Response to Post 1: Due January 4th
Please only post before January 1 IF Congress and the president make a deal to avoid this fiscal cliff. Otherwise please wait until the deadline so your info is up to date. Pick someone in the other class period to respond to. Critique the argument of the post now knowing the deal or lack of deal that occurred. Next respond to the decision that Congress and the president made. Do you agree or disagree with their decisions on the fiscal cliff? Why? Thanks for getting our trimester off to a good start!
posted by maby-keirstead @ 6:49 PM
43 Comments:
This comment has been removed by the author.
In this response I would like to respond to Mike S' post. For starters, I applaud Mike wholeheartedly. His response was pointed and informed, if somewhat naively optimistic. Maybe this is some pessimistic part of me talking, but I am too disillusioned with Congress right now to be optimistic. They putz around many of the most important issues of the day and let concerning issues and real threats go unstressed.
Mike made one point in particular that stood out to me. He intimated that failure to reach a deal on the fiscal cliff makes us look weak in the eyes of the world as well as to the average American. On this I couldn't agree more. While Mike sees this as enough to goad Congress into action however, I predicted a morass of inaction. It is unfortunate that Mike was wrong; I would have loved to see less blame and more progress to end the pretty decent year of 2012.
1) http://apusgopo.blogspot.com/2012/12/post-1-for-tri-2-due-121412.html
2)
http://ricochet.com/main-feed/What-Ought-Government-to-Do-and-Not-Do-Why-We-Need-to-Read-John-Locke
In response to Sydney’s blog post, I would have to say that she was very accurate in her assumptions. In a headline from a CNN article, the news of the day was that, “House approves Senate’s fiscal cliff deal.”(1) The article went on to quote many Republicans saying they were wary of the deal but had no choice but to vote on it, seeing that the American people would be truly hurt if nothing was done. Sydney correctly predicted that the fiscal cliff would be solved, and a deal has been made. The House only got to vote on it yesterday, so they were over their time limit, but it did pass. Overall, I doubted Congress in their ability to work together. But under a stressful deadline and with a dramatic end, they did finally reach an agreement on at least some issues. She also agreed with the deal in that it should cut for middle class families and that people who make very much money, the top two percent, deserve to pay more than families struggling to live.
The bill extended tax cuts for Americans who make less than $400,000 per year and kept unemployment benefits (2). 98 percent of Americans and 97 percent of small businesses will not see their income tax rates go up. Spending cuts however have not been determined. A new date has been set for two months from now to decide how to deal with the spending cuts. Obama commented that spending will be cut but that things like research and technology should not be cut because we need to be able to compete as a nation with the rest of the world (2).
1)http://www.cnn.com/2013/01/01/politics/fiscal-cliff/index.html
2)http://abcnews.go.com/Politics/OTUS/fiscal-cliff-house-gop-wary-senate-deal-add/story?id=18108091#.UOSmkHPjlj4
Out of all the blog posts, I’m responding to Josh’s since his argument is valid but is extremely controversial. Let me first critique the background information Josh provides before I dive into his argument at the end. Josh states that both sides, the Republicans and the Democrats are distrustful of each other and because both sides are cynical of the other’s motives, a deal will not be passed in the end and we will go over the fiscal cliff. One point in particular stuck out to me when I saw in Josh’s blog post, “further some Republicans think that the Democrats will just sacrifice the future of America just to stick the blame on the Republicans and win political points.” The statement from the huffingtonpost from which this article came from has a flawed point. Under no circumstances do the Republicans think Democrats will go to an extent to put America in jeopardy and let us go over. Republicans do blame the President for not engaging in more deep negotiations, but do not think he will willingly go over the cliff. In fact, Obama is the one placing the blame on Republicans and the GOP (1). “President Obama blamed Republican leaders for the latest round of brinkmanship in Washington and said it was now up to lawmakers to find a way back from the so-called fiscal cliff (1).” In an interview with NBC’s “Meet the Press” aired Sunday, Obama said he had reached out to Republicans for weeks, but their refusal to raise taxes had blocked progress(1).
““They have had trouble saying yes to a number of repeated offers,” Obama said. In Friday’s meeting with congressional leaders at the White House, “I suggested to them if they can't do a comprehensive package of smart deficit reductions, let's at minimum make sure that people's taxes don't go up and that 2 million people don't lose their unemployment insurance (1).”” Obama was therefore willing to make a small deal to save Americans from going back into a recession.
Josh stated that, “with the belief that the other side is only looking out for their political self, compromise becomes increasingly difficult and unlikely.” I don’t think the deal is at stake due to looking out for political self, than it is the amount of leverage the two parties had (2). I said in my blog post that we won’t go over the fiscal cliff part in because the lack of leverage the Republicans have and the fact that they will cave in in the end (2). The Republican had a lack of leverage due to the central issue of the fiscal cliff talks favoring Democrats overwhelmingly, secondary issues not favoring the GOP, and the trust Americans have in Obama and the Democrats (2). Josh’s point that both sides’ have major distrust is valid, but I think a better argument for him to use for the going over the fiscal cliff would be, starkly different ideologies on tax codes, entitlement spending, and other major issues. In my blog post, I focused on leverage and the caving of ideologies to prevent us from going over the fiscal cliff.
Now for Josh’s argument. Josh stated that, “If I was a member of Congress, I would advocate an expiration of the Bush era tax cuts. According to the Economic Policy Institute, extending the Bush Era tax cuts for all, as many Republicans would like to do, will have a large cost to extend but not a large impact.” I think this is a total understatement of the impact going over the fiscal cliff would have on the country. Part of going over the fiscal cliff is the expiration of the Bush Tax Cuts for all. Here is why I disagree with Josh about letting the Bush Tax Cuts Expire. The Tax Policy Center, a nonpartisan think tank, states that if we go over the fiscal cliff nearly 90 percent of households would be affected if no deal is reached (3). Americans in the lowest 20 percent of the income scale could pay an average of about $400 more in taxes, middle-income households could pay about $2,000 more in taxes, on average, the top 20 percent of taxpayers could pay about $14,000 more a year in taxes, on average, and the 1 percenters could pay an average of $120,000 more in taxes (3).
“The Alternative Minimum Tax was originally designed so that wealthy taxpayers would be forced to pay a minimum level of taxes no matter what. But because it was not created to account for inflation, over the years it has threatened to affect an ever-bigger group of people. Congress has previously passed temporary “patches” to keep lower-income households from having to pay more taxes. If no deal is reached this year, the latest patch would expire and the Internal Revenue Service says around 30 million additional taxpayers would become subject to the AMT (3).”
Also, 2.1 million unemployed Americans are scheduled to lose federally funded unemployment compensation if Congress cannot reach a deal by the fiscal cliff deadline (3). So the impact is enormous taking every class of people in America into consideration and Josh’s argument of letting the Tax cuts expire while cutting defense is basically just like going over the fiscal cliff which neither party wants to see.
Regarding the fiscal cliff decision, I am pleased that a deal was worked out in the end. I am, however, not satisfied with a few provisions. “The bill would boost the top 35 percent income tax rate to 39.6 percent for incomes exceeding $400,000 for individuals and $450,000 for couples, while continuing decade-old income tax cuts for everyone else (4).” I think the numbers regarding taxes are perfect in this case. Obama wanted to raise taxes on people making over $250,000 and Republicans wanted tax cuts for all (4). I think both of those ideas were extreme and the deal Congress reached was right in the middle so it is fair on both ends. The bill also “extended expiring jobless benefits; prevented cuts in Medicare reimbursements to doctors; and delayed for two months billions in budget-wide cuts in defense and domestic programs slated for this year (4).” I agree with those provisions in that those are desperately needed in society and without them, needed benefits will be gone. I do disagree with the raising of capital gains and dividend taxes. These are not salary income and should not be subject to the same tax increases as standard income. There is major harm in raising these taxes such as hindering investment. Overall I think it was wise to reach this temporary agreement, but it is by no means the end of debate. I am disappointed that there was no major deficit reduction agreements made and long term tax reform done (4). I’m looking forward to see what Congress and the President has in store for us in the future.
