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All Of This Whining About The Fiscal Cliff Is Pathetic

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The fiscal cliff is coming!  Run for the hills!  There have been endless stories in the mainstream media about the “fiscal cliff” that our country is facing if the Democrats and the Republicans can’t come to some sort of an agreement.  If there is no agreement, taxes will go up and government spending will be reduced by a very small amount.  And yes, that would likely push the U.S. economy into another recession, although there are many that would argue that we are already in a recession right now.  In any event, there is a tremendous amount of distress out there about the fact that something might interrupt the debt-fueled prosperity that we have all been enjoying.  You can almost hear them now: “No! Please don’t cut government spending! Please don’t raise taxes! Please keep stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day so that we can continue this economic illusion that feels so very good.”  The American people want the government to give everything to everybody, but they definitely do not want to pay for it.  They want a big government that showers them with government checks and government benefits, but they don’t want to cough up the ridiculous amount of money that it would take to fund such a government.  So we just keep ripping off our kids and our grandkids.  What we are doing to future generations is not just immoral, it is criminal.  If they get the chance, someday they will look back and curse us for destroying their futures and destroying their country.  So why do we continue to do this to them?  Because we are greedy and selfish and we are absolutely desperate to maintain the massively overinflated standard of living that we have been enjoying.  We have lived way above our means for so long that we don’t even know what “normal” is supposed to be anymore.

But nobody can spend far more money than they bring in forever.  At some point an adjustment comes, and our adjustment is going to be exceedingly painful.

Right now, the overwhelming consensus in the United States seems to be that we should put off any economic pain for as long as possible.  The American people don’t want significant cuts to government spending and they don’t want taxes to be raised to pay for the spending that we are already doing.

But if the Republicans and the Democrats don’t agree to a deal soon, we are going to see taxes raised substantially and government spending cut by a little bit.  A recent CBS News article did a good job of describing exactly what this “fiscal cliff” that we are facing actually is…

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.

Now, it’s true that if lawmakers fail to work out any sort of deal, there will be severe long-term consequences for the economy: According to the Tax Policy Center, going off the “cliff” would affect 88 percent of U.S. taxpayers, with their taxes rising by an average of $3,500 a year. Many economists, as well as the nonpartisan Congressional Budget Office, say the combination of spending cuts and tax hikes that are set to take effect would tip the economy into a new recession.

Please keep in mind that the “$1.2 trillion in automatic spending cuts” is not for a single year.  When you break it down, the cuts to spending would be somewhere around 100 billion dollars a year.  And a lot of those “cuts” are actually spending increases that would be cancelled.  So those spending cuts would not really put much of a dent in our yearly budget deficits at all.

The tax increases would be more significant.  Middle class families would be paying thousands of dollars more per year in taxes.  These tax increases would raise some more revenue for the federal government, but they would also do significant damage to the economy in the short-term.

Do you know what they call a combination of government spending cuts and tax increases over in Europe?

They call it “austerity”.

Nations like Greece and Spain have tried this.  They cut spending and raised taxes in an attempt to reduce government budget deficits.  What happens is that the spending cuts and the tax increases cause a significant economic slowdown and this causes tax revenues to come in much lower than projected.  So then more spending cuts and tax hikes are necessary in order to try to get closer to balancing the budget.  But then tax revenues fall even more.

In the end, both Greece and Spain still have large budget deficits and yet the economies of both nations are suffering through depression-like conditions.  The unemployment rate in both nations is now over 25 percent.  Just check out this chart right here to see how nightmarish austerity has been for the economies of both Greece and Spain.

So that is why everybody is freaking out about the fiscal cliff.  They don’t want to go down the same road of austerity.  They want to keep living in an economic fantasy land where we can borrow our way to “prosperity”.

But it is all a lie.  The lines at the Apple stores, the crazed consumers on Black Friday, the restaurants teeming full with people and the government that thinks that it can take care of everyone from the cradle to the grave and yet keep taxes low.  It is all a giant lie.

And no, please do not think that I am in favor of raising taxes.  I most definitely am not.  I believe that the government brings in more than enough money already.

Personally, I believe that we could have a system that completely eliminates income taxes and that funds the government through tariffs and various other forms of taxation.  It was good enough for the Founding Fathers and it should be good enough for us.  But that is a subject for another article.

Our current system has allowed us to live way beyond our means for an extended period of time, but it is only a matter of time until it all comes crashing down.

In fact, the game is already over.  We have already destroyed the future.  At this point it is only a matter of how long we can keep kicking the can down the road and putting off the pain.

Sadly, what we have done on a national level is simply a reflection of our “buy now, pay later” society.  We have become a nation that is constantly willing to sacrifice the future in order to make the present more pleasant.

