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View Diary: President Obama leaves door open for smaller fiscal cliff package (95 comments)

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  •  I'd also add (5+ / 0-)

    that with the economy still weak we really need more stimulus, not more deficit reduction. This actually is a perfect time for deficit spending. We have weak consumer demand and incredibly low borrowing rates.

    That's the funny part of the "fiscal cliff" hysteria. Most of the mainstream media seems to be eliding the part where the problem, if we do nothing, is too much deficit reduction too soon. Not too little.

    Long term we have a deficit/debt problem. Short term we have a weak demand, not enough jobs problem. Solving the jobs problem would help solve the deficit problem. More people working in decent-paying jobs means more taxpayers, fewer folks stuck on unemployment and food stamps, which do cost the government. Win-win.

    The current focus on closing the deficit centers on equal parts spending cuts and revenue increases. The truth is, except for defense, we've already cut spending to the bone. Obama even brags that federal discretionary spending is as low a share of GDP since Eisenhower (like that's a good thing). We have less a "deficit" problem than a revenue problem. As in people who used to pay a marginal tax rate over 70% now paying 35%, and 15% on capital gains and dividends.

    Obama's big mistake, from which all of this flows, is not pushing for sufficient stimulus when he took office. People said it couldn't pass, but he was new and had all the momentum. Propose a sufficient stimulus, even if the number is huge ($1.8 trillion or so). If the GOP filibusters, the markets will flip out and they would have caved.

    Failing to do it kept unemployment high with real human costs. It also made Dems who claimed it worked (though it did, as far as it went) look out of touch. It (and demagoguery on Obamacare/Medicare) gave us this Tea Party House and gerrymandered House districts. People say the Dem base was unmotivated in 2010 and independents turned on Obama. Think that would have happened if he inherited a crisis and got unemployment down to 6.5% in two years?

    Republicans...think the American standard of living is a fine thing--so long as it doesn't spread to all the people. And they admire the Government of the United States so much that they would like to buy it. Harry S. Truman

    by fenway49 on Fri Dec 21, 2012 at 06:05:11 PM PST

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    •  fenway, we are in agreement on all ideological (2+ / 0-)
      Recommended by:
      tardis10, kj in missouri

      issues and the substantive fiscal ones as well.

      I understand that SS is self funded and rather than driving deficits it actually has been used as a bank of sorts without most of the nation knowing there are IOUs to the SS fund.

      What I wanted to be sure of is that some in the bubble wonk didn't make up some language when the FICA cut was put in place (small stimulus) to use the General Fund to refund the difference in what would have been collected. That is what I am beginning to understand is the argument. I think.

      And added to that is the concept that if payments are reduced, then the amount needed to be repaid would be less.

      I get that this is over the backs of old and disabled people. I am in both categories and care a lot. It is wrong.

      I just want to understand the argument that is being made.

      Thank you so much.

      Science is hell bent on consensus. Dr. Michael Crichton said “Let’s be clear: The work of science has nothing to do with consensus... which is the business of politics. Science, on the contrary, requires only one investigator who happens to be right,”

      by Regina in a Sears Kit House on Fri Dec 21, 2012 at 08:20:11 PM PST

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      •  The chained cpi will (2+ / 0-)
        Recommended by:
        kj in missouri, fenway49

        increase taxes and so increase revenue into the general fund.
        http://www.dailykos.com/...

        "George RR Martin is not your bitch" ~~ Neil Gaiman

        by tardis10 on Fri Dec 21, 2012 at 09:27:06 PM PST

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      •  No (1+ / 0-)
        Recommended by:
        kj in missouri

        I could have made a shorter reply. Sorry! But no. With all the Bush tax cuts up, there would have been hell to pay for a deal that said, "You want stimulus? Fine. Cut the payroll tax AND cut social security benefits to offset the cut. In exchange, GOP demands you leave the tax rates on top earners unchanged."

        That was not the deal. The dollar amount of the FICA cut and the chained CPI, which goes on indefintely, don't match up. The "argument" being made is just the simple but false one I wasted your time disproving (though hopefully someone else will benefit): we have a huge deficit, so we need cuts somewhere. The realpolitik is that it's a cost of getting Boehner to a deal, which he maybe can't do anyway. But there's no justification even offered that maps on to anything as neatly as you were suggesting.

        Republicans...think the American standard of living is a fine thing--so long as it doesn't spread to all the people. And they admire the Government of the United States so much that they would like to buy it. Harry S. Truman

        by fenway49 on Sat Dec 22, 2012 at 07:30:14 AM PST

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      •  This did happen (1+ / 0-)
        Recommended by:
        kj in missouri
        What I wanted to be sure of is that some in the bubble wonk didn't make up some language when the FICA cut was put in place (small stimulus) to use the General Fund to refund the difference in what would have been collected. That is what I am beginning to understand is the argument. I think.
        The General Fund did refund what would have been collected. That part's true. And that was deficit spending by the General Fund. But nobody's arguing, even now, that S.S. drives deficits because of that.

        The clear answer is, you could have left FICA intact in 2010 and cut income tax on the first X of income. Same result for the General Fund (some more deficit spending).

        If you're a conspiracy theorist you might say they did cut a private deal to reduce benefits to offset the FICA cut, but delayed implemenation of chained CPI. I don't really think that happened. But, anyway, no such deal was made public for a reason: it's unacceptable. Even Congressional Dems in 2010 would  have blocked that. So we can't let them do it through the back door now.  

        Republicans...think the American standard of living is a fine thing--so long as it doesn't spread to all the people. And they admire the Government of the United States so much that they would like to buy it. Harry S. Truman

        by fenway49 on Sat Dec 22, 2012 at 07:37:19 AM PST

        [ Parent ]

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