1.http://www.latimes.com/news/politics/la-pn-obama-gop-fiscal-cliff-interview-20121230,0,1767155.story
2.http://www.washingtonpost.com/blogs/thefix/wp/2012/12/06/republicans-severe-lack-of-leverage-on-the-fiscal-cliff/
3.http://www.nbcnews.com/business/economywatch/heres-what-happens-you-if-we-go-over-fiscal-cliff-1C7753059
4. http://news.yahoo.com/congress-oks-cliff-deal-signaling-future-fights-080422547--finance.html
This comment has been removed by the author.
I think Ryan Olstad can secretly see the future. In his post, he argues that the best path forward (especially for the Republicans) would be to strike a deal that is exactly like the one that was ultimately agreed upon. Ryan would opt for tax increases on the top 2% of wealthy Americans and encourage a slower, more structured method of reducing the deficit, which is pretty much what Obama was hoping for and ended up getting (1). Also, Ryan gets brownie points for his timely West Wing reference.
As for the ultimate result of the fiscal compromise, I’m pretty pleased. The top 2% of American earners have not seen a tax increase in 20 years...until now. 2 million job-seeking Americans will continue to receive unemployment benefits and our families will still be able to claim a tax deduction for sending us to college (2). While everyone would like to see our national debt disappear overnight, I strongly support a plan that seeks to reduce the debt gradually without harming those Americans who depend on the government for their basic needs. I understand that programs like Medicaid, Welfare and Food Stamps are a massive drain on our government resources, but I’m still pleased that they’ve been preserved through this deal because I’ve seen the good these programs do. Ultimately, this fiscal cliff debate has shown us that some real progress can be made in which everyone wins. Smaller debt without massive tax hikes or spending cuts? I’m in!
1. http://www.bbc.co.uk/news/world-us-canada-20886182
2. https://my.barackobama.com/page/share/fiscal-cliff?utm_medium=email&utm_source=obama&utm_content=img+srchttpassetsbostaticcomimagesemail20130101Emailcliffemail1ajpg+altThe+President039s+message+for+you+on+the+agreementbrbrstrongua+hrefhttpmybarackobamacomFiscalCliffAgreementhttpmybarackobamacomFiscalCliffAgreementaustrong&utm_campaign=em12_20130102_jm_nda&source=em12_20130102_jm_nda
In response to Akorede’s post,
I liked the fact that Akorede had some good points to back up his argument. I believe he made a good point when he said Congress would figure it out in time just like they always do. Congress waited until the last moment to try and get a deal. I thought they would stand their ground but I miscalculated and did not take into consideration that neither side would want to shoulder the blame for what was not accomplished. However, I believe that the decision made by both sides was correct as it kept down the taxes on many Americans while it raised it on those who make more which is justified. I like the deal that went down as it was not solely Democrats who voted for it, meaning that there was some compromise between both sides.
In response to Sam A’s post, I agreed with her in my earlier post that I believed Congress would allow us to go over the fiscal cliff. Technically, they did. No deal was made until Tuesday, January 1st, however, they did make a deal to avert the fiscal cliff. I agree with Sam in the fact that our political leaders hardly ever compromise and I didn’t see an end to this stalemate, either. I believe her argument was strong in saying that it did not look good for Americans or for Congress when dealing with the fiscal cliff. We both agreed on that, on how bad and unmoving the issue looked by the press and by members in Congress. I am thankful tax increases were averted but I did not think that Congress and the President would ever strike a deal.
Now, with the deal that Congress and the President made, I believe it was simply made out of fear of not being reelected. Mr. McConnell said, “This shouldn’t be the model for how to do things around here,” and I would have to agree (1). Toying with the lives of Americans is not some simple matter. I realize it doesn’t come easily to make a deal but it also shouldn’t come down to worrying about the richest two percent and being stubborn about what each side wants. I’m surprised a deal was made at that rate. One of the only reasons I feel the House even considered the measure was spoken by John Boehner which was that they would “honor its commitment to consider the Senate agreement” (1). I feel as though the deal was made out of pressure, not actually wanting to solve anything. I do not generally agree with what Congress and the President did. According to an article in the Star Tribune newspaper, Congress and the President put off the $110 billion spending cuts for two months (2). What good does that do for anyone? It will only bring up more arguments and the same fight in the spring time. Putting it off was not the smartest idea because that is how we got into the fiscal cliff mess anyways. The Bush era tax cuts were also just extended to those below $400,000 of income (2). I also do not agree with the fact that they pushed back measures for jobless benefits and cuts to Medicare because those issues will have to, again, be addressed again (2). I am slightly impressed that Republicans agreed to increase tax rates from 35% to 39.6% on those making more than $400,000 and on those married making more than $450,000 (2). That is actually a compromise that came out of the whole dilemma that actually did anything or changed something.
1) http://www.nytimes.com/2013/01/02/us/politics/senate-tax-deal-fiscal-cliff.html
2) Star Tribune Article
I am responding to Marco’s post. In that post, Marco predicted that Congress would send the United States careening over the fiscal cliff. While they did come perilously close, that was not the case (1). Marco’s argument was that Congress, in a typical manner, would not be able to get their act together on time to act on the fiscal cliff deal. This pessimistic argument, while perfectly understandable given the overall level of competency Congress has displayed over the last decade, overlooked one important factor: that Congress always looks out for itself. No member of our national legislature wants to be caught with the hot potato of blame that comes when inaction sends the nation back into recession. It was inevitable that they would pass a bill, if for no other reason than fear of public backlash.
Now, onto the deal itself (1). I do not like it. I believe that Obama, in a rare position of power, should have used the opportunity to squeeze more concessions out of the Republicans. With polling data showing that the public would consider Republicans the more guilty party if no deal was reached, the president easily could have obtained a deal more to his liking, a deal that would have addressed issues like the upcoming debt ceiling. Furthermore, this bill moves the bill on sequestration to a later date (1), which is simply a ducking of the issue. Moving the deadline is like assigning a paper where students can extend the due date by a majority vote. It produces no results. However, this bill does accomplish some positive things. It extends unemployment benefits, and most importantly, does not send the country into recession. It was the least, and the most apparently, that Congress could have done.
1. http://www.whitehouse.gov/the-press-office/2013/01/01/fact-sheet-tax-agreement-victory-middle-class-families-and-economy
This comment has been removed by the author.
Responding to Sam Aamot’s post
I disagree with Sam that we will go over the fiscal cliff. The reasons Sam believes we will go over are very reasonable, Republicans don’t want to raise taxes and Democrats don’t want to slash spending, so it is plausible that we could go over the cliff. However I don’t believe we will because if congress cannot pass a bill the publics attitudes towards them will plummet even further downhill. Congress doesn’t have a choice they need to pass something regardless of what political side it favors, if they want any confidence from the public. Obama is slowly lowering his revenue demand to something the Republicans can somewhat agree on and after John Boehner and Obama hash it out i’m sure they can come up with a compromise. I also think we won’t go over the fiscal cliff because 65% of Americans believe we should increase taxes which leads to more of a Democratic plan to fix the fiscal cliff.
