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December 21, 2012
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It's actually good to go over the cliff

:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 21, 2012  Student Traditional Artist
Thus, we should all hold hands and nose dive over. Recently, in the hysteria of checking one party's plan over the next (more specifically, the Plan B catastrophe of Boehner), I decided that I'd go over the potential scenarios of us going over the cliff, and the effect it has on the American people. Now, as Ben Bernanke warns, it could lead the US into a double dip recession. However, the long term effects could very well pull the US out of a budgetary crisis.


This is a graphic drawn up by the Congressional Budget Office. [link]

It paints a relatively grim picture by way of GDP growth, and unemployment which kicks as high as 9%. That point being made, by 2017, the federal debt begins to substantially lower to as much as 58% of our GDP. Our deficit, should we go over, is projected by the CBO to reduce our deficits by as much as $560 billion from 2012-2013 year.

[link]

The recession, as predicted by the CBO for going over, would last 'til mid-summer, at which point the GDP would bounce back and begin a growth at a rate of .5% (sluggish, but a growth). Expenses from this go mostly towards unemployment insurance, and social safety nets. Unemployment is projected by the same CBO to rise up to 9%, before bouncing back. Experts such as economist Bruce Bartlett agree that going over the cliff is economically viable, and a meaningful method of avoiding a long-term catastrophe. That is, the ability to pay down our public debt, and reduce our deficits. The amount of debt held by the public has increased from $4.9 trillion in the beginning of 2007 to $11.5 trillion today—from 36 percent of GDP to 75 percent of GDP.

The Office of Management and Budget released a nifty table showing how it's possible to return to Clinton-era spending as well as taxes, and avert the growing interests on our public debt. This is what reductions can reasonably take place -

:bulletred: Defense spending reduced by 3-5% (3% is Clinton-Era. You can push 5% to compensate for Medicare loss).
:bulletred: Medicare spending reduced by 2%


Both of these returning to Clinton-era levels of spending should yield roughly $200 billion in savings over a 10 year period. Now, for taxes (copy/pasta from Washington Post).

- Taxes

Five tax measures have provisions expiring at year’s end:

- 2001/2003 Bush tax cuts: These cut individual income tax rates, pared back the estate tax, lowered rates for investment income (such a capital gains and dividends) and expanded a number of tax credits, including the child tax credit. According to the Economic Policy Institute, these would cost $203 billion next year if extended.

- 2009 stimulus: This included expansions of the Earned Income Tax Credit, which provides aid to low-income workers, as well as the child credit, and the American Opportunity tax credit, which helps families pay for college tuition. Extending these would cost $10 billion next year.

- Payroll tax holiday: This was included in the December 2010 tax deal and slashed the payroll tax rate on employees from 6.2 percent to 4.2 percent. Extending it would cost $115 billion next year.

- Alternative Minimum Tax: Intended as a baseline tax for high earners, the AMT is not indexed for inflation and would hit a lot of middle-class taxpayers if not “patched” before next year. A patch would cost $114 billion.

- Extenders: This is the catch-all term tax wonks use for corporate tax breaks that need to be extended regularly. Doing that again, as per usual, would cost $109 billion.

$109 + $115 + $114 + $10 + $203 = $551 billion in lost revenue should taxes expire. So, we take this $551 billion in lost revenue, and assume that the law kicks in, and taxes revert back to Clinton levels without any White House change.

:bulletgreen: $551 billion in one year
:bulletgreen: $900 billion from richest 1-2% in decade.

Another substantial deficit and debt reduction plan. As far as entitlements go, they are self-funded and have virtually no effect on the budget. More-over, it's unfunded parts of the budget. We could take a page from Ronald Reagan and raise taxes on Social Security to better fund them to maintain the rate of growth. Potential fix, though, admittedly, it's probably going to require a rise in the age of retirement from 65 to 67, in addition to a lift on the 110,000 tax cap.


tl;dr Point is, postponing the fiscal cliff only deepens it. The size of the drop off of the cliff will just rise as the interest grows on our public debt, and that the best way to go through it right now is to dive off the cliff and balance our budget while lowering our debt. We'll experience a recession, which we will probably work through and recover from. The DOW will plunge, which it will also recover from. Thoughts?
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Devious Comments

:iconbroadwayext:
broadwayext Featured By Owner Jan 8, 2013
The country to the edge when they could have signed the one-sentence extension of debt ceiling in five minutes seem to at least know they are not gonna be able to spin themselves out of responsibility for this joke.

