Wednesday, November 28, 2012

Elites Going Into Overgear Waving Around The Fiscal Cliff To Frighten American Workers


If someone-- whether a Fox anchor, a Republican Big Business shill, a New Dem corporate whore or even President Obama-- uses the words "fiscal cliff" in a way to terrorize lo-info Americans about a manufactured faux-"crisis," they are, at best, being disingenuous. A couple weeks ago we saw how medieval French elites used the exact same tactics the exact same way to get free French peasants to give up their liberty and embrace serfdom for themselves and their families... for centuries. Right now, our elites here in America are trying to demolish the progressive agenda embodied in FDR's New Deal, a program that conservatives have always fought against. It's not unexpected from Republicans and their media stooges like the obnoxiously brainless harridan whining at Raul Grijalva in the CNBC clip above. The tragedy is that Obama and so many Democrats are just as culpable and seem just as willing to sell out the working families they have grown so distant from. There are too many millionaires in Congress-- way too many. Democrats should be demanding retirement ages drop to make room for new workers and so that older people share in the wealth they have helped create but that a few rich families have gobbled up. As for cost of living adjustments to Social Security-- they should rise, not fall; purchasing power for seniors has eroded drastically-- and it isn't all the Republicans' fault. As for Medicare, why not do what really makes sense and open it up to the whole population-- remember the public option-- to get spiraling healthcare prices under control? Plouffe equating normal working American families with Republican lobbyists like Grover Norquist is not helpful. Our elites are clearly failing us.

Grover-- not dead yet
Obama is putting pressure on Republicans to buckle under to the Grand Bargain he and Boehner have cooked up, while going directly to the American people and asking the to back his plan to sell themselves out. Word is seeping out, slowly that the whole Fiscal Cliff meme is a gimmick meant to stampede the public into acquiescing in their own demise. The war industries and the wealthy caused the budget deficits and nearly wrecked the entire economy. The political elites whose careers they finance don't have the guys to make them pay for it and they're trying to squeeze it out of an over-squeezed middle class. It's time to say NO!

You're going to be hearing the phrase "fiscal cliff" a lot over the next few weeks: The phrase has emerged as a shorthand way to describe the combination of tax hikes and spending cuts set to start kicking in at the end of the year. Lawmakers are now feverishly negotiating over how to keep many of those spending cuts and tax increases from kicking in-- to keep from what is often described as "going off the fiscal cliff."

Yet if no deal comes, the nation won't actually be going over a metaphorical cliff. The word cliff implies an all-or-nothing situation-- once you go over a cliff you plummet to earth. There's no going back.

But the situation the nation faces is not like that. The so-called "fiscal cliff," in fact, would be more accurately described as a "gradual fiscal slope." Though that admittedly doesn't have quite the same ring to it.

There are two parts to the so-called fiscal cliff. The first is the scheduled expiration of the tax cuts enacted in 2001 and 2003 under President George W. Bush, the payroll tax holiday enacted under President Obama, and a host of other tax breaks. The second is $1.2 trillion in automatic spending cuts to defense and domestic programs that are looming due to a 2011 deal that resulted from House Republicans' reluctance to raise the debt limit.

...But here's the thing: If the nation goes over the cliff-- but then lawmakers work out a deal in, say, late January - it will not be nearly as bad as all that suggests. It's true that many of us would see slightly more money coming out of our paychecks at the start of the year, but lawmakers could retroactively reverse the tax hike once they work out a deal. (You'd then effectively get a bonus in your next paycheck.) Since both parties agree that the Bush-era tax cuts should be extended for the vast majority of Americans, it's unlikely that most of us would end up taking a serious hit over the long run.

The spending cuts, meanwhile, are phased in gradually-- which is why the "slope" metaphor makes more sense than the "cliff" one. It's not as though $1.2 trillion would suddenly disappear from the economy at the end of the year: The cuts, while undeniably significant, are set to be phased in over a decade. In addition, there are budgetary maneuvers that can be taken to at least somewhat soften the blow of both the tax hikes and spending cuts. Certainly, total inaction on the "fiscal cliff" over the long term would likely have a deeply negative impact on the economy. But if a deal comes in January or February, after the deadline-- as it well could-- the structural damage could be relatively small.

