Fiscal Cliff

A friend suggested that all the drama around the “fiscal cliff” is one of the many diversionary strategies aimed at distracting us from the real problem which is the global warming.

What do you think about the fiscal cliff?

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17 thoughts on “Fiscal Cliff”

  1. The fiscal cliff basically is a series of tax increases and spending cuts. In other words, austerity. Doing such austerity right now would almost certainly trigger a new recession, at least over the short term.

    The overwhelming majority of economists agree that tax cuts and/or spending increases are significantly stimulative in a less than fully employed economy, and that the federal budget (if it is to be balanced) should be balanced over the course of the business cycle rather than yearly. What this basically means is that, in a recession, you spend money on public works and/or cut tax cuts, running up a deficit if necessary. When the economy recovers, you hold back and pay off the debt accumulated in a recession.

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    1. “The overwhelming majority of economists agree that tax cuts and/or spending increases are significantly stimulative in a less than fully employed economy, and that the federal budget (if it is to be balanced) should be balanced over the course of the business cycle rather than yearly. ”

      – I know they agree but nobody seems to listen. Stieglitz recently went to Spain to explain that the austerity measures do not and will not work. But nobody listened. There is massive disconnect somewhere. The “cut, cut, cut” school of economic thought is winning out everywhere in the world. Except Russia, but they have the oil.

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    2. Brilliant; running up more debt seems to be the logic answer. But what do you do if everybody hits you over the head because you “irresponsibly handing our children an unmanageable deficit”?

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      1. I’d tell them to read the second part of what I wrote: “…When the economy recovers, you hold back and pay off the debt accumulated in a recession.” If they read it, then I’d suggest an economics textbook and remedial language arts.

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  2. I think it’s all just political theater as usual. In any case, the rich are going to be taxed more and that’s the reality of the situation and whatever tax cuts the Republicans are proposing comprise of only a fraction of the total national debt. Several conservatives were ousted from House Financial Services Committee. Maxine Waters will succeed Representative Barney Frank in his position.

    In other words, I really wouldn’t worry or care that much about the fiscal cliff because we already know what’s going to be the result. Frankly, I want to hear and read some refreshing commentary that isn’t fiscal cliff related and I’m not talking about your blog specifically. Besides, Christmas, Hanukkah, and Kwanzaa are approaching and I don’t see the need for all the bitterness, outrage, or anger yet.

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    1. “Frankly, I want to hear and read some refreshing commentary that isn’t fiscal cliff related and I’m not talking about your blog specifically. Besides, Christmas, Hanukkah, and Kwanzaa are approaching and I don’t see the need for all the bitterness, outrage, or anger yet.”

      – I promise to write some nice, life-affirming posts after the semester is over. For now, I’m completely exhausted, though.

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  3. The fiscal cliff is not all that steep. It is a real option to go over it. That way at least the debt problem would begin to be attacked and everyone more or less would pay something to its resolution. It is better than either of the two proposals so far on the table. Federal tax revenues have to increase to 20 per cent of gdp from 15.5 per cent and federal expenditures have to fall from 25 per cent to 19 per cent of gdp in order truly to address the debt problem. This will not be easy and the fiscal cliff will take us only a small part of the way. But it does represent a real start. After all the Congress signed off on it as a back stop when negotiatrions folded .Ultimately entitlements will have to be curbed. And there will be blood on the floor when that happens

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    1. I have a feeling that Obama and the Congress will stage their annual show around this and then fail to make any actual decision. This is beginning to remind me of one of those ritualistic wars some tribes stage.

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  4. I cannot read, or hear, the phrase “the fiscal cliff” without hearing it sung to the tune of the Doors song “The Crystal Ship.”

    That’s all I have to say about that.

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  5. A friend suggested that all the drama around the “fiscal cliff” is one of the many diversionary strategies aimed at distracting us from the real problem which is the global warming.

    I don’t know. But the snow on your blog is distracting me no end. Why does it follow the mouse pointer on your main page and run away from it when I look at a post?

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  6. OK I’m now thinking it’s random. This time I’ve got snow falling more or less straight down, with very little sensitivity to where the mouse pointer is.

    Forget global warming. I’m in “Ooh look! Shiny!!” mode.

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