• It has come to our attention that some users may have been "banned" when they tried to change their passwords after the site was hacked due to a glitch in the old vBulletin software. This would have occurred around the end of February and does not apply after the site was converted to Xenforo. If you believe you were affected by this, please contact a staff member or use the Contact us link at the bottom of any forum page.

The US and the Fiscal Cliff


Ulster-Lad

Well-known member
Joined
Oct 26, 2006
Messages
10,092
It is being widely reported about the US about to go over the "Fiscal Cliff" and possible fall back into recession and in turn damaging the world economy. This are the immediate effects in the US.

On 1 January, tax cuts from the George W Bush era expire and huge spending cuts kick in. Some $607bn of cuts and tax rises are planned, including:

Reductions in the defence budget
The end of a 2% payroll tax cut
Changes to allowances for Medicare - medical care for the elderly
Reductions to some family income credits for the poor
The so-called "alternative minimum tax" returning for many taxpayers
The end of long-term federal unemployment benefits - at about $300 a week - which immediately cuts off about 2 million people
BBC News - Fiscal cliff: What if we go over the deadline?

So the immediate effect is tax rises and spending cuts? If I remember correctly Obama et al were against these tax breaks and has been blaming Bush Jr. for inheriting the economy in it's current state. So what is the problem with Obama if the US does go off the Fiscal Cliff on 31 December?
 

NLPete

Well-known member
Joined
Dec 11, 2011
Messages
573
Soon time for those that can, to get the hell out of the usa me thinks...
 

Analyzer

Well-known member
Joined
Feb 14, 2011
Messages
46,201
The Americans are borrowing like crazy. Obama borrowed more than Bush in less than half the time. Though, just like in the UK, the previous administration left a financial mess behind them (Phony Tony, Flash Gordon). And the same here.

To their credit the some Americans are at least acknowledging that there is a serious financial debt problem.

No debate here in Ireland. None in Britain. None in France. In fact it seems as if EU member borrowing just keeps increasing.

Also there is another problem. Large Democrat run states like Illinois, and California have an extreme addiction to living beyond their means.
 

Ulster-Lad

Well-known member
Joined
Oct 26, 2006
Messages
10,092
Well neither side wants to give in and maybe present a few concessions. It looks like it is going to be time for a bit of austerity in the US.

From the BBC article I cited.

The term fiscal cliff refers to the combination of almost $600bn (£370bn) of tax rises and spending cuts due to come into force on 1 January if Congress does not pass new legislation.
 

bob3367

Well-known member
Joined
Jan 11, 2007
Messages
8,083
The Americans are borrowing like crazy. Obama borrowed more than Bush in less than half the time. Though, just like in the UK, the previous administration left a financial mess behind them (Phony Tony, Flash Gordon). And the same here.

To their credit the some Americans are at least acknowledging that there is a serious financial debt problem.

No debate here in Ireland. None in Britain. None in France. In fact it seems as if EU member borrowing just keeps increasing.

Also there is another problem. Large Democrat run states like Illinois, and California have an extreme addiction to living beyond their means.
But California has had 15 Republican Governors to 5 Democratic ones since 1899, kinda holes that argument.

Also Illinois has had a majority of Republican Governors 12 to 9.

They will get a deal...
 
Last edited:

Analyzer

Well-known member
Joined
Feb 14, 2011
Messages
46,201
But California has had 15 Republican Governors to 5 Democratic ones since 1899, kinda holes that argument.
And a legislature that is usually a Democratic majority. Everything a Republican governor proposes has to please a Democrat legislature. In effect the Democrats hold the power, because they decide what happens and what doesn't happen.
 

feedmelies

Well-known member
Joined
Jul 9, 2011
Messages
2,463
The Americans are borrowing like crazy. Obama borrowed more than Bush in less than half the time. Though, just like in the UK, the previous administration left a financial mess behind them (Phony Tony, Flash Gordon). And the same here.

To their credit the some Americans are at least acknowledging that there is a serious financial debt problem.

No debate here in Ireland. None in Britain. None in France. In fact it seems as if EU member borrowing just keeps increasing.

