Democrats Taking the USA over the Fiscal Cliff

I've been watching Bloomberg TV part of yesterday and today - it's been on in the background while we work on my brother's house. I like Bloomberg because people that report on the stock market for a living are only interested in the TRUTH. Being politically biased when deciding on stocks is like always betting on your favorite team, you will lose your shirt.

The shocking consensus on Bloomberg is that the Democrats absolutely refuse to cut spending. Politicians exercise power by spending money. Democrats won't release that power. While Dems of course want to raise taxes on the "rich", the math says that even if the "rich" are taxed at 100% that isn't enough.

Some Bloomberg analysts are speculating that if the Dems refuse to cut spending and instead raise the debt ceiling, while Wall Street MIGHT plummet, we are guaranteed to end up with a recession in 2013. How deep no one can tell. But many corporations are cutting back on R&D and hording cash for the coming storm.

Bloomberg TV also said that on Obama's 30-minute conference call with House Republicans this morning, Obama spoke for 27 minutes. Even the Democrats seem to be saying that Obama has no influence in this crisis.

The Democrats seem to have no interest in averting disaster. They only want to assign blame! Is anyone surprised?

 

The current fiscal cliff situation arose out of the debt ceiling crisis from mid 2011. Most people who do not have a huge political axe to grind would acknowledge the debt ceiling crisis of 2011 was entirely artificial and politically motivated.

After all the debt ceiling has been raised by Congress endlessly over many years:

Essentially it was more or less routinely raised 78 times, and then 1 time it created an enormous political hubbub, the result of which was to effect a political compromise in 2011 that pushed the "artificial crisis" of 2011 to a new date, the end of 2012, wherein another crisis was established; the fiscal cliff we face now.

Its a "fiscal cliff" in the context that by pushing the debt crisis in front of all other issues, the "do nothing" alternative, beginning with the first of January 2013, would move all govt oriented actions to dealing with the debt and damn all other consequences. The main consequences being returning all tax rates to 2000 rates and dramatically slashing govt spending on a huge level and across the board impacting many elements of the country from the poor on substance living to the military in a dramatic slashing across the board.

It is an artificial politically mandated crisis, pushed to the now near term, from another artificial crisis that occurred in mid 2011.

Cripes we do not have to operate on a crisis basis all the time, subject to a a political realm that cannot agree to agree on anything. More than anything its an indictment on current politics as played out in Congress vis a vis the President.

Major business and union leaders are both calling for a responsible effort to solve the "fiscal cliff" issues

The call for a responsible effort is dramatically non partisan if one looks to the membership of the group urging congress to come to an agreement.

The Dems in Congress, Obama, and the GOP are going to tackle this. It will, of course, get lots of press and commentary. Regardless, and hopefully, somewhat immune to the press the parties will take on this task, engage in a world of negotiations and come out with something sooner rather than later that reflects some sort of compromise. It would be sweet, IMHO if they could resolve this thing in the first 2 weeks of Dec.

 

Democrats Taking the USA over the Fiscal Cliff

Yet, you, a republican, seem to be 'assigning blame'. Too funny Corwin. Best try again.

 

I am most definitely NOT a Republican. Don't call me that or I'll throw up.

If Bloomberg is to be believed, this isn't routine. OTOH I admit I don't understand the deep economics of this.

I dunno, maybe that's what we need to wake up the population and realize the dysfunction in Washington.

I heard Pelosi speak last night, and Boehner also. Both made me ill. I think Pelosi wants to do the right thing. Harry Reid, I'd like to see him run out of Congress.

EDIT: Boehner is speaking right now. He's actually taking questions, no one else in Washington that I've seen speak this week has taken questions.

 

Economists suggest that if nothing is done the very significant double hits of tax increases on everyone plus very significant reductions in govt spending (meaning less jobs and less transfer payments to the poor) will result in a return of a recession.

Its too bad, imho, the "negotiations" are so highlighted by the press. Of course the press wants to publish about this...its news and scary, and gets readers, and it doesn't matter which side of the agenda you are on, as a reader of this press, its provocative.

Most business negotiations are very secretive without all this "press". Both political parties have to play the "press" game to "play" to their constituencies, so the press part is a part of the game.

Regardless, I hope the "players" on both sides do some very heavy virtually every day negotiating and iron this thing out by the 2nd week of Dec.

Corwin: I have no idea how Bloomberg news played out and explained the debt ceiling deal from 2011 that caused this thing to hit us now...but cripes the debt ceiling has been raised roughly 1.5 times a year every year for about 50 years, let alone all the times it was raised prior to 1960. It was more or less automatic. Last year it changed and became traumatic. Why?

Now we have this drastic situation simply because it was so traumatic last year, and the politicians pushed it out to 12/31/2012.

the pols should simply solve the thing rather than be the cause of the problem.