"We're not going to fall off the edge of the earth at the beginning of next year," said Ed Yardeni, president and chief investment strategist for institutional investor advisory Yardeni Research. "When you fall off a cliff you die. So it's a bit of an exaggeration to say that's what we're facing here."

What would happen on Jan. 2, when the fiscal measures are scheduled to kick in, without a deal? Most households facing higher taxes would see a relatively minor hit to their income. That could weaken demand and constrain spending in the short term, but it's unlikely to push the economy off some sort of proverbial ledge. And some of the tax increases wouldn't be felt for months. For instance, taxpayers newly subject to the alternative minimum tax, which tends to affect upper-income households, wouldn't pay those increased taxes until they file their returns in April.

For the broader economy, meanwhile, the incremental reduction in people's purchasing power would be far smaller than the full revenue increase the tax increase would generate over the entire year.

Many Democrats hate the "fiscal cliff" metaphor because they feel that they have more leverage to negotiate if the year-end deadline comes and goes without a deal. If and when taxes go up in January, Democrats would be in a position to put forth what is now a tax cut for 98 percent of Americans-- and Republicans would face the prospect of opposing a major tax cut if they refuse the deal. (The GOP wants to extend the Bush-era tax cuts for the highest earners as well, something Mr. Obama strongly opposes.) The doomsday notion that America is poised to go off a cliff at the end of the year creates more pressure on Democrats to come to a deal before January, which would seem to help Republicans.
Senate liberals-- though not real liberals like Bernie-- are starting to buckle under GOP pressure to raise the Medicare eligibility age. There's a plan floating around that leaves it in place for blue collar workers but raises it for office workers. And meanwhile, the #2 Senate Democrat, Dick Durbin (D-IL)-- usually regarded as an accurate reflection of what Obama wants-- and Senate Finance Committee Chair Max Baucus (D-MT) assert that, "despite the rhetoric" to placate Obama supports, "the White House is floating cuts behind the scenes." In GOPland Boehner and Ryan have embraced one of the very worst of the Wall Street Blue Dog-types, Erskine Bowles as their wedge against working families. Boehner and Ryan, despite the message from the election, are demanding cuts to Social Security, Medicare and Medicaid and Bowles also favors draconian cuts against working families.
The visit comes at a time when top Republicans believe the negotiations over avoiding the fiscal cliff have become dangerously unbalanced, just weeks before the $600 billion in tax hikes and automatic spending cuts are set to slam the economy.

For Republicans, there has been too much focus put on specifying tax loopholes to close and on Democratic demands for tax-rate increases, and not enough on the liberal refusal to match GOP concessions with spending-cut specifics.

By associating themselves with the centrist Bowles, whom some in the business community had hoped would be named the next Treasury secretary before he ruled that out this month, the GOP can paint Democrats as being out of the mainstream.

...[T]he GOP is looking closely at a proposal that Bowles unilaterally made to the failed 2011 deficit supercommittee.

That proposal included only $800 billion in revenue-- on top of revenue from economic growth-- instead of the $1.8 trillion in Bowles-Simpson.

Bowles also laid out $300 billion in additional discretionary cuts; $600 billion in healthcare savings, including raising the Medicare eligibility age; $300 billion in savings from other mandatory programs such as federal retirement or farm programs; and $200 billion from revising the way inflation is calculated for tax and entitlement benefits.

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At 8:04 PM, Anonymous me said...

Yes, the "fiscal cliff" is obviously a gimmick. The fact that all - ALL - the corporate whore media are making such a big deal of it is just more proof that it's bullshit.

Frankly, I think that under the circumstances, it would be a good thing. Removing those ridiculous tax breaks for rich bastards is long overdue, and if taxes go up for working people, that's fine too. It's about time they realized that the stuff they want isn't free, and in any case, it won't be much for working people.

What's more likely is that Obama will sell us out again. We'll probably get an insignificant increase for the very wealthy, significant cuts to spending on the unwealthy, and more and more borrowing from the Chinese. And it will all be coupled with a promise to do "more" next year. Or the year after.

Compared to that scenario, we'd all be far better off if Congress just adjourned.


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