Just check out this video.  We have become addicted to a prosperity that we cannot possibly pay for.  But as long as someone will keep lending us the money we will continue to enjoy it.

As I have mentioned previously, the government has spent about 11 dollars for every 7 dollars of revenue that it has actually brought in while Barack Obama has been president.

We print, borrow and spend without giving any thought to what we are doing to the future of this country.  We are shredding confidence in our currency and we are wrecking the greatest economic machine that the world has ever seen.

And all of our politicians and all of our “leaders” prance about as if they are the smartest generation of Americans ever, and they think that they are an “example” for the rest of the world, but if our Founding Fathers were around today they would be absolutely horrified about what they have done to the country that they built.

If you think that the economy is bad now, you just wait.

We are still in the “economic fantasy land” phase where we are enjoying a massively inflated standard of living constructed on a mountain of borrowed fiat currency.  Our economy is being held up by trillions of borrowed dollars, and all of that money makes the U.S. economy appear to be far more prosperous than it actually should be.

When we have to start living closer to what our real standard of living should be things are going to get really bad.

Most Americans simply don’t understand that if the federal government went to a balanced budget tomorrow it would instantly plunge the U.S. economy into a depression.

Just look at Greece and Spain.  The same thing is going to happen to us one way or another.

So enjoy this false prosperity while you still can.  This is about as good as things are going to get, and from here on out it is downhill for America.

  • haselcheck

    I’m very confident that any compromise solution arrived at by the Dems and the Republicans will be much worse than the current fiscal cliff solution….

    • MichaelfromTheEconomicCollapse

      They always seem to mess things up even more, don’t they?


  • Sam Colt

    “Just look at Greece and Spain. The same thing is going to happen to us one way or another.”

    And we have 90 million people plus armed here. When the candy is taken away from the spoiled children expect blood baths.

    • 2Gary2

      we in no way are even similar to greece or spain. The fact that you can even utter such crap is astounding. We can print our own money

      • JustanOguy

        Then why do taxes need to be raised if the solution is to just keep printing up money?

        Why don’t we just print up enough and give everybody enough to be a Millionaire?

  • MeMadMax

    Budget compromises = bandaids to a system that is failing, and can’t be fixed until it is totally dead, like a blown motor. The system comprises of the Fed, Fiat Money, entitlement programs, a upside down trade system(see global economy), a gov that only thinks about votes, and a legacy that is long gone….

  • 2Gary2

    Proof Conservatives are the problem and not the solution. They are hypocritical and immoral. Their poster boy Paul (Eddie Munster) Ryan is a fraud as are the low information tea baggers who keep voting for these flim flam crap.

    Also–Proof–Taxing the rich and spread in the wealth will work:

    From 1992 to 2000, America prospered, and Clinton left office with a
    surplus, not a deficit, like Bush 43. During 8 years of conservative
    rule, Bush 43 approved every Republican spending bill sent to his desk,
    including trillions in tax cuts for the wealthy and the infamous $900
    billion Prescription Drug Bill, the largest unfunded give-away in
    history. Under Bush 43, with Paul Ryan voting yes, Republicans

    increased the Debt Ceiling 7 times, for a total of $6.5 trillion, while
    growing the deficit to $11.6 trillion, and Tea Party Republicans were
    apathetic and reticent. And now Americans expect the same Republicans
    who got us into this mess to fix it, which meets the definition for
    insanity. In 2006, combined corporate taxes accounted for 6% of all
    collected revenue, as compared to 1982, when it accounted for 39%.
    America does not have a spending problem; instead, we have a problem
    with Republicans like Paul Ryan continuing to give perverse tax cuts to
    millionaires and billionaires, even in the midst of the largest
    recession in modern history, with millions unemployed and losing their
    homes to foreclosure due to the deregulation of Wall Street by
    Republicans like Ryan. To embrace the big lie that repealing tax cuts
    for the wealthy will hurt small businesses (by supposedly inhibiting
    their ability to create jobs) requires acceptance of the harebrained
    Paul Ryan argument that trillion dollar corporations like GE, Bechtel,
    and Koch Industries are “small businesses” and in desperate need of tax
    cuts to make payroll! One “small business” in particular that Ryan wants
    to help by cutting their taxes is the Wall Street buyout firm Kohlberg,
    Kravis and Roberts (KKR), which recently reported more than $64 billion
    in revenue and assets, but paid less than 2% in 2011 corporate
    taxes. If millionaires, billionaire, and trillion dollar corporations
    simply paid their fair share in taxes, the Republican created deficit
    would be erased by 2017, and the unfair tax burden currently strangling
    the middleclass could be reduced by a staggering 59%, according to
    nonpartisan CBO figures. The Paul Ryan budget plan will add $8.4
    trillion to the deficit and not balance the budget until 2042, allowing
    the pervasively wealthy to buy and accumulate even more political power.

