The Fiscal Cliff Approacheth

[Direckshun]

In an effort to make this thread sticky-worthy, I am going to update this OP to keep casual glancers informed.

This post is the official one-stop shopping of the key points/developments of the fiscal cliff negotiations.

Far as I understand, the fiscal cliff:

1. Gets rid of the Bush tax cuts for the wealthy.
2. Gets rid of the Bush tax cuts for everybody else.
3. Slashes defense spending by something like $500 billion.
4. Slashes domestic programs like the NIH, Head Start, and medicine/drug care for the poor by $500 billion.

The new idea is for Democrats to allow the cliff to hit, then immediately introduce a bill that would bring 2, 4, and some of 3 back. But not 1.

Here is a chart detailing exactly what the fiscal cliff is going to do, financially:

Spoiler!

Originally Posted by Direckshun

New CBO projection: if the fiscal cliff hits, we are in another recession, and lose two million jobs.

http://www.reuters.com/article/2012/...87L0JV20120822

The poor would be hurt by the fiscal cliff:

Originally Posted by Direckshun

Overall, if the tax breaks from the 2009 stimulus are allowed to expire—the EITC and Child Tax Credit expansions, along with American Opportunity Credit for college tuition—the poorest 20 percent of Americans would see their taxes go up by $209 on average, reducing their after-tax income by 1.9 percent, according to the Tax Policy Center.

As would the middle class:

Originally Posted by Direckshun

According to estimates by the Tax Policy Center, more than half of all married couples will owe an additional tax of around $4,000 unless Congress acts. And more than a third of families with children will fall subject to the AMT, with parents of three or more children facing an extra tax of $4,700.

Among married couples with at least two children and adjusted gross income between $75,000 and $100,000, the center estimates that 84 percent will face a significantly higher tax bill this year because of the AMT.

There seems to be some consensus between the parties that substantial revenues want to be raised. Boehner and the GOP hopes that's through limiting tax deductions rather than tax raises.

Obama's opening offer, essentially:

• Allow the Bush tax cuts on high earners to expire. $849 billion
• Limit itemized deductions to 28 percent, close some loopholes and deductions on high earners, eliminate tax breaks for oil and gas companies, eliminate the carried interest loophole, plus a few other items. $584 billion
• Create a special "Buffett Rule" tax rate for millionaires. $47 billion
• Restore the estate tax to 2009 levels. $143 billion
• Limit corporate income shifting to low-tax countries. $148 billion
• Other miscellaneous tax increases and reductions. About -$200 billion
• Total: $1.6 trillion

[DementedLogic]

A tax cut is not a cost to government. The government doesn't own everyone's income. I am not spending money by choosing to not rob a bank. The government isn't spending money by stealing less from me.

[FishingRod]

Originally Posted by FD

Its a 3.9 percentage point reduction in growth, so a swing from +2% to -2%, more or less.

Not that the recent track record of the so called experts has been particularly stellar the last few years but, the difference between a change of 4% in the rate of growth and 4 % reduction of the total economy is a fairly large amount. At some point we will be spending more on just the interest on our debt than we have left for everything else if we continue spending as we do.

[FD]

Originally Posted by FishingRod

Not that the recent track record of the so called experts has been particularly stellar the last few years but, the difference between a change of 4% in the rate of growth and 4 % reduction of the total economy is a fairly large amount. At some point we will be spending more on just the interest on our debt than we have left for everything else if we continue spending as we do.

No, they are exactly the same. Read my last post, its percentage points, not percent.

[Dallas Chief]

Originally Posted by FD

No, they are exactly the same. Read my last post, its percentage points, not percent.

That's not what direckshame's post said. It didn't say points, it said only percent, which are two totally different things. Correct? Or am I the real mathidiot here... totally possible. An almost 4% percentage point swing in either direction would be drastic for the GDP agreed?

The CBO estimates that the total effect of these provisions is a 3.9 percent reduction in the growth rate of GDP next year — enough to make the year’s total growth rate negative, plunging the country back into recession.

[FD]

Originally Posted by Dallas Chief

That's not what direckshame's post said. It didn't say points, it said only percent, which are two totally different things. Correct? Or am I the real mathidiot here... totally possible. An almost 4% percentage point swing in either direction would be drastic for the GDP agreed?

The CBO estimates that the total effect of these provisions is a 3.9 percent reduction in the growth rate of GDP next year — enough to make the year’s total growth rate negative, plunging the country back into recession.

The CBO result refers to percentage points, which is what I was trying to clear up. And yes, its quite drastic.

[Dallas Chief]

Originally Posted by FD

No, they are exactly the same. Read my last post, its percentage points, not percent.

Originally Posted by FD

The CBO result refers to percentage points, which is what I was trying to clear up. And yes, its quite drastic.

How do you know that for sure? I couldn't find it spelled out in the CBO report. Not challenging your knowledge per se, it's just this kind of information is so important that it could change the way I vote. TIA

[FD]

Originally Posted by Dallas Chief

How do you know that for sure? I couldn't find it spelled out in the CBO report. Not challenging your knowledge per se, it's just this kind of information is so important that it could change the way I vote. TIA

I haven't actually read this report, but 600 billion is 4% of 15 trillion, which is the size of our economy.

[Direckshun]

New CBO projection: if the fiscal cliff hits, we are in another recession, and lose two million jobs.

http://www.reuters.com/article/2012/...87L0JV20120822

[Donger]

Originally Posted by Direckshun

New CBO projection: if the fiscal cliff hits, we are in another recession, and lose two million jobs.

http://www.reuters.com/article/2012/...87L0JV20120822

Massive U.S. government spending cuts and tax hikes due next year will cause even worse economic damage than previously thought if Washington fails to come up with a solution, the Congressional Budget Office warned on Wednesday.

If "massive" cuts in government spending can cause a recession, I'd argue that the government is spending too much to begin with and is far too involved in our economy that it should be.

[Direckshun]

Originally Posted by Donger

Massive U.S. government spending cuts and tax hikes due next year will cause even worse economic damage than previously thought if Washington fails to come up with a solution, the Congressional Budget Office warned on Wednesday.

If "massive" cuts in government spending can cause a recession, I'd argue that the government is spending too much to begin with and is far too involved in our economy that it should be.

I take it you support breaking up the big banks, as well?

[Donger]

Originally Posted by Direckshun

I take it you support breaking up the big banks, as well?

Pardon?

[patteeu]

Originally Posted by Direckshun

I take it you support breaking up the big banks, as well?

Some conservatives are calling on Romney to take up that position, fyi.

[Direckshun]

Originally Posted by Donger

Pardon?

If your argument is that it's wrong for an institution to be so critical to the economy that sharp cuts would tank the economy, then I'd figure you'd be in favor of breaking up the big banks.

[Direckshun]

Originally Posted by patteeu

Some conservatives are calling on Romney to take up that position, fyi.

Absolutely. Many conservatives on DC have spoken up for it, rightly.

I'm attempting to get Donger on the record.

[patteeu]

Originally Posted by Direckshun

Absolutely. Many conservatives on DC have spoken up for it, rightly.

I'm attempting to get Donger on the record.

Just to clarify, I'm talking about respectable conservatives, not just Ron Paul fringe conservatives.