CBO: Fiscal Cliff Could Trigger a Recession

[Rudeboyelvis]

The CBO says that major changes to current tax or spending policies are necessary “to put the budget on a more sustainable path,” noting that these changes will require “significant trade-offs” between debt-reducing goals and other policy goals.

The CBO continues: “With the population aging and health care costs per person likely to keep growing faster than the economy, the United States cannot sustain the federal spending programs that are now in place with the federal taxes (as a share of GDP) that it has been accustomed to paying. To put the budget on a path that is more likely to be sustainable than if current policies were continued, lawmakers will need to adopt a combination of policies that require people to pay more for their government, accept less in government benefits and services, or both. However, making policy changes that are large enough to shrink the debt relative to the size of the economy — or even to keep the debt from growing — will be a formidable task.”

So just how big is the projected U.S. deficit and debt? According to CBO, the federal debt currently exceeds 70% of the nation’s annual output (gross domestic product, or GDP), a percentage not seen since 1950.




http://www.nacsonline.com/NACS/News/...rc=newsarticle

[Danzig]

Originally Posted by Rudeboyelvis

The CBO says that major changes to current tax or spending policies are necessary “to put the budget on a more sustainable path,” noting that these changes will require “significant trade-offs” between debt-reducing goals and other policy goals.

The CBO continues: “With the population aging and health care costs per person likely to keep growing faster than the economy, the United States cannot sustain the federal spending programs that are now in place with the federal taxes (as a share of GDP) that it has been accustomed to paying. To put the budget on a path that is more likely to be sustainable than if current policies were continued, lawmakers will need to adopt a combination of policies that require people to pay more for their government, accept less in government benefits and services, or both. However, making policy changes that are large enough to shrink the debt relative to the size of the economy — or even to keep the debt from growing — will be a formidable task.”

So just how big is the projected U.S. deficit and debt? According to CBO, the federal debt currently exceeds 70% of the nation’s annual output (gross domestic product, or GDP), a percentage not seen since 1950.




http://www.nacsonline.com/NACS/News/...rc=newsarticle

the CBO has been saying this for years now. problem is, congress and the executive have done nothing about it. the party members are more interested in catering to their respective constituencies in order to be re-elected. they are not interested in making tough decisions to fix our fiscal problems.
we keep hearing how medicare/caid need 'tweaking'. when will that happen? the age for ss (65) is the same age as when fdr signed the thing into law. it used to be that most people only lived about 18 months past retirement age. now it's over 20 years. but any suggestion that the age be changed is met with outrage bordering on hysteria. if people wish to still retire and draw ss at 65, the amount of money paid in must be commensurate with that plan. also, the amount of quarters one must work hasn't changed. it should also be revamped.
when bush originally placed his 'temporary' tax cuts, the actual tax cut was to the payroll tax. that's the name for social security. so, for years now, we've been paying less than we should into a program that's already broke, with the 'ss lock box' full of iou's. so yeah, brilliant idea to cut the funding that already wasn't enough to sustain the program.

[rpncaine]

Pretty sure I got a notice from SS stating that I couldn't get FULL benefits until 66 1/2. I'm 53 now. Point is I think it is indexed now.

If someone in the GOP would step up and lead to do the "right things" for this country all the party's problems would go away pretty quickly.

[Danzig]

http://www.ssa.gov/retirement/1960.html

there's the chart. if you wait til 67, you can still expect to live many more years past that date then people did when it was begun. it's unsustainable, especially with us now putting in less than we should be. that tax 'cut' should be allowed to expire. it's not a tax that you're paying less, it's your ss withholding that is lowered. of course employers still must pay their full share of 7.5%.

and i don't care if the pols are with the dem party, rep part, or an independant-tough decisions must be made, the sooner the better. the longer the wait, the worse the hits will be when they come. and they will come.

[Cannon Shell]

http://online.wsj.com/article/SB1000...ostpop_emailed

[Danzig]

'4% fall in defense spending'

what, and no attack yet?

'Note, however, that federal spending remains at a new plateau of about $3.54 trillion, or some $800 billion more than the last pre-recession year of 2007. One way to think about this is that most of the $830 billion stimulus of 2009 has now become part of the federal budget baseline. The "emergency" spending of the stimulus has now become permanent, as we predicted it would.'

like i said, temporary is always anything but.