Last Tuesday night at 2 am the House of Reps voted to pass the Senates Bill on the fiscal cliff. The measure called to maintain tax cuts for most Americans but increase rates on the wealthy passed the Democratic-led Senate overwhelmingly early in the day (1). It will raise $620 billion by taxing the top 2% while protecting the other 98% from huge tax increases (2). The Bush-era tax cuts will be permanent for individuals making less than $400,000 and couples making $450,000 (2). The bill extends emergency federal unemployment benefits for another year (2). Unfortunately Wall Street lucked out and and won a 20 percent on dividends above $400,000 which otherwise almost would have doubled (2).Even though a crisis was adverted for now the fiscal cliff was just pushed back and i’m sure I will have to hear about the fiscal cliff throughout my lifetime. Crisis adverted for now but the fiscal cliff still looms ahead.
http://www.cnn.com/2013/01/01/politics/fiscal-cliff/index.html
http://www.huffingtonpost.com/2013/01/01/fiscal-cliff-deal-passed-_n_2394022.html
I have decided to respond to Jeremy's post, because I found some interesting opinions to react to. The first point that Jeremy made was that if he had to vote on such a bill, staying strictly on party lines would be a must. While there is no right or wrong opinion here, it is interesting to note that this wasn't the case for many congressmen (1). Many votes, especially in Republican leadership, showed a deep divide within the party; this was another good point Jeremy brought up (2). This division shows the complexity of the issue at hand facing American lawmakers. It is also interesting to note that Jeremy's preferences for what the bill would look like turned out to be pretty close to what the actual bill included, including the all-important tax increase on the wealthy (3). As for the actual deal made by the President and Congress, I think our problems are far from solved. While the tax increase on the wealthy and the extension on middle-class tax cuts is a step in the right direction for the Democrats' agenda, many of the bill's provisions simply put off our problems for later in the year. These include issues like the farm bill and the automatic spending cuts that were part of the original "fiscal cliff" issue.
(1) http://www2.tbo.com/news/politics/2013/jan/03/cliff-vote-split-floridas-gop-lawmakers-ar-596816/
(2) http://nbcpolitics.nbcnews.com/_news/2013/01/02/16302329-fiscal-cliff-deal-a-debacle-for-the-gop-sets-up-bigger-fight-in-months?lite
(3) http://www.nationaljournal.com/congress-legacy/here-s-what-s-in-the-fiscal-cliff-deal-20130101
In response to Grant's post, whose comments on what congress would do seem fairly accurate. The men and women of our congress were tenacious to the very end.
But they eventually came to a compromise that will hold for a little bit.
Personally I think that the choices that were made, were an alright temporary fix. However somethings could have gone better. My initial estimate of the tax increase point was almost spot on, as they settled on 400,000 for individuals and 450,000 for families [1] I think this is a good compromise from the two points the parties were at initially. I'm happy that the legislators pushed off most of the tax questions for two more months, It would be nice to have the resolution now, but they apparently need more time to figure out their differences. [2] However there were multiple things that I disagreed with in their handling of this matter. The farm bill that went into place didn't make any changes, we just upheld the status quo, which isn't even working for most american farmers. [4] I also had some issues with the Buisness cuts that were allowed to continue, such as the Rum Tax as well as other things that have not been proven to help the economy. [3] I just think that these things have outlived their helpfulness to the American Economy, and need to be given less of a focus as they aren't helping the average person. In the next few months I hope more of these can be removed, spending less excess money for business that don't really need it. But overall I'm quite happy with how this turned out, and I look forward to seeing if they can get everything else right in the next few months.
[1]http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/31/your-fiscal-cliff-deal-cheat-sheet/
[2]http://www.cnn.com/2013/01/02/politics/fiscal-cliff/index.html
[3]http://abcnews.go.com/Business/results-buzzed-fiscal-cliff-tax-issues/story?id=18114812#.UOX5Cm80WSo
[4]
Maddie A’s analysis of the fiscal cliff contains very useful and relevant information. Her prediction that a deal would be made turned out to be correct; although, it was not necessarily in quite as timely a manner as some may have thought (1). Hours after we had slipped off the edge of this metaphorical catastrophe, Congress finally reached a compromise. This deal extends the Bush-era tax cuts to individuals making $400,000 or less and families making less than $450,000 (2). This number is up from $200,000 and $250,000 written about in Maddie’s post (1). Furthermore, the settled amount was near the minimum that the Republicans were willing to accept, as well as the maximum for the Democrats (5). While this number seems a reasonable middle ground from Obama’s $200 and Boehner’s $1,000,000, both parties appear unhappy about how the bill turned out overall (3). Democrats hoped that this legislation would raise $1.6 trillion over the next ten years (3). However, calculations predict revenue to be much smaller at $620 billion (3). Republicans, on the other hand, are annoyed by the lack of spending cuts present in the bill (3). This frustrates the GOP because they believe over-spending is at the heart of our economic turmoil (3). Additionally, many others are discontent with Congress’s actions for various reasons. Firstly, this compromise contains numerous loopholes that should be viewed with suspicion (4). To name a few, the bill provides tax credits for NASCAR owners, rum imports, Hollywood films, and use of electric scooters (4). Some say that these useless amendments are a clear display of corruption that surrounds Congress. Secondly, people are angry because this issue has not been solved once and for all (3). In a mere two months, the cliff will have to be addressed again (3).
1) http://apusgopo.blogspot.com/2012/12/post-1-for-tri-2-due-121412.html
2) http://www.cnn.com/2013/01/02/politics/fiscal-cliff/index.html
3) http://www.huffingtonpost.com/2013/01/01/fiscal-cliff-deal-passed-_n_2394022.html
4) http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/02/from-nascar-to-rum-the-10-weirdest-parts-of-the-fiscal-cliff-deal/
5) http://www.forbes.com/sites/beltway/2013/01/03/the-bottom-line-what-the-fiscal-cliff-deal-really-means-for-taxes-and-spending/
Well, as per instructions, I am supposed to critique the “deal or lack of deal that occurred”. I don’t know which part to focus on though; the deal or the lack of a deal. First, however, kudos to Maddie A. for correctly predicting that Congress would not fall over the fiscal cliff.
Now, to the deal. (1)The agreement reached by Congress and signed by the President raises taxes on 77% Americans. (2) The estate tax will be increased from a top tax rate of 35% to 40% with a $5 million exemption level. This threshold will be indexed to inflation going forward. However, the deal did not address payroll taxes. As a result, the rate of payroll taxes for workers used to fund Social Security will increase from 4.2% (which was in place for the previous two tax years) to 6.2% as of January 1, 2013. According to The Tax Policy Center, approximately 77% of American households will face higher federal taxes in 2013—not just income tax increases on wealthier American households but payroll tax increases on middle and low income American households as well.
But, budget cuts? What budget cuts? There not in there. This is because Republicans fought against the Democrats and Speaker Boehner and each other and pretty much anyone else. Democrats, to their own fault, rush gallantly to the imaginary bulwarks of Social Security and Medicare while leaving those affected by hurricane sandy in the lurch. (3)The entire fiscal cliff scenario was supposed to be centered on eliminating the budget deficit and reducing the national debt. It was supposed to involve a "grand bargain" that would reform entitlements and rein in long-term spending. Yet the White House has not articulated goals for reducing or reforming entitlements. Many of the proposed fixes for Medicare, Social Security and other entitlements are not that radical. They include higher eligibility ages and higher premiums for richer seniors. It’s time for Washington to stop acting like Kindergarteners fighting over the same toy and come together for the good of America. @ Ms. Aby, can we come back to this in like two to three months to see what ends up happening?
