Daily Archives: November 13, 2012

What’s Going On With The Fiscal Bump In The Road?

The Mother Jones article What’s Going on With the Fiscal Cliff? goes with the sub-head:

Why we’re not really going to fall off a cliff on January 1 and everything else you need to know about the upcoming budget talks.

That is why I think my headline is more appropriate.  Kevin Drum goes on to explain:

So when you add it all up, what’s the price tag for this stuff?

That’s where things get a little tricky. The whole fiscal-cliff metaphor is specifically designed to sound super scary, but it’s really kind of misleading. Here are two different ways of looking at it:

  • The fiscal-cliff way: On January 1, about $400 billion in tax increases and $200 billion in spending cuts will take effect. That’s $600 billion, or 4 percent of GDP, and that would be a huge drag on the economy.
  • The fiscal-staircase way: On January 1, total spending cuts and tax increases of about $1.6 billion will take effect. On January 2, another $1.6 billion. On January 3, another $1.6 billion. Etc.

You see? We’re not really going to fall off a cliff on January 1. The cumulative effect of all this stuff will be pretty small for the first few weeks. It’s only if it drags on forever that we really feel the hit.

The article goes into a lot more detail in a fairly humorous way.

Obama, left leaders discuss fiscal bump in the road campaign

The Politico article really titled Obama, left leaders discuss fiscal cliff campaign shows that perhaps, just perhaps Obama has finally figured out what it takes to be President.

Obama raised the possibility of a barnstorming tour to promote his position, while others in the room pledged to keep organizational pressure on Republicans to back Obama’s agenda.

Raised the possibility?  Maybe he isn;t as serious as I thought.    Maybe he will get some backbone if we  pressure him.

The invited union leaders said they will mobilize their members to push Obama’s agenda.

“We’re very, very committed to making sure that the middle class and workers don’t end up paying the tab for a party that we didn’t get to go to and the president is committed to that as well,” said Richard Trumka, president of the AFL-CIO.

That commitment, of course, is not unconditional. It comes with the expectation that Obama not cave on allowing cuts to entitlement programs like Medicare, Medicaid and Social Security and that he stick to his guns on refusing to allow an extension of the Bush tax cuts on annual income greater than $250,000.

Max Richtman, the president and CEO of the National Committee to Preserve Social Security & Medicare, said he was “reassured” by Obama that any deal will maintain current spending levels for key entitlement programs.

And Trumka said Obama made it clear that he will have the wealthy, not the middle class, pay down the nation’s debt.

“The president, like we are, is committed to preserving tax breaks for the middle class and making sure that rich people pay their fair share,” Trumka said.

This won’t happen unless we keep blogging, emailing, commenting, letter to the editor writing, contacting our Congress critters, and whatever else you can think of.

Fixing the Fiscal Bump In The Road: Is Hiking Taxes on the Rich the Answer?

The actual Daily Ticker segment is headlined Fixing the Fiscal Cliff: Is Hiking Taxes on the Rich the Answer?

In this dialog, Henry Blodget is too right wing for me. He seems to be the more in agreement with Obama’s position than is Adam Task.

In his meetings this week, the president hopes to persuade Republicans in Congress to accept higher taxes on wealthy American while he works to persuade Democrats to agree to spending cuts in entitlement spending.

I’d like to see a lengthy trial of tax hikes for the wealthy being used to fund fiscal stimulus until the economy recovers. During this waiting period, there can be efforts made at finding ways to lower the costs of programs whose benefits people are contractually entitled to. There is absolutely no need to cut benefits.

The full scale Obamacare program before it got watered down by Congress would go a long way to solving the Medicare and general societal medical cost problem. There is some hope that in the ensuing years, enough voters and politicians would come to wake up to this fact and start reinstating some of the items that got lost the first time around.

As for Social Security, I have been promoting Franco Modigliani’s plan for putting Social Security on a firm financial footing with no decrease in benefits and no deficits in the plan. I know that I have been pushing for this since before 2005. See my old politics page section on Social Security.

Senator Ted Kennedy was supposed to get Franco Modigliani a hearing of his plan before Congress, but they both died before it could happen.

As long as the politicians are ignoring the two obvious fixes to our biggest potential budget-busters, then I am ignoring what the politicians suggest as alternatives.