Posts tagged ‘Republicans’

December 28, 2012

The Never-ending Fiscal Cliff Negotiations for Dummies (Updated)

The Never-ending Fiscal Cliff negotiations

President Obama has cut his trip to Hawaii short to meet with congressional leaders in hopes of a last-minute effort to avoid the upcoming “fiscal cliff”.

The Fiscal Cliff Explained

“Fiscal cliff” is the popular shorthand term used to describe the conundrum that the U.S. government will face at the end of 2012, when the terms of the Budget Control Act of 2011 are scheduled to go into effect.

Among the laws set to change at midnight on December 31, 2012, are the end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, a rollback of the “Bush tax cuts” from 2001-2003, and the beginning of taxes related to President Obama’s health care law. At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect. According to Barron’s, over 1,000 government programs – including the defense budget and Medicare are in line for “deep, automatic cuts.”

In dealing with the fiscal cliff, U.S. lawmakers have a choice among three options, none of which are particularly attractive:

  • They can let the current policy scheduled for the beginning of 2013 – which features a number of tax increases and spending cuts that are expected to weigh heavily on growth and possibly drive the economy back into a recession – go into effect. The plus side: the deficit, as a percentage of GDP, would be cut in half.
  • They can cancel some or all of the scheduled tax increases and spending cuts, which would add to the deficit and increase the odds that the United States could face a crisis similar to that which is occurring in Europe. The flip side of this, of course, is that the United States’ debt will continue to grow.
  • They could take a middle course, opting for an approach that would address the budget issues to a limited extent, but that would have a more modest impact on growth.

Can a Compromise be Reached?

The oncoming fiscal cliff is a concern for investors since the highly partisan nature of the current political environment could make a compromise difficult to reach. This problem isn’t new, after all: lawmakers have had over a year to address this issue, but Congress – mired in political gridlock – has largely put off the search for a solution rather than seeking to solve the problem directly. In general, Republicans want to cut spending and avoid raising taxes, while Democrats are looking for a combination of spending cuts and tax increases. Although both parties want to avoid the fiscal cliff, compromise is seen as being difficult to achieve – particularly in an election year. Currently, it appears that a meaningful deal won’t be reached until after the December 31 deadline.

The most likely outcome is another set of stop-gap measures that would delay a more permanent policy change. Still, the non-partisan Congressional Budget Office (CBO) estimates that if Congress takes the middle ground – extending the Bush-era tax cuts but cancelling the automatic spending cuts – the result, in the short term, would be modest growth but no major economic hit.

Possible Effects of the Fiscal Cliff

If the current laws slated for 2013 went into effect permanently, the impact on the economy would be dramatic. While the combination of higher taxes and spending cuts would reduce the deficit by an estimated $560 billion, the CBO also estimates that the policy would reduce gross domestic product (GDP) by four percentage points in 2013, sending the economy into a recession (i.e., negative growth). At the same time, it predicts unemployment would rise by almost a full percentage point, with a loss of about two million jobs.

A Wall St. Journal article from May 16, 2012 estimates the following impact in dollar terms: “In all, according to an analysis by J.P. Morgan economist Michael Feroli, $280 billion would be pulled out of the economy by the sunsetting of the Bush tax cuts; $125 billion from the expiration of the Obama payroll-tax holiday; $40 billion from the expiration of emergency unemployment benefits; and $98 billion from Budget Control Act spending cuts. In all, the tax increases and spending cuts make up about 3.5% of GDP, with the Bush tax cuts making up about half of that, according to the J.P. Morgan report.” Amid an already-fragile recovery and elevated unemployment, the economy is not in a position to avoid this type of shock.

The Term “Cliff” is Misleading

It’s important to keep in mind that while the term “cliff” indicates an immediate disaster at the beginning of 2013, this isn’t a binary (two-outcome) event that will end in either a full solution or a total failure on December 31. There are two important reasons why this is the case:

1) If all of the laws went into effect as scheduled and stayed in effect, the result would undoubtedly be a return to recession. However, Congress continues to work toward a deal that will alleviate the effects in some form.