[OldDog]

Originally Posted by Cannon Shell

http://online.wsj.com/article/SB1000...ostpop_emailed

Facts are damn pesky things.

[Rudeboyelvis]

So much for the middle class not bearing the brunt of the "Fiscal Cliff"

WASHINGTON (AP) - Everyone who pays income tax - and some who don't -will feel it.

So will doctors who accept Medicare, people who get unemployment aid, defense contractors, air traffic controllers, national park rangers and companies that do research and development.

The package of tax increases and spending cuts known as the "fiscal cliff" takes effect in January unless Congress passes a budget deal by then. The economy would be hit so hard that it would likely sink into recession in the first half of 2013, economists say.

And no matter who you are, it will be all but impossible to avoid the pain.

Middle income families would have to pay an average of about $2,000 more next year, the nonpartisan Tax Policy Center has calculated.

Up to 3.4 million jobs would be lost, the Congressional Budget Office estimates. The unemployment rate would reach 9.1 percent from the current 7.9 percent. Stocks could plunge. The nonpartisan CBO estimates the total cost of the cliff in 2013 at $671 billion.

Collectively, the tax increases would be the steepest to hit Americans in 60 years when measured as a percentage of the economy.

"There would be a huge shock effect to the U.S. economy," says Mark Vitner, an economist at Wells Fargo.

Most of the damage - roughly two-thirds - would come from the tax increases. But the spending cuts would cause pain, too.

The bleak scenario could push the White House and Congress to reach a deal before year's end. On Tuesday, Congress returns for a post-election session that could last through Dec. 31. At a minimum, analysts say some temporary compromise might be reached, allowing a final deal to be cut early next year.

Still, uncertainty about a final deal could cause many companies to further delay hiring and spend less. Already, many U.S. companies say anxiety about the fiscal cliff has led them to put off plans to expand or hire.

A breakdown in negotiations could also ignite turmoil in financial markets, Vitner said. It could resemble the 700-point fall in the Dow Jones industrial average in 2008 after the House initially rejected the $700 billion bailout of major banks.

Since President Barack Obama's re-election, nervous investors have sold stocks. The Standard & Poor's 500 index sank 2.3 percent last week, its worst weekly drop since June. The sell-off resulted in part from anxiety over higher tax rates on investment gains once the fiscal cliff kicks in.



http://www.myfoxtampabay.com/story/2...e-fiscal-cliff

[Danzig]

i have no doubt that a bandaid will be applied before years end.
that way, the departing congress can leave the mess to the new one coming in.
you know, like always.

[Danzig]

http://nbcpolitics.nbcnews.com/_news...der-blame?lite

If the U.S. government ends up careening off the "fiscal cliff," Republicans in Congress stand to shoulder most of the blame, according to a new poll released Tuesday.

A majority of Americans said in a new, post-election poll that they do not expect President Barack Obama and members of Congress to reach an agreement to avoid the effects of the fiscal cliff, the combination of automatic spending cuts and tax hikes set to take effect at the beginning of the year.


Fifty-three percent of Americans said Republicans in Congress would be more to blame in that instance, according to a Pew Research Center poll conducted in the days following the election. Twenty-nine percent said that Obama would be more to blame, while 10 percent said both the president and Republicans would share blame.


i don't agree with the poll. i think something will be done to avoid the automatic changes.
obama MUST act as tho he has the position of power (i mean, he does, doesn't he??) and tell the repub-LIE-cans that he will prevent defense cuts by standing firm on the tax cuts to those earning more than 250k-they need to go away. but then, i also think the payroll tax cut needs to go away. the last thing SS needs right now is less pay going in, knowing the shape it's in.
he also needs to adamantly explain this is not a tax increase, but a return to where they were after being 'temporarily' cut.
some will say 'oh noes. don't raise taxes with this economy'. we have been involved in a war for over a decade now. it was never paid for. it must be paid for. we rushed headlong into that conflict, it's time to pay the piper.

[jms62]

Originally Posted by Danzig

http://nbcpolitics.nbcnews.com/_news...der-blame?lite

If the U.S. government ends up careening off the "fiscal cliff," Republicans in Congress stand to shoulder most of the blame, according to a new poll released Tuesday.