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:iconmgonzales041090:
mgonzales041090 Featured By Owner Jan 8, 2013  Student Traditional Artist
Going over the cliff would likely have only needed the debt ceiling to be raised once, and that's it. It reduces the debt long term.
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:iconvisionoftheworld:
VISIONOFTHEWORLD Featured By Owner Dec 28, 2012
Well all the fucked up conservatards that drove the country to the edge when they could have signed the one-sentence extension of debt ceiling in five minutes seem to at least know they're not gonna be able to spin themselves out of responsibility for this joke. There is no 'cliff' because it was already resolved a year ago when they passed these automatic cuts/taxes, and honestly I hope they get implemented. All the people who stand to take a tax hike are fundraisers for the tea bag cause and various other anti-American political movements. I have a good job so I'm not worried. I elected the right president to lead the country so that means even if I lose said job, I will still have access to healthcare. The blubbering ignorants can shove their fists in their asses and maybe they'll have a few more shooting sprees... fuck if I care. I didn't expect their insane ideology to go out without a big bang. I'm not worried about my taxes going up, it amounts to about $150 per year. I can get over it, and so can everyone else.
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:iconcarusmm:
carusmm Featured By Owner Dec 27, 2012  Hobbyist Writer
Hopefully America goes over the fiscal cliff and is never heard of again.
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:iconmomobfvfd:
momobfvfd Featured By Owner Dec 26, 2012
I am sticking with Ben Bernanke (the current head of the FED); I am hoping to Allah that lawmakers in this country are able to compromise before such tax hikes are implemented.
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:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 26, 2012  Student Traditional Artist
I know. I cited with Bernanke's claim about a 2nd recession. I just went by the testimonials of other economists whom agree that going over is the best thing for this country to do to control the interest on the debt in the long term (saving us from potential default).
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:iconmomobfvfd:
momobfvfd Featured By Owner Dec 27, 2012
considering what this would do to our already burdened economy (I.E. the increase in unemployment and people on government assistance) i have to disagree on the higher taxes fixing the debt. I honestly believe that the only reason politicians or other important people would say that this would be a good thing for America would be to try and quiet down the mega-rage when this does occur in January. Although debt is a major problem taxing a burdened populous would make the nation's economic situation much worse IMO. However, considering i do not have any degree in economics you might wanna take my opinion with a grain of salt
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:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 27, 2012  Student Traditional Artist
Taken with a grain of salt.
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:iconunvalanced:
Unvalanced Featured By Owner Dec 26, 2012  Hobbyist Writer
Spending needs to be slashed more than the fiscal cliff intends. But I'm actually okay with the cliff. *Shrug* I expect a recession either way.
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:iconmaddmatt:
maddmatt Featured By Owner Dec 25, 2012
I wish all ignorant liberals that vote for other ignorant liberals would do a little exercise. Sell lemonade for 10 cents per cup and track your sales for one year. Then, charge 1 million dollars Per cup the next year. Report which year had better revenues.

Liberals want to spend as if they will be selling the same amount of cups and need only raise the prices to offset their ignorant spending.

Bush had these rates, was funding two wars AND had the budget to only 150 billion deficit. A figure everyone in the country would accept at this point. If liberals were not such bloodthirsty vampires wanting the heads of the rich, then they would address their reckless spending and lack of ANY passable budget by this President before they went back to steal more from the people. You don't mention spending because the honest goal is to hurt those you consider privileged.

Ask France, Spain, and Greece how raising taxes to appease the middle class liberals works out for the country.
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:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 25, 2012  Student Traditional Artist
Your ad hominem liberal rant has nothing to do with the cliff.
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:iconmaddmatt:
maddmatt Featured By Owner Dec 26, 2012
Because you and idiot liberals don't want to address spending and your real goal of punishing the wealthy.

Let me know how your million dollar hot dog sales go, kid.
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:iconoweeilikee:
oweeilikee Featured By Owner Dec 24, 2012  Hobbyist Traditional Artist
might as well go ahead and get it over with, as the saying goes, "somebody's gotta pay". Trillions of dollars spent on wars and nobody seems to feel responsible for the debt. A president that decided he would lower taxes at the same time he was going to war? Bail out banks in new money, whatever the hell that is. Some kind of sorcery - magically turning paper into weapons?