Also there is another problem. Large Democrat run states like Illinois, and California have an extreme addiction to living beyond their means.
Eh... Austerity is being widely implemented in the above countries. Compared to the USA where there has been very little if any.
 

bob3367

Well-known member
Joined
Jan 11, 2007
Messages
8,083
And a legislature that is usually a Democratic majority. Everything a Republican governor proposes has to please a Democrat legislature. In effect the Democrats hold the power, because they decide what happens and what doesn't happen.
Thats not my understanding.....
 

Analyzer

Well-known member
Joined
Feb 14, 2011
Messages
46,201
Thats not my understanding.....
Political party strength in California - Wikipedia, the free encyclopedia

Since 1959, the Democratic Party have controlled both houses of the Legislature of the State of California, with the exception of a narrow Republican 41 to 39 majority one house in the years 1995-1996, and 1969-1970.

This means the California Senate and the Assembly of the State of California has been overwhelmingly Democrat controlled in this period. In fact the CA Senate has been continually Democratic. This has an overwhelming influence on what gets through as state policy. The Democrats have had effective sanction over any governor for this time period. In addition the state Treasurer has been a Democrat consistently since 1998, and for a majority of the years in the period from 1974 to 1998.

The California Democrats control the State finances of the State of California.
 
Last edited:

seanmacc

Well-known member
Joined
Jan 10, 2009
Messages
1,022
Eh... Austerity is being widely implemented in the above countries. Compared to the USA where there has been very little if any.
There has been heavy austerity mesures on a state to state level. One area where I used to live near in Oregon has their Kindergarten schools on a 3 day week at certain times of the year as the state trie to balance its books. This is mainly as a result of a collapse in property tax takes which is ring fenced for local schools though.

California had some major adjustments with their public servants and even laid off a ton of police and firefighters a while ago.

On the Federal Bugets there hasn't been much in the line of austerity alright but that's coming
 

owedtojoy

Well-known member
Joined
Feb 27, 2010
Messages
45,473
It is being widely reported about the US about to go over the "Fiscal Cliff" and possible fall back into recession and in turn damaging the world economy. This are the immediate effects in the US.



BBC News - Fiscal cliff: What if we go over the deadline?

So the immediate effect is tax rises and spending cuts? If I remember correctly Obama et al were against these tax breaks and has been blaming Bush Jr. for inheriting the economy in it's current state. So what is the problem with Obama if the US does go off the Fiscal Cliff on 31 December?
It is not Obama who will have the problem.

The USA will go into double-dip recession and the Republicans will have to go to the people in 2014 and explain why they let it happen. Recessions are not good for incumbents and this Congress is already the most unpopular in American history.
 

owedtojoy

Well-known member
Joined
Feb 27, 2010
Messages
45,473
The Americans are borrowing like crazy. Obama borrowed more than Bush in less than half the time. Though, just like in the UK, the previous administration left a financial mess behind them (Phony Tony, Flash Gordon). And the same here..
The President spends within the budget agreed with Congress.

If Obama borrowed it, it was with Congressional approval.

Which makes the "debt ceiling" a total joke .. in effect, Congress agree a spending program, then the Republican majority refuses to obtain the money to be spent either by borrowing it or raising taxes.

Republicans allowed Bush to bust the debt ceiling, to engage in a $trillion war, while granting tax breaks to his rich donors, and a Medicare D scam to satisfy his Big Pharma backers. And now the very same ones who voted for sll that (typical example: Paul Ryan) are whining about the "deficit".

The only thing really wrong with the deficit is that a Democrat President is spending the money.

What the Republicans are really doing is reducing the size of Government by stealth, by pretending it is all about the "deficit". It sounds so much better than taking away Medicare and Social Security.
 

Ulster-Lad

Well-known member
Joined
Oct 26, 2006
Messages
10,092
It is not Obama who will have the problem.

The USA will go into double-dip recession and the Republicans will have to go to the people in 2014 and explain why they let it happen. Recessions are not good for incumbents and this Congress is already the most unpopular in American history.
Really? It depends on how you define "Congress" there I suppose. The Senate is controlled by the Democrats and the House of Representatives is controlled by the Republicans. Both those chambers make up the Congress. Of course we know that Obama is a Democrat as well.
 

True Republican

Well-known member
Joined
Apr 3, 2008
Messages
4,067
will boehner be able to compromise with obama and sell it to the republican controlled congress? Especially the tea party lunatics.
 

