With all this doom and gloom over us all going over the so-called fiscal cliff, aren’t we forgetting that this rather drastic measure does in fact take care of the deficit? Doesn’t it? I mean, I’m not advocating that this is the best way to do it. Personally, I don’t even think fixing the deficit should be the number one priority that some think it should be.
However, why aren’t we hearing more from those who want to see the deficit fixed, because they should be ecstatic over the fiscal cliff. It seems we are only hearing from those politicians who want to soften the blow, and put off fixing the deficit so that they can get their taxes lowered, or their spending cuts reinstated.
Where are the voices rejoicing? There must be some? After all, this all happened because so many wanted it to happen.
After all, this legislation which goes into effect on January 1st does fix the deficit problem, or eventually it will, won’t it?
Just answering your primary question: I don’t know if the changes will even fix the deficit on paper. But it might not do so in reality, if such drastic and hamhanded cuts cause the economy to enter a double dip recession and thus lead to much less tax revenue than previously expected. Then, what promises to be a balanced budget turns into a deficit nonetheless due to lower tax receipts. And I’m pretty sure that the plans do not take these secondary effects into account.
Nope. You need at least something like $800bn in tax revenue and $800bn in spending cuts to actually keep even I believe over 10 years. The fiscal cliff compromise still increases the debt by something like 3-4 trillion over 10 years.
An earlier bargain where they had like $1.2tn in tax revenue and $800bn in spending cuts would have cut the debt by several trillion.
Even still, back when the whole thing started last year when we had the debt ceiling debate (which lead to legislation creating the fiscal cliff) it was generally thought you needed a “grand bargain” that would increase revenue by $2tn and decrease spending by $2tn over 10 years, to truly get our deficit under control. We’ve never been close to that.
Just to be clear, the CBO says that the fiscal cliff deal will increase deficits by $4 trillion over ten years compared to what would happen if all the Bush tax cuts were allowed to expire. Compared to a case were all the Bush tax cuts were extended, the deal raises revenues by about $600 billion over the same period.
As I read reactions to the CBO analysis, there’s an implication that the $4 trillion is additional new debt on top of what would happen if the Bush tax cuts were extended, which isn’t true.
It is the rational thinkers who actually want deficit reduction, and the fiscal cliff is not a rational approach to that end.
Those shrieking gibberish about the deficit are the very same ones proposing yet more tax cuts for the rich. Their comments about deficit reduction are a complete sham; they love the deficit since it helps their goal of Starve the Beast.