Let's go over the fiscal cliff

[Fear_Itself]

@JQPublic

OK gas prices aren’t double what they were 4 years ago anymore I’m getting 40% less gas for every dollar I spend. To me that sounds like devalued currency.

Only if you assume that any decrease in gas for your dollar is due to inflation, which it is not. Oil prices are determined much more by fluctuations in supply and demand that the value of the dollar. One word for you: China.

[Try2B_Comprehensive]

@Richard_Parker

Going over the cliff without modification will probably cause a rescession. Even if you don’t believe the analysis that’s being put out about the GDP consequences of the changes, there is definitely a perception in the business community that no change means everyone should sit on their money–so the analysis is self-fulfilling.

I explicitly suggested in my early posts that we modulate some aspects of the fiscal cliff, excepting certain tax increases or cuts in defense spending. I might believe the analysis- depends on which one you’re talking about.

@Marley23

I’m having flashbacks here: “Oh, let the banks fail. What’s the worst that can happen if the global economy crashes?” “Oh, let’s just give up on the deficit ceiling. What’s the worst that can happen if the U.S. tells its creditors it doesn’t plan to pay its debts?”

I do not promote a ‘do not compromise ever’ position. I am merely suggesting that we, democrats, postpone all negotiations until Jan 2. At that point the effects of the cliff will be in effect, and if the other side would rather not talk about it then, I suppose we will just have to accept the new status quo. I think they’ll have a deal ready to go at 8:00 AM that very morning.

@XT

Pretend you could cut the entire DOD budget…that still wouldn’t bring our deficit spending back into line. Better keep that chainsaw handy, and hope you are willing to take it to other places than the Pentagon…

Well… look at what I’ve cited again. Look at the first graph, then the second. The Bush tax cuts are a huge part of our budget problem, and doing away with them will at least greatly reduce our deficit spending. We might prefer to extend these tax cuts for low earners, but if the pubs won’t talk on Jan. 2 then that won’t be possible.

@XT

This is pretty much where I’m at as well. We need to look at some tax increases as well, but tax increases are only going to get us so far. There is no ‘I’ll take a chainsaw to the Pentagon’ or ‘Let’s just raise taxes on “The Rich”’ type quick fixes here. We are going to need to raise taxes across the board, including on the dreaded capital gains, but we are also going to need to look at spending cuts (and to more than The Pentagon™).

No one is going to like it…and both parties are going to resist their sacred cows getting used for hamburger.

Right. Let’s raise capital gains taxes past a certain threshold, and revisit Richard Parker’s suggestion about reducing deductions as well. Maybe raise all capital gains taxes, no threshold, therefore all my suggestions will raise my own taxes. The thing about the fiscal cliff is that it seems to have been authored by a computer rather than a partisan human being. The deficit problem is defined, and the current law addresses the defined problem. Everyone is going to hate it, and that is the problem. Frankly there is no easy way out of our budget problem, which is why I use language like ‘take our medicine’. That’s why I say go over the cliff, and if we do it now I think there is still some wiggle room for ‘earmarks’ or what-have-you.