A question that is often used in Japanese business dealings is, "who pay?" Every person that has any type of interests in the U.S. economy would do well to ask "who pay?".

Military spending is too high and taxes are too low. Lets jump over the cliff and correct it. I'd rather jump off of the cliff than be pushed off of it.

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:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 24, 2012  Student Traditional Artist
"Trillions of dollars spent on wars and nobody seems to feel responsible for the debt."

I think a lot of people attribute that to George W. Bush.

"Bail out banks in new money, whatever the hell that is."

It's necessary considering we went through a banking crisis which lost roughly 3 trillion dollars.
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:iconunvalanced:
Unvalanced Featured By Owner Dec 26, 2012  Hobbyist Writer
I don't think it was necessary. I think at best it pushed off the inevitable, and rewarded the people that should have taken the brunt of the blow.
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:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 26, 2012  Student Traditional Artist
It hurts people who need the measures being cut the most, that's the tragic part.
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:iconoweeilikee:
oweeilikee Featured By Owner Dec 24, 2012  Hobbyist Traditional Artist
Bush was only one of many that helped to rack up this insane debt.

Creating new money is a scam which is about to come back and bite us on the ass.
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:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 24, 2012  Student Traditional Artist
Are you referring to Quantitative Easing?
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:iconoweeilikee:
oweeilikee Featured By Owner Dec 24, 2012  Hobbyist Traditional Artist
By golly, that's just what I was talking about. Although I was unfamiliar with the term until now!
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:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 24, 2012  Student Traditional Artist
Glad to help.
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:iconheaven-spawn:
heaven-spawn Featured By Owner Dec 23, 2012
dude i have no idea what you are even talking about
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:iconprincess-amy:
Princess-Amy Featured By Owner Dec 23, 2012  Hobbyist Photographer
What about the knock on effects to the rest of the world if the USA goes back into recession. 
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:iconheaven-spawn:
heaven-spawn Featured By Owner Dec 23, 2012
screw the rest of the world
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:iconprincess-amy:
Princess-Amy Featured By Owner Dec 23, 2012  Hobbyist Photographer
Screw america <3
You lot deserve to fail as a country with that attitude
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:iconheaven-spawn:
heaven-spawn Featured By Owner Dec 24, 2012
sorry man just the truth rest of the world aint as important
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:iconzer05um:
Zer05um Featured By Owner Jan 2, 2013  Professional General Artist
Well, America is the dominant economy at the moment, but as things stand China and the India are going to overtake you soon. Others are on the way up, whilst the US and the EU are stagnating. The eternal deadlock that stops anything useful being done is a symptom, not the cause.
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:iconprincess-amy:
Princess-Amy Featured By Owner Dec 24, 2012  Hobbyist Photographer
America is though?
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:iconthegman0:
theGman0 Featured By Owner Dec 24, 2012  Hobbyist
FUCK YEAH AMERICA BITCH :iconamericaplz:
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:iconprincess-amy:
Princess-Amy Featured By Owner Dec 24, 2012  Hobbyist Photographer
LMAO such a narssisistic country can't survive long
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:iconanatarakentara:
AnataraKentara Featured By Owner Jan 2, 2013  Hobbyist Traditional Artist
Every country is Narcissistic. If you whore yourself out to everyone else *liberal uk*, your nation begins to break apart.
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:iconthegman0:
theGman0 Featured By Owner Dec 24, 2012  Hobbyist
Fuck you.
This is America. My president is black and my Lambo is blue. Now get the fuck out and if I see you on the street I'm slapping the shit out of you. :iconamericaplz:
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(2 Replies)
:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 23, 2012  Student Traditional Artist
Not sure. They probably get plunged into a depression. It might just have to come to that.
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:iconprincess-amy:
Princess-Amy Featured By Owner Dec 23, 2012  Hobbyist Photographer
If that was to happen and the USA was at fault for it, I could see Americans becomeing quite unpopular in some lesser countries.
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:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 23, 2012  Student Traditional Artist
Well, it might have the same overall effect it has now. Like, the recession might me mild or even light. During the height of this recession, unemployment peaked at 10%, and it didn't really have an overly adverse effect on their recovery (sluggish it may be).
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:iconabstract-mindser:
Abstract-Mindser Featured By Owner Dec 21, 2012
What exactly is this fiscal cliff, and why are so many people riding on the stock market, and why would it plummet because the USA forgot to whatever it is they're doing?
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:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 21, 2012  Student Traditional Artist
The fiscal cliff is a bunch of mandatory tax hikes and spending cuts that kick in on Jan 2013.