1. http://politicalticker.blogs.cnn.com/2013/01/03/fiscal-cliff-deal-raises-taxes-on-77-of-americans/?iref=allsearch
2. http://www.forbes.com/sites/advisor/2013/01/03/fiscal-cliff-deal-4-tax-provisions-handled-1-hiked-still-work-to-be-done/
3. http://www.news-journalonline.com/article/20130103/OPINION/301029956?p=2&tc=pg
This comment has been removed by the author.
This comment has been removed by the author.
In response to KQ’s post:
Kangqiao maked a very strong argument and rightly predicted we will not tumble over the cliff (1). He lobbied well for necessary cuts AND necessary revenue. I support his plan for slow returns to Clinton-Era tax rates, first for the rich but then later for the rest of the population, even though I believe they would be unpopular with the public and infeasible when dealing with Congressional Republicans (1). His stance on cuts recognized the grim future of entitlement spending and the lavishness of defense contracts, of which I agree (1). Such a deal as KQ proposed, however, could never have been adopted. As much as an omnibus of deficit-reduction measures was desired it would have been impossible to pass. The Republicans, although in beaten and battered from their November losses and growing dissention, still hold the Nation’s conscience when they espouse “fiscal conservatism.” Although fiscal conservatism received a walloping as well, it is at the foundation of the House GOP and would not be sidestepped by aggressive negotiations by Democrats (2). Also, to each and every Congressperson it would have been too much of a compromise. Each party/caucus would rather stake individual fights to get what it wants. Boehner said it himself that it is better to compromise one step at a time and play your hand when you need it (3). To Republicans, their spending cuts hand was not at the forefront of the December-long discussion; taxes and revenue were, so they could not fight a strong fight concerning a larger package (4). And so, the Republicans are already saddling their horses to ride into battle over spending when the debt ceiling is met in two months (4). It is there that they will be able to play their hand (3). Such large compromises as KQ and most students proposed must now be done in steps.
And with my own opinion on the deal, I believe it did not raise enough revenue. Economists agree that the $600 billion from this band-aide deal will not be enough in the long-run (5). We need more revenue which should have been a result of the President’s original intentions of ending the Bush tax cuts for those making more than $250,000. I am content with compromising in steps but also hope that defense cuts are not ignored when spending is slashed in two months. Entitlements must be on the table for they are also part of the problem. In addition, making this a multi-step process provides a little more time in possibly drafting any entitlement reform legislation which is more desirable than slashing funding. To summarize, I was hoping for more revenue and some sort of sign that spending would be decreased rationally.
1. http://www.blogger.com/comment.g?blogID=1594687385816014274&postID=3827874000784155475
2. http://www.theblaze.com/stories/fiscally-conservative-congressman-purged-by-speaker-boehner-issues-scathing-response-on-facebook-and-twitter/
3. http://www.bloomberg.com/news/2013-01-01/senate-s-new-year-s-cliff-deal-shifts-pressure-to-boehner.html
4. http://www.cnn.com/2013/01/02/politics/fiscal-cliff/index.html
5. http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/03/how-the-fiscal-cliff-deal-will-affect-the-economy-and-deficits-in-six-charts/
In response to Ryan O’s blog post:
I like that Ryan supports “Obama’s use of stimulus spending in the plan on infrastructure,” and I think his idea of a tax increase on the top two percent of wealthy Americans as well as a more gentle and organized way of reducing the deficit is a very good idea (1). The strong evidence he uses, such as The Great Depression regarding spending on infrastructure, prove that his plan takes knowledge from history and applies it to current events, which makes his ideas seem more likely to work in the long run. Ryan’s plan seems like one of the most logical and potentially successful plans.
Fortunately, what Ryan had stated as the best way to go forward is very similar to what has actually been passed by Congress.
On January 1st of this year, the House of Representatives passed the fiscal cliff bill. The bill included taxing the top two percent of wealthy Americans, while keeping the remaining 98% of Americans safeguarded from high tax increases. For individuals making less than $400,000 and couples making less than $450,000, taxes will remain cut. Additionally, unemployment benefits are extended (3). The bill, however, is lacking in important and controversial issues such as the farm bill (4).
Essentially, the fiscal cliff has been pushed back. This topic will fuel much more conversation in the country as, hopefully, more permanent deals will be worked out. It is my opinion that the deal includes what both the Republican and Democratic parties want, which is a decreasing national debt, spending cuts, and no large tax increases. Although this is good, there is still so much more to be worked out. I think this is only the beginning of a very long and highly debated resolution to an inevitable issue.
1)http://apusgopo.blogspot.com/2012/12/post-1-for-tri-2-due-121412.html
2)http://www.bbc.co.uk/news/world-us-canada-20886182
3)http://www.cnn.com/2013/01/01/politics/fiscal-cliff/index.html
4)http://www.nationaljournal.com/congress-legacy/here-s-what-s-in-the-fiscal-cliff-deal-20130101
In Blaze's post, Blaze accurately predicted that a deal would be made and that the budget cuts would be phased in over the course of 2013 (1). One of Mike's points that I disagree with is his point that Republicans are fighting for votes that they are not going to get. In support of this fact, he sites a statistics that says that a Romney did not win the richest counties in America. However, when one looks at the bigger picture, one sees that in fact a majority of those earning over $50,000 favored Romney. One reason for the discrepancy in Mike's source is that the 50% who earn less than $119,000 in Loudon County, the richest county in America, earn a lot less than $119,000. In fact, the average for the county is $43,777 (2). The fact that the average is so far from the median shows that the range of income is very large. So if a large majority of the poorer citizens of Loudon County vote democratic, as the graph suggest, and a small percentage of the average income voters vote for Obama, Obama would have gained a majority (2). On Mike's analysis on what is needed in the fiscal cliff deal, I agree that tax cuts should be extended for middle and lower income families, but I disagree with Mike's characterization that increasing the taxes on the rich will not have a high magnitude of damage. According to the Heritage Foundation, by increasing taxes on the rich, capital investments will decrease which will cause a decrease in GDP, also causing a rise in the unemployment rate in the private sector and a drop in wages (3). With everything else, however, I find Mike's analysis very intelligent and logical, especially his analysis of curbing drug prices in Medicare and lessening America's military force world wide.
In regards to the actual fiscal cliff deal, I was very disappointed because Congress did not focus enough on spending cuts. In fact, the ratio of spending cuts to tax increases is $1:$41. Our country does not have a problem with tax rates; what we do have a problem with is the amount of people paying taxes. The top 20% of income earners pay for 67.9% of government revenues through taxes while the earning 50% of the income(4). That means that everyone else in the economy (80% of the people) pay approximately 32% of government tax revenue while still earning 50% of the total income. I also dislike how their are tax cuts included for NASCAR, rum exporters, bankers and major multinationals, subsidizing Hollywood films, and more. Although this loss is relatively small at around 10 billion dollars, it gives the impression that Congress favors the wants and desires of a few rather than the needs of the nation. And while Congress may have been able to satiate investors and credit rating industries, Congress still has to make a deal on how where to cut spending and whether to raise the debt ceiling. This means that the real issues are still yet to come.
1. http://townhall.com/tipsheet/kevinglass/2013/01/02/boehner-forces-fiscal-cliff-deal-through-house-n1477444
2.http://www.nytimes.com/interactive/2012/11/08/us/politics/obama-was-not-as-strong-as-in-2008-but-strong-enough.html
3http://www.heritage.org/research/reports/2012/12/the-economic-and-fiscal-effects-of-the-obama-tax-plan?rel=Taxes
4http://www.washingtontimes.com/news/2012/jul/10/cbo-rich-pay-outsized-share-taxes/
This comment has been removed by the author.