    • chilller

      Skipping meds again are we gary?

    • otter1111

      Gary, you say that conservatives are the problem, then use as your “proof” the Prescription Drug Bill which was opposed by conservatives. Bush was not a true conservative. Raising taxes will continue to drain the economy and hurt hiring and economic growth. Even Obama knows this as he was asked in an interview about how raising taxes hurts revenue to the gov’t. He acknowledged this but said it was an issue of “fairness.” Liberal ideas sound nice, but they never work in the real world.

      • 2Gary2

        Tax the rich (yeah I know, always get a response from some lobster
        eating fatboy that he’s already being taxed, but screw you – tax the
        rich) tax the rich, tax Wall St, tax Wall ST…

    • arizonadiane

      @2 gary and the other libs that continue to buy Obama’s “blame Bush” line. Do some research for yourself instead of just listening to the phony in chief.

      This is reality of what caused the banking collapse which trace straight to the housing bubble and the 2008 financial crisis.

      The first was Clinton’s obsession with pushing homeownership to new highs via government coercion. The second is his unleashing of Wall Street risk-taking.

      Clinton charged his Housing secretaries, Henry Cisneros and Andrew Cuomo, with driving homeownership rates up to about 70 percent of households from around 64 percent in the early ’90s.

      How did they do this? Through rigorous enforcement of housing mandates such as theCommunity Reinvestment Act, and by prodding mortgage giants Fannie Mae and Freddie Mac to make loans to people with lower credit scores (and to buy loans that had been made by banks and, later, “innovators” like Countrywide).

      The Housing Department was Fannie and Freddie’s top regulator — and under Cuomo the mortgage giants were forced to start ramping up programs to issue more subprime loans to the riskiest of borrowers.

      We know how that turned out: Fannie and Freddie help stoke a housing bubble that actually made homeownership less affordable unless borrowers took out ever-more-risky loans. Eventually, both agencies imploded (along with the housing market); bailing them out since 2008 has already cost taxpayers more than $100 billion.

      (And, yes, Bush continued Clinton’s policies — but did try to rein in Fannie and Freddie in his later years, before the meltdown. But Democratic barons in Congress like Rep. Barney Frank balked at stopping the train before the wreck.)

      You can also blame Clinton for helping usher in an era of wild risk-taking that led to the 2008 banking debacle. As president, he put the final nail in the coffin of the Depression-era Glass-Steagall Act — which for decades had separated Wall Street risk-taking activities from traditional commercial banking, such as taking deposits and small-business lending.

      To be sure, ending Glass-Steagall was a bipartisan folly, but Clinton was fully on board. He killed it at the advice of then-Treasury Secretary Robert Rubin — a Goldman Sachs alum who went to work for the biggest beneficiary of Glass-Steagall’s demise, mega bank Citigroup.

      Citigroup soon took risk-taking to new levels, obliging other banks to follow its lead — and in the end it crashed and burned like the rest of the banking business. (Indeed, Citigroup’s taxpayer bailout was far more generous than its rivals’, because the size of its risk-taking gone bad was far more dangerous to the financial system.)

      So, yes, Bush deserves some blame for what happened in 2008 and the Great Recession. He left in place much of what his predecessor had done — but the crisis had nothing to do with tax cuts or Iraq.

      Of course, we never hear the “real” story from Obama and his libs. But we know the truth!!

      • Just scanned, but did you mention that Obama was into ‘mortgages for everyone – everyone deserves to own a house’ and voted for the programs that led to the impending bubble??? Let’s bring in Ayers and the Chicago thugs as well…..

  • 2Gary2

    the GOP can be blamed.–The Grand Old Plutocracy will be blamed as it is the sickening conservatism that IS the reason we are in this republican great recession. So yes you are correct We will never miss an opportunity to blame the GOP for our problems as it is simply pointing out the truth. Most folks know this already which is WHY YOUR SIDE LOST. I thank God daily there is not a republican in the white house.

    • otter1111

      Gary, you see the world only through a radically leftest, democratic mindset. Even though Obama had the four largest deficits in history, and the democratically controlled senate failed to even pass a budget in years, it’s the Republican’s fault. Notice how the blame has shifted from Bush to the Republicans? Blaming Bush is even more ridiculous now than it was before the election, so the when the country collapses, instead of blaming the runaway spending under Obama that was much worse than Bush’s, you have to blame Republicans. Of course the leftest media will go along with the charade, and that’s why everyone’s talking about the fiscal cliff. It’s all about shifting blame from Obama’s economy.