Analyzer

Well-known member
Joined
Feb 14, 2011
Messages
46,201
The President spends within the budget agreed with Congress.

If Obama borrowed it, it was with Congressional approval.

Which makes the "debt ceiling" a total joke .. in effect, Congress agree a spending program, then the Republican majority refuses to obtain the money to be spent either by borrowing it or raising taxes.
I actually think the Debt celing is a joke. They are both committed to living beyond their means. Only one is more committed to borrowing than the other. The real debt ceiling occurs when the bond market demands a higher interest rate. I expect that we are heading towards this in the Eurozone in the next year. The interest rate in the Eurozone is simply far too low to account for the scale of risk, and outright money printing.

In the US, Bernanke is backstopping the US Treasury market. The Chinese stopped buying after a dimplomatic disagreement circa two years ago. The Saudis are buying T Bonds, as long as the Us supports their position in Syria.

Republicans allowed Bush to bust the debt ceiling, to engage in a $trillion war, while granting tax breaks to his rich donors, and a Medicare D scam to satisfy his Big Pharma backers. And now the very same ones who voted for sll that (typical example: Paul Ryan) are whining about the "deficit".

The only thing really wrong with the deficit is that a Democrat President is spending the money.

What the Republicans are really doing is reducing the size of Government by stealth, by pretending it is all about the "deficit". It sounds so much better than taking away Medicare and Social Security.
Social Security and Medicare are both in deficit. The commitment far exceeds the intake. And it will continue for years like this. The accounting for Medicare was changed under Clinton. But there are observers like John Walter Williams in the US who regard the official statistics as dodgy in this regard.
 

owedtojoy

Well-known member
Joined
Feb 27, 2010
Messages
45,473
Really? It depends on how you define "Congress" there I suppose. The Senate is controlled by the Democrats and the House of Representatives is controlled by the Republicans. Both those chambers make up the Congress. Of course we know that Obama is a Democrat as well.
There is not a Presidential election in 2014. So Obama will not be standing for office.

All Congressional seats are up for grabs. In recessions, the voters vengeance falls on incumbents, but there are more Congressional Republicans that Congressional Democrats, so they will suffer the more, and deservedly so. Just like the Democrats did in 2012.

In 2014 there are 20 Democrat seats and 13 Republican seats up for election. The Republicans need to gain at least 6 seats to overturn the Democrat Senate majority, and if they could not do that in 2012, they will hardly do it in 2014.

Any delay over a solution to the fiscal cliff is Advantage Obama. The Republicans have already publicly humiliated their own Speaker (something no one would have dared do to Nancy Pelosi) by not approving his Plan B, and openly showed how divided and disorganised they are.

The worse the economic situation, the madder voters will be with Congress, who are the ones in the firing line.
 

Ulster-Lad

Well-known member
Joined
Oct 26, 2006
Messages
10,092
@owedtojoy, So you agree with me then. It is not a Republican controlled "Congress" because the Democrats control the Senate.
 

hmmm

Well-known member
Joined
Oct 4, 2006
Messages
2,834
This is being totally blown out of proportion by financial commentators, if it drags on for a few weeks no real harm will be done. I suspect a few people are trying to create a financial market panic which will also create a buying opportunity for them.

On the subject of US downgrades, no-one cares. US treasury bills are still the worlds purchase of last resort, and that's not about to change any time in the next few decades.
 

owedtojoy

Well-known member
Joined
Feb 27, 2010
Messages
45,473
Social Security and Medicare are both in deficit. The commitment far exceeds the intake. And it will continue for years like this.
They are in deficit because of the Bush Boondogle for Big Pharma called Medicare D, and his $trillion wars, both of which the deficit-whinging Republicans approved.

Clinton left the country in a decent economic position, and Obama inherited an utter mess. Some of the spending assigned to President Obama are deficit-busting policies and a 2009 budget he inherited from Bush.

At the moment the Republicans are more on the hook for the fiscal cliff than the Democrats - yes, they will all get some blame, but Congress goes to the polls next. How soon before Congressmen with arms factories in their districts start to feel the pinch of reduced military spending?

Twice before the Republicans in Congress have shut down the Government, or threatened to shut it down, under a Democrat President. Each time it has backfired disastrously. This time will be no exception.
 
Top