In response to Dylan’s post, I would say that I mostly agree with him. His thoughts on whether we would go over or not were similar to mine. Where we disagree is what we would do as a Democratic politician. Dylan said that he would stand his ground, but I disagree. Just because you’re in a position of power doesn’t mean you should abuse it and that kind of thinking is exactly why it took so long to come to a compromise. Despite the fact that the Republicans would be receiving most of the blame, it would be a politically sound idea to try and let them have a few things in order to make the bill an easier pill to swallow.
As for the Fiscal Cliff deal, I think it’s an infantile and slapdash deal that is a perfect example of why our government doesn’t work. The fact that 77% of peoples taxes were going to go up, as well as the copious amount of key things left out makes the bill seem quite inept. Important farm bill legislation, Hurricane Sandy relief are just a few of the things that were left out of the bill by Speaker Boehner and others. The fact that we went actually over the deadline in negotiations and yet only managed to push things back two months is astounding. Luckily, something I was concerned about, unemployment benefits, were renewed for another year. To be honest, any complaints I have about the fiscal cliff could be resolved in the upcoming negotiations, especially with a new congress, but I’m afraid that it will be more of the same with the house rushing to slap something together, like a kid who forgot to do a homework assignment.
http://us.cnn.com/2013/01/02/politics/cliff-winners-and-losers/index.html?iref=obinsite
http://www.cnn.com/2013/01/02/politics/fiscal-cliff/index.html
In response to Sara’s post her argument was articulated well and the research accurately represented what ended up happening. Technically her prediction was proven correct because Congress did not pass the bill until January 1st, not the actual deadline of December 31st. Her proposed additions to the bill if she was a Congressional leader made a lot of sense to me, some of which actually happened in the bill that was passed.
Now for that bill that was passed. The fiscal cliff disaster was technically averted but “new battles over taxes and spending await Washington in the next few weeks” (1). “It makes permanent the Bush administration's tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000” (1). I feel this is a good measure to help fix some of our financial issues. As a country we need to increase revenue and decrease spending. The bill ”does begin to reduce the deficit to levels approaching sustainability”(2). Unemployment is also extended along with putting off major spending cuts for a few months. Congress seems to a propensity for shuffling off major issues to be dealt with at a later time thinking that compromise will be easier. But it never is. Not to mention that aid for Hurricane Sandy victims was not voted on. Even though I personally was not affected by the storm, this angers me. We have usually been quick to react to natural disasters, so what changed in this case? Even though it was passed “looking at taxes and spending as a share of GDP shows just how tough it will be for the parties to reach a fiscal compromise” (2). Congress needs to find a better way to compromise in order to avoid another situation like this in the future.
1.http://www.cnn.com/2013/01/02/politics/fiscal-cliff/index.html
2.http://www.forbes.com/sites/beltway/2013/01/03/the-bottom-line-what-the-fiscal-cliff-deal-really-means-for-taxes-and-spending/
After reading Mike B.’s (extremely long) post from last week, I have found that I mostly agree with his ideas. While there are exceptions, such as his ideas on peacekeeping by our military (if we aren’t going to stop the rest of the world from killing each other and their neighbors, who is. The UN???), I agree with him on some of the other areas about how to save money. Mike was also very close to correctly guessing what the final bill would entail. He said that it would extend Bush era tax cuts, but only for Americans earning less than $500,000 annually. He also predicted that Congress would push some of the issues off until a later date, and that’s exactly what happened (1).
As for my opinions on the fiscal cliff, I can find a few areas where I agree with what Congress passed. While I don’t like the idea of raising taxes on anyone, in the spirit of compromise I would be willing to raise taxes, to a limit, on the wealthy. The public, for some reasons, seems to hold Republicans more accountable than the Democrats (2). I still feel that entitlements need to be cut in order to permanently resolve our national debt crisis.
1)http://www.whitehouse.gov/the-press-office/2013/01/01/fact-sheet-tax-agreement-victory-middle-class-families-and-economy
2) http://www.washingtonpost.com/blogs/thefix/wp/2012/12/06/republicans-severe-lack-of-leverage-on-the-fiscal-cliff/
1.http://www.google.com/hostednews/ap/article/ALeqM5ioJbVyNJZkB2VTB2XgeUHL25-C-g?docId=a881abcc28684fa3a37cdad4e195913d
2.http://www.forbes.com/sites/kenrapoza/2013/01/03/why-the-fiscal-cliff-deal-is-better-than-you-think/
3.http://www.cnn.com/2013/01/02/politics/fiscal-cliff/index.html
I am responding to Sara’s blog post. She predicted that Congress would not reach an agreement by the deadline because of the unwillingness to compromise. I agree with Sara that I would side with the Democratic Party on this issue and push for a tax increase on the top 2% but keep the cuts on the other 98%. Pretty late at night a compromise was reached though. The bill includes a tax raise on individuals making at least $400,000/year and couples making $450,000/year (2). This is not the top 2% that the Democrats had originally hoped for, it is actually just the top .6% of Americans (3). However, passing this bill was necessary to avoid the fiscal cliff (2) and a compromise was reached (1).
In my opinion reaching a compromise before the deadline was necessary. It had a positive effect on Wall Street. The DOW went up nearly 2% by mid-afternoon (3). The risks on the Global economy are also reduced with the passing of this bill (2). Economists expect growth in the economy to pick up in the second half of 2013. Overall passing legislation to avoid the fiscal cliff was a good thing. I do not think that procrastinating the issue of sequestering, automatic federal spending cuts, is a good idea because the problem is not going to go away (3). To conclude reaching a compromise was good for Americans and the global economy as a whole.
In response to Noah’s post, I must agree with his view on the actions needed by Congress. He stresses something very important in his argument: the need for both an increase in taxes from the wealthy and cuts in spending on entitlements and defense. The key, of course being the ‘and defense’ part. Spending cuts must come from BOTH defense and entitlements in order for it to be a fair solution. We spend more on our military that any other part of our government and it doesn’t seem fair to take money away from people that depend on government programs so we can kill our fellow man more effectively. It’s interesting though. In the fiscal cliff bill that was passed, little was mentioned about spending cuts. It basically just reformed the tax code and increased taxes on the wealthiest 2% of Americans (1). If Democrats want to avoid an intense battle on the next fiscal cliff (March 1st) they will need to give in to the Republican’s wishes for cuts (1). They can gain some ground in public opinion by reaching for compromise while making the republicans look bad when they argue against defense cuts, and they will. The Democrats can say that the Republicans asked for spending cuts and we gave them spending cuts. They will have the people behind them too. So in summary, Noah was right about what would happen with taxes and could be right about spending cuts. We’ll just have to wait and see for that fight.
1. http://abcnews.go.com/Politics/OTUS/fiscal-cliff-congress-passes-compromise-aimed-averting-recession/story?id=18108091&page=2#.UOY1QG9JOAg
2. http://www.forbes.com/sites/rickungar/2013/01/01/heres-the-deal-on-the-fiscal-cliff-deal/
Let me just say, I apologize for my loquacity & verbosity.
A response to the post of “Tom N.” To begin, it seemed that the post of the aforementioned student entirely avoided the primary purpose of the post, which was to address whether or not we will go over the fiscal cliff. Instead, he rather ineffectively argued that the term “fiscal cliff” is entirely inaccurate and made broad, largely unsupported claims that the United States government has far exceeded the correct and “constitutional place as thought by the founders.” Rather than try to concisely communicate the essence of the haphazard argument presented—because there hardly is one—let’s examine Tom’s post section-by-section.