A majority of Americans said in a new, post-election poll that they do not expect President Barack Obama and members of Congress to reach an agreement to avoid the effects of the fiscal cliff, the combination of automatic spending cuts and tax hikes set to take effect at the beginning of the year.


Fifty-three percent of Americans said Republicans in Congress would be more to blame in that instance, according to a Pew Research Center poll conducted in the days following the election. Twenty-nine percent said that Obama would be more to blame, while 10 percent said both the president and Republicans would share blame.


i don't agree with the poll. i think something will be done to avoid the automatic changes.
obama MUST act as tho he has the position of power (i mean, he does, doesn't he??) and tell the repub-LIE-cans that he will prevent defense cuts by standing firm on the tax cuts to those earning more than 250k-they need to go away. but then, i also think the payroll tax cut needs to go away. the last thing SS needs right now is less pay going in, knowing the shape it's in.
he also needs to adamantly explain this is not a tax increase, but a return to where they were after being 'temporarily' cut.
some will say 'oh noes. don't raise taxes with this economy'. we have been involved in a war for over a decade now. it was never paid for. it must be paid for. we rushed headlong into that conflict, it's time to pay the piper.

If we had 10% war tax and instituted the draft would we have multiple decade long wars or would we get involved only when absolutely necessary? The average American is oblivious to the carnage of these wars actual and financial.

[Danzig]

good questions jms, especially the draft question.

altho we have no need for a draft because there are enough volunteers, i'm sure a wartime draft would make a lot of people sit up and take notice. because right now, 'they' are fighting the war-they being our servicemen and -women. it doesn't bring the fight home to everyone, just the families of those serving.

but, i bet you if you said 'hey, we need to invade, and we need to raise taxes to pay for it', you'd get the response you're looking for. that way it would affect everyone, and where many don't want to be affected.

[jms62]

Originally Posted by Danzig

good questions jms, especially the draft question.

altho we have no need for a draft because there are enough volunteers, i'm sure a wartime draft would make a lot of people sit up and take notice. because right now, 'they' are fighting the war-they being our servicemen and -women. it doesn't bring the fight home to everyone, just the families of those serving.

but, i bet you if you said 'hey, we need to invade, and we need to raise taxes to pay for it', you'd get the response you're looking for. that way it would affect everyone, and where many don't want to be affected.

http://www.tnr.com/blog/the-plank/th...tax-precedent#

[Rudeboyelvis]

Originally Posted by jms62

If we had 10% war tax and instituted the draft would we have multiple decade long wars or would we get involved only when absolutely necessary? The average American is oblivious to the carnage of these wars actual and financial.

When I moved to Tampa 8 and a half years ago, my wife was a VA nurse who was able to transfer to the James a Haley VA hospital in town.

That hospital is now 2 and a half times the size it was then, and the spinal cord wing alone is practically the size of the original hospital.

The costs and suffering will last decades longer than any end to these wars, predetermined or otherwise, will preclude.

It'd be nice if the media did their job, but we all know why they don't.

[Danzig]

Originally Posted by Rudeboyelvis

When I moved to Tampa 8 and a half years ago, my wife was a VA nurse who was able to transfer to the James a Haley VA hospital in town.

That hospital is now 2 and a half times the size it was then, and the spinal cord wing alone is practically the size of the original hospital.

The costs and suffering will last decades longer than any end to these wars, predetermined or otherwise, will preclude.

It'd be nice if the media did their job, but we all know why they don't.

i saw a bit on a show the other evening, discussing how broken vets aren't the only ones who suffer. it showed the wives and families of some of these vets. one lady is married to a guy who suffered head trauma from an IED. she said he's 'not the man she married'. he has a different personality than he had before, he has a service dog, he's disabled, he tends to lose his temper very, very easily. so she's trying to take care of him, and her daughter, and keep their family as normal as possible.
another woman has a husband who tried to commit suicide because of the lasting effects from several tours in iraq and afganistan. she has tried to commit suicide twice herself.
you can see the physical results of some of the wounds-but the emotional wounds, to the vet as well as his/her family, are not so easily seen. but they're there.

[Danzig]

Originally Posted by jms62

http://www.tnr.com/blog/the-plank/th...tax-precedent#

great idea, hasn't got a shot in hell of happening.
but thanks for the link, i'm going to read that article with the headline on rich staying with obama-except for bankers. i'm sure that had nothing to do with romney wanting to remove all those new regulations.