"In the United States, the fiscal cliff is a term used to refer to the economic effects that could result from tax increases, spending cuts and a corresponding reduction in the US budget deficit beginning in 2013 if existing laws are not changed by the end of 2012. The deficit—the difference between what the government takes in and what it spends—is expected to be reduced by roughly half beginning in the first days of 2013. This sharp decrease in the deficit in such a short period of time is known as the fiscal cliff. However, the Congressional Budget Office estimates this sudden reduction will probably lead to a mild recession in early 2013.

The laws leading to the fiscal cliff include the expiration of the Bush tax cuts and planned spending cuts under the Budget Control Act of 2011. The Budget Control Act was a compromise intended to resolve a dispute concerning the public debt ceiling. Some major programs, like Social Security, Medicaid, federal pay (including military pay and pensions), and veterans' benefits, are exempted from the spending cuts.[note 1] Spending for defense, federal agencies and cabinet departments would be reduced through broad, shallow cuts referred to as budget sequestration.

From fiscal year 2012 to 2013, federal tax revenue is expected to increase by 19.63%, while spending outlays are expected to decline by 0.25%.[1](table-1.6)[note 2] Relative to the size of the economy, these changes would raise 2013 tax revenue to 18.4% GDP, above its historical average of 18.0% GDP, while reducing spending to approximately 22.4% GDP, still above the 21.0% GDP historical spending average.[2]
"
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:iconabcat:
AbCat Featured By Owner Dec 22, 2012   Writer
Oh, I thought it was a confused metaphor to depict the levels of debt verses the amount of tax the government could possibly raise, kind of like an event horizon, or the bridge over the Rubicon. Instead, in this metaphor, the economy doesn't go down off the fiscal cliff, but attempts to ascend it - in an exhausting and hazardous climb. Nice.
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:icontheredsnifit:
TheRedSnifit Featured By Owner Dec 22, 2012
No, in the metaphor we go down the cliff. The cliff itself isn't the tax raises and spending cuts, but the recession that would supposedly follow.
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:iconabstract-mindser:
Abstract-Mindser Featured By Owner Dec 21, 2012
So...in laymans terms?
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:icontheredsnifit:
TheRedSnifit Featured By Owner Dec 21, 2012
It means that if nothing's done, everybody's taxes will skyrocket, presumably causing a recession.
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:iconabstract-mindser:
Abstract-Mindser Featured By Owner Dec 21, 2012
What's the logic to that? Why can't only the $$$ class be taxed to death? Why can't they just make massive cuts to DoD?
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:iconjeysie:
Jeysie Featured By Owner Dec 21, 2012  Hobbyist Writer
Because the Republican philosophy of "low taxes" only applies to the rich. And the concept of "no government spending" doesn't apply to the military and anything that controls non-Christians and women.
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:iconabstract-mindser:
Abstract-Mindser Featured By Owner Dec 21, 2012
Screw the Republicans, NRA, and so on.
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:iconjeysie:
Jeysie Featured By Owner Dec 24, 2012  Hobbyist Writer
I'd hate the right-wingers a lot less if they weren't such damn hypocrites. If you're going to be a sociopathic bastard, at least be honest about it.
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(1 Reply)
:icontheredsnifit:
TheRedSnifit Featured By Owner Dec 21, 2012
*defense cuts
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:icontheredsnifit:
TheRedSnifit Featured By Owner Dec 21, 2012
Ask the OP; he's the one saying that we should take the dive, although it should be noted that the cliff does include spending cuts.
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:iconmgonzales041090:
mgonzales041090 Featured By Owner Dec 22, 2012  Student Traditional Artist
If you would read what I wrote, you'd know It's probably for the best.
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:icontheredsnifit:
TheRedSnifit Featured By Owner Dec 22, 2012
I didn't say it wasn't. Take it up with the Jeysie and Abstract.
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