He begins his post with the statement, “The Fiscal Cliff is a symptom of...deficit spending.” Unfortunately, this is almost entirely incorrect. The fiscal cliff is a symptom on Congress’ attempt to force a compromise on wide variety of important budget spending and taxing changes.(1) Rather than a symptom of the US’ long-established tendency to run a deficit, it was simply a mechanism that Congress created in August, 2011 that they hoped would end in a comprehensive compromise. Next, Tom asserts that Keynesian economic theory believes in deficit spending during times of poor economic performance, which is entirely true. Unfortunately, he taints this seemingly objective statement with the adjective “flawed,” yet provides no support for his assertion. Is it really that difficult to find something that supports that broad claim, like this (2), written by an economist with a PhD, or this (3), or this (4), or this (5), or this! (6) Seriously, I hardly had to go to page two of the Google search “keynesian flawed” to find six different (at least somewhat) respectable sources, including three different think tanks! A little more effort next time would be appreciated: at least make it a challenge. Tom next moves on to the inevitability of the default of the federal government. While his metaphors are...uncreative, his analysis is even further flawed. In case you hadn’t noticed, the US government is hardly a risky investment, and no, we won’t “run out” of money as long as people keep buying treasury bills. Even The Economist, hardly a bastion of left-wing radicalism (in fact, I could probably argue pretty effectively that it is one of the best—as in reliability, objectivity and effectively being realistic—conservative sources out there) has doubted that the US Government will ever default on their loans. (7) Furthermore, your proposition that the US defaulted in 1971 is a largely skewed presentation of the facts. While the US did technically “default” on an obligation, it was not public debt they defaulted on, it was their guarantee to provide gold for US dollars to foreign banks. It was done by Nixon, a conservative , because foreign currencies were then considered largely undervalued compared to the dollar, and it forced foreign nations to reevaluate their currencies to more accurate exchange rates. (continued in next post)
(continued from previous post) Next, despite your belief that the Fed can simply avoid inflation by “print[ing] the money, borrow[ing] the money, or lend[ing] out bonds to other countries at artificially low rates” the economics, I can assure you, is much more complicated than that. There are two main causes of inflation: cost-push inflation and demand-pull inflation, while you’re only recognizing one. (11, 12) Furthermore, “the drivers of inflation and currency values are about as complicated as they get” (10), and your argument is missing out on several key elements, including the fact that Bernanke has had the lowest inflation rate since 1970 (10), the fact that Bernanke has not even been the Fed chief to increase the money supply the most (10), the fact that the dollar has been falling on a trade-weighted basis, and that investors move out of the dollar as risk increases, all factors that pull in different ways on the value of the dollar. (10) Your next statement, shockingly, is almost entirely true, despite lack of support. Certainly the government is a reflection of the people, and certainly the people are apathetic, (13) yet that ignores many other nuances. For instance, Congress members are hardly apathetic, (this is not a baseless assumption, simply look at the example schedules for a Senator in our textbook) and they are the ones actually making the decisions. And the reality of the budget problem is the same as the Prisoner’s Dilemma. Everyone would be better off if we didn’t spend much of what we do spend, and had the lower taxes that go with it. Unfortunately, when the barrel of pork comes rolling around even the most staunch conservatives take their share. (14,15) Our spending problem is the result of inherent human characteristics and the structure of our governmental system, and until everyone admits that, “Pork” and other excess government spending isn’t going to go away.
Your next brief paragraph establishes that you would push for a true balanced budget as a Republican in Congress. Congratulations, you’ve established a thesis for your next few paragraphs. You then assert that, “other world leaders such as the EU are looking for other opportunities because we don't balance our budget.” I’m not even going to bother trying to deny this, not because it’s true but rather because I have no idea why you believe this. If say, you had sourced your assertion, then I could provide a legitimate criticism or concurring statement (doubtful), but as it is I will simply let that lie in the bucket of unsupported claims you’ve made.
In your next paragraph, you express support for the return to the gold standard and allowing the release of silver bonds by the US government. While it is certainly noble (I would say unrealistically idealistic) of you to propose the return to a system that has been out of use for several decades, there are several significant problems with this plan. First of all, although you don’t state it (again, generalizations, unsupported assumptions and unstated arguments seem to be central to your post) I assume you support this because it would end the Federal Reserve’s “manipulation” of interest rates. I’m sure you feel that right now they are artificially low (since they are near 0 already (16), and even you wouldn’t assume that .25% is too high) and that, if left to the market, they would “rebound” to more “normal” rates. Well I hate to inform you but this would certainly only hurt the economy (something that you seem not to take notice of in your post, despite its vital role in the fiscal cliff negotiations). The Fed is, by law, required to do everything in its power to make the economy grow. When the economy performs poorly, as it is now (in case you were unaware), the best thing to do is to loosen the money supply. When it’s easy to borrow money for businesses and individuals, spending and investment, things lacking in a recession, rise. Tying the money supply to the gold standard would eliminate the Fed’s ability to do so, and would only make sence if our economic outcomes had been deteriorating over the past 30 years. They haven’t. (17). Finally, and most importantly, because of the Internet, money values are currently much more accurate than at any time under the gold system. The US dollar is probably the central currency in the world, and its value is relatively stable. Because of high fluidity in exchange markets, the dollar cannot be artificially inflated or deflated: it is in an open market, and its value is set by supply and demand. The gold standard is a system that died 30 years ago and became obsolete fifteen years ago. For the purpose of brevity (I know, I sound like Polonius), I’ll ignore your support of silver bonds.
So, Melayna, we didn't go over this fiscal cliff (1). However, you are correct in that the parties still don't agree. Republicans only signed the agreement because the alternative is another possible recession (2). They are actually unhappy with the apparently unchecked spending the government is going to continue doing (3). Again, you are correct because timely is definitely not how I would describe this decision. President Obama agrees, saying, "...hopefully, in the new year, we'll focus on is seeing if we can put a package like this together with a little bit less drama, a little less brinksmanship, not scare the heck out of folks quite as much." (Copy and pasted from (2), hope the formatting isn't off)
I'll say I'm satisfied with what Congress did, only because they managed to get their act together. I'm not pleased because the they didn't really solve the problem with things like the way government programs are spending and the debt-ceiling. In fact, they just pushed off the date for a second cliff (2). It's not even that far off, only 2 months. If Congress couldn't come up with a solution in a year, how can they think of one in 2 months? Also, while taxing the rich as a good way to make money, 4.9% (2) seems like a large amount. Frankly, I also get the sudden feeling that this is discrimination based on wage, which may or may not be a thing. The government shouldn't discourage making tons of cash, because those who are rich have a lot of potential to invest in the economy, causing it to grow. On the other hand, the national response to the deal was positive, evidenced by renewed faith and stock raising 2% (2).
(1)http://www.chacha.com/question/did-we-go-over-the-fiscal-cliff
(2)http://www.cnn.com/2013/01/02/politics/fiscal-cliff/index.html
(3)http://www.cnn.com/2013/01/01/politics/fiscal-cliff/index.html
In your next section you make your first tenable argument but taken to the extreme. I think that there is widespread support for reducing our troop levels in foreign countries, and you make a good point about the ridiculous amount of troops in countries like Japan & Germany (nearly 100,000 between the two of them) (18). However, as a major world player we could never withdraw 100% of troops from abroad without replacing them with NATO or UN forces, to which we would have to commit many more resources. Certainly reductions can be found, after all we don’t have to be the world’s police force, but total withdrawal is called isolationism, which didn’t work so well before the major World Wars. After military cuts you propose that we could recover $300 billion dollars by cutting the federal government back to its “its constitutional place as thought by the founders.” However, as eloquently argued in this NY Times Editorial, “constitutionalism” is not a valid arguement: “Our obsession with the Constitution has saddled us with a dysfunctional political system, kept us from debating the merits of divisive issues and inflamed our public discourse. Instead of arguing about what is to be done, we argue about what James Madison might have wanted done 225 years ago...Imagine that after careful study a government official...reaches a considered judgment that a particular course of action is best for the country. Suddenly, someone bursts into the room with new information: a group of white propertied men who have been dead for two centuries, knew nothing of our present situation, acted illegally under existing law and thought it was fine to own slaves might have disagreed with this course of action. Is it even remotely rational that the official should change his or her mind because of this divination?” (19) Certainly it’s possible that we might be better off with a drastically smaller government, but proposing that “the Founders would have wanted it,” when in reality they devised the Constitution specifically so that we could deal with our own issues, is ridiculous, pointless and inane.