    • JustanOguy

      All of them can be blamed for the spending insanity. People like you are just too stupid to realize what’s really going on.

      Bush and Friends started the big government and Obama & Co. just bloated it up even more when they had full control.

      Federal Budget has gone up from $2 Trillion in 2000 to $3.8 Trillion in 2013. Main Street has suffered since 2007….. and will continue to suffer while the Washington D.C. and Wall St. cronies live the high life.

      • We can fix the ‘blame game’…… The Repubs vote ‘present’ (a page out of Obama’s own playbook) and give ’em what they want.

        • JustanOguy

          @facebook-1576660258:disqus — Great idea.

  • 2Gary2

    Tax the greedy to help the needy. The rich need to pay their fair share and then some.

  • mainstreeteconomist

    The US government has 2 options for fixing the economy:

    (1) Increase the US industrial base.

    (2) Decrease the US population.

    There is nothing on either side of the Fiscal Cliff that would increase the US industrial base.

    Politicians are using Fiscal Cliff arguments to smokescreen their option 2 decision.

    Politicians are using Fiscal Cliff arguments to test dumbed-down Americans:

    Americans are told that economic conditions will become worse unless the US government goes further into debt and Americans agree with this.

  • Either decision they make will cause severe pain. If they discontinue entitlements it will cause civil unrest and recession because of the fiat money taken out of circulation. Raising taxes will not remove the dollars from circulation but it will be a transfer of those dollars from the producers to the non producers. Which of course is nothing more than extortion. At some point those producers will determine it is better to “go galt” than continue supporting a broken unjust system . I feel confident they will decide on the transfer of wealth from one segment of society to another. Even that wont work in the long run due to the fact they cant extort enough by taxation to fund the entitlements. They have painted themselves into a corner with paint that never dries.

  • haselcheck

    Warren Buffett seems to have figured out how to beat the income tax system and pay minimal taxes….Wonder how he would feel about a WEALTH TAX ???

    • Heard he’s all for it – the wealthy should be paying more. Funny coming from him, though, cuz taxes mean a lot to him. Just look at his past decisions.

      • haselcheck

        Buffett has figured out how he can minimize his taxes….Wonder if he can protect his wealth if it was just a wealth tax based on assets that he directly or indirectly has rights to…..

  • Colin

    The way that our global civilization is heading, and the fact that we, as Humans, have passed the point of no return on avoiding the worst effects of climate change, I believe that in short order this debate over a fiscal cliff will seem trivial compared to the challenges faced by a population that finds itself short on just about everything.

  • For every American that still has a full-time job, there is 1.1 American collecting a government check. It’s over, folks.

  • Washington76

    “The Political System” is infiltrated, overwhelmed and overpowered by corruption, greed, stupidity and evil “people”, and America is equally populated with stupid, lazy and corrupted citizens who’s “morals, ideas and agendas” are thoroughly destructive [and] will lead to our collapse.

    We [as a country] have reached the “event horizon” of “saturation” and intelligence [and] morals no longer hold a position of prominence, respect or importance in America; we are in a death spiral and we will impact the ground in a “uncontrolled descent” with great velocity.

    Sorry to rain on your parade fellow patriots, but all of this discussion about “fixing things” politically” is just hand wringing and punching at the air, so let’s face the reality of our situation.

  • Bill

    Just left a comment which then said I must be authenticated. Refreshed the screen and my comment was gone. Does this mean as it used to “That means awaiting moderation ?”

  • That’s right, the Gullible Old Party will take the blame. What a bunch of chumps

  • JustanOguy

    Great write up…. The Fiscal cliff rhetoric is all about just kicking the can down the road even longer. 2013 Federal Budget is $3.8 Trillion and it’s not going down anytime soon. Even if all of the tax rates go into effect, it’s not even going to put a dent into the deficit.

    Get it over with sooner then later is what I always believe in.

    The only way to end the insanity and return to a long term sustainable economy is to just let it collapse and start over with the hope that the American Takers who voted for the Fraudster in Chief will actually learn from the pain.

    Of course… that’s not going to happen if the Republicans don’t somewhat go along with the lying fraudsters and when the inevitable finally does happen… it’s just going to be all their fault because they didn’t go along with the lying idiots.

    By the way…. surprised you did not write up something to go along with Ron Paul’s Farewell speech.

  • Thinner Buddha

    If the US were to stop deficit spending, it would be dumped head first, not into a depression but rather into reality. Wealth is created not printed. Until society realizes that fact and acts on it, there will be no recovery. There COULD be recovery, for millions with the potential to build real wealth currently sit idle.