2) Even if the deal does not occur before December 31, as appears likely, Congress can – and almost certainly will – act to change the scheduled laws retroactively to January 1 after the deadline.

At the same time, even a “solution” isn’t necessarily positive, since a compromise will likely involve higher taxes or reduced spending in some form – both of which would help reduce the debt, but would be negative for economic growth.

With this as background, it’s important to keep in mind that the concept of “going over the cliff” is largely a media creation, since even a failure to reach a deal by December 31 doesn’t mean that a recession and financial market crash would necessarily occur.

(Source – About.com)

February 24, 2012

Fact check: The Conservatives Infanticide attack on President Obama

Two GOP presidential hopefuls claim President Obama supports infanticide and say the media never covered the issue.

February 13, 2012

White Supremacist Own the New GOP, was there ever any question?

Log Cabin Republicans weren’t welcome at this year’s CPAC convention, but White Nationalists were not only welcomed with open arms, but they were given a prime speaking slot.

January 9, 2012

A New Hampshire Small Business owner takes Mitt Romney to task on healthcare

At a campaign event at the Nashua chamber of commerce, presidential candidate Mitt Romney got into a feisty exchange with a voter over his stance on health care. And Check out Mitt Romney’s wife giving the voter the “Go To Hell” glare all through the conversation!   classic 1% gaze!

January 8, 2012

Despite attacks, Romney remains in pole position after debate

Republican presidential hopeful Mitt Romney has hit back at criticism from his rivals, over what they say is his lack of political experience.

He fared well in another televised debate in New Hampshire on Saturday.

The state is the next battleground in the contest to take on Barack Obama.

January 8, 2012

Another GOP Debate? – Damn! Where’s an “I Love Lucy” marathon when you need one?

The GOP candidates for president were doing some early appearances on Saturday, hoping to lure the vast amount of New Hampshire’s undecided voters before two debates and Tuesday’s primary.

January 3, 2012

What’s really going on with the GOP being so racially ignorant? (Updated)

Of the 2012 Republican Presidential candidates, Mitt Romney, Ron Paul and Rick Santorum have made clueless and ignorant comments  leading up to the Iowa Caucus regarding race (the Dream Act, Civil Rights and an assumptions regarding welfare respectively). Not to mention Rick Perry‘s own troubles (ie “The N#ggerhead Ranch Debacle” ) Are they really this clueless, or is there something deeper yet still familiar rising up from their psyche?  And why is it that it seems like only the GOP is having this problem?

 

December 23, 2011

Say It Ain’t So Ronny! – Ron Paul’s Keynote Speech ~ 50th Anniversary of The John Birch Society

Well, I have many friends that are Ron Paul Fans, and run into many people on a daily basis that have a favorable opinion of him.  But most lack even the basic knowledge of the man himself or his past. Sad to say, even though Dr. Paul may have some interesting ideas and opinions, they are shaded  by his past racism and current associations.  For instance, many view The John Birch Society in a negative light, but come to find out, not only was Dr. Paul the keynote speaker at their 50th anniversary meeting, he has spoken several times at various John Birch Society events.  Here is his keynote address posted by The John Birch Society’s YouTube Channel.

Just In Case You Forgot What The John Birch Society Is…

from The Rachel Maddow Show circa 2009

December 16, 2011

Nothing Good, can come of this! – The Ryan-Wyden Medicare debacle

A review of Wisconsin Congressman Paul Ryan and Oregon Senator Ron Wyden‘s plan that would retain today’s Medicare as an option while adding private plans and restrictive benchmarks.

December 10, 2011

Obama to GOP – “Stop The Games!” “Don’t Be a GRINCH”

Independent economists say extending the tax cut would boost the economy at a critical time.

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