To conclude, I can’t even agree with you on your conclusion. Democrats and Republicans don’t agree on spending more money, that’s one of their main disagreements. You claim that this bill will destroy the “countries” economy, (quick grammatical lesson: when a noun possesses another noun, as is the case “the nation possesses its economy,” an apostrophe, typed thus, ‘ is used. Therefore, it is the “country’s economy”, not the “countries economy.” Where would all those countries even fit anyways?) yet your solution would obliterate it. You would cut spending so drastically, in addition to raising taxes, that we would return to where we were in 2007 but with no government to deal with it. Finally, we did not abandon the free market system in 1913, we realized that it is imperfect. It’s called a mixed market, where the government performs roles that are still good for the majority, like public goods and dealing effectively with externalities, that wouldn’t be dealt with by the free market. Furthermore, you should re-check your history: the middle class didn’t rise in the late 1800’s and early 1900’s, it was created in the wake of World War Two, the biggest explosion of government in America’s history. Keynesian economics and big government soften the blow of pure free markets. Why do you think Europe has less income disparity than we do? They have a softer free-market, with more government and more benefits, although they certainly pay for it with slower growth. Keynesian economic theory has and will continue to be one of the primary economic underlying theories (though let’s be clear, Obama isn’t sitting at his desk with Keynes’ outdated papers figuring out what to do; the field of economics has grown and developed to even more accurate models since) because, for the most part, it works. The issue is whether you want the pie to grow faster for everyone, but leave it divided as is (free-market), or have it grow slower but divided more equally (mixed-market). And yes, we will be stuck with the bill, and that’s OK.
Finally, to comment on the deal that was actually made. I am greatly disappointed in the deal that was made, but I remain hopeful that additional negotiations and compromises will be made over the coming months as the delayed deadlines approach. While I recognize that it was necessary for this more temporary deal to be made, and acknowledge that I would have made the same decision had I been in their place, I was certainly hoping for a more comprehensive deal which reduced the deficit greater, raised taxes on a much larger portion of the population (down to $200,000 or $250,000) and effectively dealt with the issue of Social Security (leave Medicare for another bill). If we want to effectively deal with our budget issues, we need to start soon. If we wait until they reach critical mass, it will be very painful for us to resolve our issues. However, if we begin now to gradually and incrementally decrease our spending and increase our income, then we will never reach a point of insolubility. We need to reduce our military obligations and spending, utilizing modern techniques to achieve the same security and reach that we have now; solve Social Security by raising payments by current workers, raising the retirement age gradually (perhaps raising it 1 month per year), and decreasing benefits gradually, grandfathering out current recipients (ie. current recipients would not see their benefits decrease, but future recipients would); and address other spending excesses. Overall, I think that this deal was a good, if disappointing, first step, but nothing more.
1. http://www.huffingtonpost.com/2013/01/02/the-fiscal-cliff_n_2394208.html
2. http://spectator.org/archives/2011/07/22/fatal-flaws-of-keynesian-econo
3. http://www.auburn.edu/~garriro/fk7trouble.htm
4. http://www.cato.org/publications/commentary/barack-obamas-keynesian-mistake
5. http://www.rand.org/blog/2011/11/where-keynes-went-wrong.html
6. http://www.heritage.org/research/commentary/2010/08/the-fatal-flaw-of-keynesian-stimulus
7. http://www.economist.com/blogs/buttonwood/2012/02/fiscal-crisis
8. http://www.bloomberg.com/news/2011-07-22/default-now-or-suffer-a-more-expensive-crisis-later-ron-paul.html
9. www.dartmouth.edu/~dirwin/Nixon.pdf
10. http://business.time.com/2011/09/12/is-bernanke-the-most-inflationary-fed-chair/
11. http://econport.gsu.edu/content/handbook/Inflation/Causes.html
12. http://www.oswego.edu/~edunne/200ch7.html
13. http://www.jstor.org/discover/10.2307/2745968?uid=3739736&uid=2129&uid=2&uid=70&uid=4&uid=3739256&sid=21101492626463
14. http://www.truth-out.org/buzzflash/commentary/item/10962-congressional-republicans-cant-stop-feasting-on-pork-even-as-they-denounce-it
15. http://www.nytimes.com/2011/08/02/opinion/pork-earmarks-what-do-you-mean.html?scp=2&sq=earmark&st=cse&_r=0
16. http://www.federalreserve.gov/faqs/money_12849.htm
17. Wheelan, Charles J. Naked Economics: Undressing the Dismal Science. New York: Norton, 2002. Print.
18. http://en.wikipedia.org/wiki/United_States_military_deployments
19. http://www.nytimes.com/2012/12/31/opinion/lets-give-up-on-the-constitution.html?pagewanted=all&_r=1&
I'll be responding to Melayna's post. The first thing she predicted was that if we went over the cliff, the effects would not be felt immediately. I found this interesting because we technically did go over the cliff. Which is also something she predicted. Granted, a deal was made the very next day, and apparently, crisis was averted. Melayna's solution was a balanced one, raising taxes on the top 2% of Americans, but also making spending cuts on unnecessary government programs. Unfortunately, Americans didn't get a deal like the one Melayna proposed.
Taxes were indeed raised on the top 2%, by letting the Bush tax cuts for their income level expire. But the deal also allowed a 2% payroll tax break on all working Americans to expire. So even if the rich are finally "paying their fair share", the rest of America has no choice but to follow suit. Even though the Bush tax cuts were kept for the middle and lower classes, taxes still increased as a part of this deal. The other part of the cliff, spending cuts, was pushed off for another two months. Call me pessimistic, but if Congress had 507 days to address the problem and only agreed to a solution within the last possible hour, I don't see how they'll make any more headway in two short months.
Overall, I think that the deal to avert the fiscal cliff was a bad one. It does nothing to start solving the real problem, which is the fact that the American government continually spends much more money than it takes in. We've already hit the debt ceiling, which is another upcoming legislative issue that will probably cause more disagreement and lack of action. I think that we will see more gridlock and failure to compromise when the two month deadline comes around, with the only difference being that Americans will already be paying higher taxes.
Matt S. was indeed correct when he said that the possible consequences for our nation would have been too severe for our lawmakers to allow us to go over the fiscal cliff. Despite this, he also knew that Congress would not be too eager to reach a compromise, for each side wanted to get the best possible deal for themselves.
Matt was looking for great compromise, but in actuality the deal is a little less of a compromise and more of a delaying-strategy. The deal finally reached included almost no spending cuts and did not address entitlements as Matt wanted (1). I agree that there should have been more further reaching compromise that could, in the long term, give the American people a sense of stability, as opposed to having them wait to see what will happen as the talks about not only spending cuts but the debt ceiling and entitlements continue in Washington D.C. While I do like the fact that the plan takes into account that the rich have more to provide and should give back proportionally through taxes, I do not think that solely, or even mainly, tax hikes on the rich can solve our financial woes. Spending cuts are necessary too, and hopefully as congress and president Obama continue to talk, Democrats will take into account the concessions that Republicans gave them for the tax code when considering spending cuts.