    We have the resources, we lack purpose and leadership, and what we need is a spiritual awakening. No amount of financial economic manipulation will address that issue.

  • Hangdog

    Try not paying rent to the government (property tax) and you will see how “paid for” your house is.

  • I wouldn’t have a problem if everybody’s taxes went up (and I mean EVERBODY’S – 20K and up gets skin in the game) if they would CUT SPENDING SIGNIFICANTLY and use the extra money to pay down the debt. Problem is these degenerates will simply use the extra money for additional spending and in a couple of years claim the rich aren’t “paying their fair share” etc.m We deserve this because we send them back year after year. Guns, ammo, food, and medicine folks. It’s coming…

  • frank1569

    ‘The American people want the government to give everything to everybody.’

    Quite a broad generalization – and a false one at that.

    The vast majority of American people just want to work, earn at least a decent living, and have their taxes be used for our ‘general welfare,’ not Big Corporate subsidies, multiple undeclared ‘wars,’ a failed ‘war on drugs,’ Big Bank bailouts, etc.

    Over 100 million full-time working Americans live below, on, or just above the poverty line. Clearly, they’re trying to NOT turn to our government for help.

    We have over 25 million unemployed and a total of 3.5 million job openings – the majority of which offer low wages, no benefits and no future. Even if all job openings were filled today, we’d still have 22 million citizens who are becoming ever more broke and desperate. Is it their fault there are no jobs? What should we do – ignore them and hope they go away, or die or something?

    Blame Republicans, or Dems, or Obama, or whomever – the fact is, the vast majority of the American people do not want our government to give them everything – THEY WANT TO WORK FULL TIME and pay their own way. Period.

  • Republicae

    The fiat monetary system has allowed this government to ignore any real budgetary restraints. It is apparent that since 1971, the increase in deficit spending and therefore the debt has shot up due to this lack of restraint. Such systems allow governments to spend without regard to taxation or revenues, for if it had to actually operate within the boundaries of a budget restrained by a system of sound money none of this could take place, there would be an instant tax revolt if taxpayers actually had to pay for government spending, thus the fiat monetary system is the perfect solution to the political restraint of taxation.

    We could certainly not see the drastic degree of entitlement spending or, for that matter, military spending in this country if this government were restrained by a sound monetary system which, would also not allow for the hidden taxation of inflationary depreciation of the currency as we have now.

  • QUOTE: “Most Americans simply don’t understand that if the federal government went to a balanced budget tomorrow it would instantly plunge the U.S. economy into a depression.” We have been prolonging the inevitable… since Divine Judgment is already here! EVIDENCE?

  • Looks like it showed up….

  • JustanOguy

    I disagree…. Too much credit is being given to Washington D.C. and not Main Street. If Main Street was allowed to thrive then we would be getting back on track. As it stands… all of the Malinvestment for the past six years has been in D.C. and Wall St.

    If D.C. and Wall st. were treated the way they should be treated and allowed to go down… the real producers would do just fine.

    Too many people believe in that made up fear that without D.C. and Wall St. we would all be living in tents by the river eating rat meat…. when it’s really all about putting too much faith into D.C. and Wall St. which will eventually create that scenario.

  • noIMspartacus

    What a cliched bunch of squealing guilt ridden nonsense – sure there’s
    been an obscene, debt fueled mindless consumption binge but how come
    there’s not A SINGLE WORD about the toxic cesspools of the criminally
    insane parasites on ‘Whore Street’ and the sin ‘city of London’ with
    their ticking time bombs of derivatives and CDS!!! Or the endless trillions the so-called FED and ‘Bank of England’ has dished out to the banksters
    that are draining whatever is left in the public/govt assets!?!?! You
    lot – and the plebs of the so-called “united” king-con-dom – are rushing
    headlong like a bunch of lemmings towards that “fiscal cliff” with the
    most frightening arrogant ignorance and fatalism and trying to blame and
    “sex up” the Euro crisis (thanks to a stupid currency war) is not going
    to save you – or the rotting dollar. Better wake up and smell the
    coffee real soon, ya hear…?

  • Albert8184

    I’m certain that the crisis has been engineered for a specific purpose; to create the sort of conditions that existed in the Wiemar Republic 90 years ago that will make me beg for the “strongman” to save me.

  • Ajaxx

    Great article. However, I would argue that if the Demon-cats want to return to the Clinton era tax rates then the Republican leadership should demand that we return to the Clinton era government spending as a percentage of GDP. Sounds like a fair compromise to me.

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