republicans wanted competition by allowing insurance companies to sell over state lines. Obama would not allow it, some think because he wanted to shrink the pool of insurance providers to get to a single payer solution, which, after all, he said himself was his ultimate goal. Then had the GALL to say that he had incorporated ideas of Republicans into the bill!
Whatever happened to the seperation of church and state? As for controlling government spending. I certainly hope Mitt Romney makes it a priority to eliminate all of U.S. federal tax dollars spent to support the funding of the LDS Missionary program (60,000+ worldwide), and now in October 2012 the number of enrollees increasing from 700 to 4,000 per week since LDS church leaders lowered the eligibility of missionary minimum. There seems to be no maximum age limit (55+). Worst yet upon their return of serving their LDS missions, U.S. federal tax dollars will then be used to pay for the college education because they supposedly served as community "volunteers". The loophole being exploited is the proselytizing cannot be in "scripted" form. The U.S. federal tax payers can hold Utah Senator Orin Hatch (senator of host state of worldwide headquarters of the LDS/Mormon Church and Romney's 2002 Winter Olympics) and other LDS faithful lawmakers, responsible for sponsoring early amendments to and finally the 2009 Kennedy-Hatch bill Serve America Act . The irony of the entire situation is the LDS faithful pay minimum if no U.S. federal tax dollars (example Mitt Romeys multi-million dollar contributions to his church on his 2010 tax forms) to payout to the Hatch Serve America Act since their 15% tithings are considered eligibile federal tax deductions to a private non-profit. The LDS church collects a tithing for a Missionary fund why is that money not being used instead of U.S. federal tax dollars to support its growing worldwide missionary program? Also in 2005, Governor (and concurrent LDS/Mormon church Bishop/Pastor) Mitt Romney appointed his wife Ann Romney as head of an unpaid and new special office whose purpose was to help the state's faith-based groups gain more federal monies in association with the White House Office of Faith-Based and Community Initiatives.
What we have created in this country thanks to mainly the republicans, corporations and Wall ST is totally unregulated capitalism!
The result is total exploitation of people, resources and the environment – in the end catastrophic failure on all points!
We have ceded our people, country, environment and our world to the plutocratic one percent!
The Republican Party will continue to take us down the same path!
SPIN IT ANY WAY YOU WANT
OK folks - the federal reserve prints money for the government and charges interest for this.
I keep wondering how people who do not know much keep talk, talk, talking about things they do not know.
Again - THE FEDERAL RESERVE IS NOT A GOVERNMENT AGENCY, IT IS A PRIVATE FOR-PROFIT CORPORATION THAT CREATES PRINTED MONEY FOR THE GOVERNMENT AND CHARGES INTEREST FOR EACH DOLLAR IT PRINTS.
Please, please, please try to understand this.
The root cause of debt is the federal reserve printing money and charging interest to the government for each and every dollar printed.
Debt begins at the printers and follows everything.
The monetary system we have is the root cause of the national debt.
"Brian Lupiani wrote:
What a crock from David Wessel.
It's Obama's fault because he didn't kiss the Republicans' butts enough? Sure - how did that work out when he gave in on almost everything to get any GOP votes for the health care bill?
October 29, 2012 - 11:01 am"
It's almost comical, but not really, he is so measured and non-partisanish on Morning Edition, but then listen to him when he forgets he's on the Air and says what he really thinks.
But what do we expect from the WSJ?
The President has but ONE arrow in his quiver and it is the Bush Tax cuts. If he blows that, were done for.
Monte Haun mchaun@hotmail.com