(1) http://www.nytimes.com/2013/01/03/us/politics/for-obama-fiscal-deal-is-a-victory-that-also-holds-risks.html
I am responding to Marcos post before winter break. I think that he was a pessimistic in his assumptions but no one would disagree that they could have easily been accurate. He thought no deal would be reached because Republicans and Democrats were refusing to budge. While this is true the Republicans would have taken a far larger hit from the fallout of no deal being made. They appeared to have been protecting a wealthy few that did not entirely deserve it in the American people’s eyes. He was right that they would both have to move more towards the middle though, as too far to the right or left and you start to lose support from the general public. Not to split hairs but the payroll tax was not meant to be permanent anyways and that is one thing that could go. Marco was definitely right in the sense that they would delay the real decision making for a while longer. They made some tax changes to appease the public but left the real work to be done in two months when the debt ceiling must be discussed.
This deal raised tax rates on those above 400,000 dollars a year and married couple above 450,000 to Clinton era tax rates, though in that era it was 200,000 and 250,000. This should be a relatively large victory for Republicans. They payroll tax went up from 4.2 to 6.2 percent and deductions for children stayed at 1,000 dollars. The medi care and estate taxes are back as well. The AMT which I do not understand that well, alternative minimum tax rate will be indexed for inflation so it does not affect middle class families if the economy runs rampant inflation. They pushed the debt ceiling back a couple more months as well and all real spending cuts. This was a good start but we are far from done with this crisis.
http://20somethingfinance.com/fiscal-cliff-deal-details-how-it-impacts-you/
http://www.cnn.com/2013/01/02/politics/fiscal-cliff-5-things/index.html
http://www.twincities.com/national/ci_22296093/fiscal-cliff-deal-details?source=most_viewed
In this reply post, I have decided to reply to Matt S’s post. He was certainly right in saying we would avoid going over the fiscal cliff, and they certainly did drag it out as far as physically possible—into the wee hours of the new year, in fact. Taxes did end up being raised on those over $400,000, up from 35% to 39.6%, and as the biggest tax increase in four decades is projected to raise about $620 billion (1, 2). And after reading this article, (3), I have to agree with Matt that entitlement program spending needs to be cut soon, for the fear of just how much health care—especially for our growing population of those over retirement age who are now collecting Social Security and Medicare benefits—will cost us in the next few decades. Soon, those programs will become unrealistic to sustain at current levels, and full benefits won’t be feasibly payable, for Medicare after 2024, and Social Security 2036 (though SS is projected to grow much more slowly) (3). As the article points out, tax hiking the upper tax-brackets is hardly a quick-patch, catch-all solution (3). It is merely a plug in the straining and leaking dam that is the volatile American budget deficit, and we need to find a bigger stopper; greater spending cuts and entitlement reductions will likely end up as two of the larger components of that in the coming compromises, regardless of any bipartisan sentiments of don’t-tax-them and entitlements-for-all. Party ideals must be left behind in this argument for everyone’s sake.
Anyhow, on the actual deal: I am glad that they at least came to a compromise; going over the cliff was never actually a viable option, but now Congress needs to come to real debate and concession. They now , in two short months, have to truly deal with the $110 billion automatic spending cuts that will otherwise go into quick (and largely disastrous) effect (4). At this point, we reach the debt limit, funding to government from a resolution expires, and the cuts occur simultaneously. While the deal itself is little more than a means of procrastination and avoidance, though, it does deal with the immediate issue that is at hand: the fiscal cliff happening instantaneously. Congress has pushed it off for a few years now, setting it on the back burner in the hopes that they would find the fire extinguisher to end all extinguishers. They haven’t, naturally. After all, this is American politics we’re talking here—our system makes it nearly impossible to create a cohesive plan that ever fixes everything and satisfies everyone. The compromise didn’t handle any tax reform. The debt ceiling. Or entitlement spending cuts (5). But right now, the US economy—and the global economy—can’t handle with the intense shock of America being plunged into that austerity it was threatened with. So for now I’ll concede that it was—while far from complete or satisfactory—the best (or at least something) they could do with the worst possible situation. And now, we wait. Again.
1. http://www.nytimes.com/2013/01/02/us/politics/senate-tax-deal-fiscal-cliff.html?pagewanted=all&_r=0
2. http://www.dailymail.co.uk/news/article-2255923/Fiscal-cliff-deal-Republicans-surrender-tax-cuts-Obama-heads-restart-Hawaii-vacation.html
3. http://money.cnn.com/2011/09/05/news/economy/national_debt_spending/index.htm
4. http://www.businessweek.com/articles/2013-01-02/a-fiscal-cliff-deal-republicans-should-learn-to-love
5. http://www.nwtntoday.com/news.php?viewStory=78968
I shall be responding to T-Poon at this late of hour. T-Poon stated that we would no go over the fiscal cliff, well we did. May it be only for a few hours, we did, I too was wrong in thinking that we wouldn't. T-Poon stated, and backed up with hard data, that many Americans and even Congress men and women supported President Obama's proposal rather than completely extending all tax cuts and spending areas from the Bush era. T-Poon stated that the Republicans should cave in and thankfully they have, at least most of them, ones that did not had their own reasons and did not necessarily disagree with the bill.
Congress has decided to extend tax cuts for most Americans but also increase them for the wealthiest in the country (1). I am glad that congress made this decision. Completely going over the cliff, as in not doing anything at all, ever, would have created a travesty of the United States. Taxes would have rose for everyone and government spending would have fallen dramatically (2). This would have been grave for America for it would have halted, or extremely dampened, the flow of money, wealth, and income in America throwing us into a deeper recession than the one faced in 2008. But luckily Congress has saved for the time being, and now only time will tell whether or not raising taxes on the rich will actually hurt the economy.
1. http://www.cnn.com/2013/01/01/politics/fiscal-cliff/index.html
2. http://bonds.about.com/od/Issues-in-the-News/a/What-Is-The-Fiscal-Cliff.htm
I am responding to Storm, I agree with his thoughts on the fiscal cliff and how the Democrats and Republicans both will react to the fiscal cliff situation. His comments on how the Republicans would "cave" when it was time to decide on the bill was really interesting because in a way that's what happened. Because the Senate is in dead more democratic led, when the house Republicans began “backing away from threats earlier in the day to amend the deal with cuts”, people considered that moment the beginning of them caving. House members like Rep. John Fleming said that he does not support the bill but thought that it was a “waste of time” to change the bill when Senate Democratic leaders have said that they would reject any amendments to the legislation. Personally I mainly agree with the fiscal cliff bill on the basic fact that it averted america from fully going over fiscal cliff for the time being, even though not all of the necessary things that should be on the bill are on there I am content that congress has finally (of course within the last moments and after going over for a short bit) agreed upon a bill to save the country from completely going over the fiscal cliff. Thus preventing the U.S from falling into a deeper recession than the one we faced in 2008.
http://www.huffingtonpost.com/2013/01/01/fiscal-cliff-vote_n_2393543.html
http://www.cnn.com/2013/01/02/politics/fiscal-cliff/index.html
In response to Sam W's Post, I agree with him that people in congress need to focus on the nation's wellbeing. Not worry about their money. I believe that what he was prepared to do is what they agreed upon. The Republicans originally wanted to not raise taxes on anyone, but they would rather the economy be healthy. Obama wanted to raise taxes on income level of 250,000 and above. The deal settled at raising taxes on income levels of 450,000 and above. In response to the actual deal, something needed to be done. I do think that the deal is decent, and works as it was passed. However I would like to see the income level that is taxed on be lower, like what President Obama wanted. All in all, I think neither side won, and that for now we are safe.
Post a Comment
Subscribe to Post Comments [Atom]
<< Home