 

We need to go over this BS fiscal cliff, which is really just Clinton era tax rates and dramatic spending cuts. Good for us.

The real comedy is watching our president stump on tv show after tv show telling us how failure to re institute the Bush tax cuts will cause the economy to collapse. I guess Earlpearl never got Obama's memo...... tax cuts.... good for the economy. LMFAO.

 

Now those are lines reminiscent of the extremist financial type thinking of the far right wing that in the face of the financial melt down in Sept 2008, the GOP congress voted against TARP. Markets swooned. The entire world of real people faced imminent world wide financial disaster, LIBOR threatened to jump by several points. Within a couple of days reality sunk in and the extremist GOP'ers reluctantly voted for the necessary steps thereby averting a financial meltdown.

Move forward several years into summer 2011 and the same type of GOP thinking, balked at raising the fed debt level, something that had occurred 78 times during a 60 year period. The result was a uniform downgrade of American debt, based solely on the inability of the government to solve problems.

Frankly, Osama Bin Laden would agree with you. That is the ultimate reality of this teaparty thinking.

 

Obama flat out made fun of Romney in the third debate for even mentioning sequester, and flatly stated "It will not happen".

Strong words for a guy that's planning to leave on a 3 week vacation right now. Frankly I have a feeling the Democrats actually *want* it to happen and plan to blame it on the GOP. The GOP has revenue enhancement {ie - taxes} on the table, but the Dems don't seem marginally serious about spending cuts.

If need be I can provide the quaotes where Obama called raising the limit unpatriotic when it was done before. Did his sense of patriotism wane?

 

I'd like to stay away from political posturizing but its difficult in the face of right wing extremist perspectives.

The current situation is a drastic response to an artificial crisis that was established in summer 2011 with the the thinking at that time....that the situation we are currently facing would be so serious that it would push people into making a reasonable deal.

Hopefully that is the case as reasonable business people are warning all parties that the lack of a deal as of 12/31/2012 will push the US into another recession.

@Rob: I know you made a lot of deals. So did I. I actually go back to one of the very first lessons I learned when I first got into real estate. We had this killer boss, who became one of the real estate business leaders in the DC region. Beyond that he was a great inspirational speaker and motivational guy.

The lesson was that in a "perfect deal" everyone walks away a little unhappy. In other words if they work out a compromise of some sort, everyone gives somewhat and they end up with a compromise that accomplishes the big goal: In this case avoiding this fiscal cliff.

Hopefully in this case that is what will occur.

We'll see. The real deal will not be played out in the press but hopefully made by people with the best interests of the country at heart and a strong desire not to push the country into a recession for poltical reasons.

We'll see. The politicians really haven't been doing that very effectively for the last few years.

 

Well, if we really had a deal that was effective I'd be thrilled to see everyone walk away a little unhappy, but my expectations arent high. People on both sides of the aisle have spent decades being whores and it isn't likely to change overnight. Even if sequestration is avoided, if we dont see an end to the deficits this country is going to become Greece, pure and simple. You just cant keep writing checks when there isnt anything in the bank, and we're likely to learn that the hard way. Nobody could stay in business acting as DC acts.

My expectations are very low. I've no faith in DC or the blithering idiots that put these guys there. We're headed for one cliff or the other. I don't know about y'all but I plan to embrace the suckage and do a swan dive.

 

Your expectations are low because they have been set low. By a decade of obscene spending under Bush, and by four years of ineffectual "leadership" under Obama (coupled with obscene spending).

Obama has truly mastered double speak. When Susan Rice comes out and says she provided the best unvarnished information available to her on Benghazi by the intelligence community, in direct opposition to what the intelligence community is saying they provided to her, we are all just supposed to accept that. When Warren Buffet comes out and says we need to get expenditures down to 21% of gdp and revenue up to 18%, and shortly thereafter, Obama proposes a "balanced budget deal" with net increases in spending and 1.6 trillion dollars in taxes, we are supposed to accept that as the definition of a "balanced" deal.

I'm convinced Obama is stupid. Seriously. He is a dumb shit. Like most stupid people, he assumes that the people listening to him are as stupid as he is.

I've worked closely with some very effective sales organizations, and the top earners shared a lot of qualities with Obama. Charming, high EQ, ability to connect on an emotional level, and mostly ignorant about what it is they were selling. Oh sure, now and again you'd get a rock star that had both IQ and EQ, but it was rare. For the most part, the guys that could sell had below average intelligence and were narcissistic as hell. This is who is running the country. He isn't a serious individual, nor should he be taken as one.

 

You just described the vast majority of the top producers in the residential sales industry.

 

That's pretty much what Bloomberg is saying. The Democrats will cut spending and blame it on the Republicans. They can get away with it - the Democrats are running a masterful PR campaign.

There is absolutely no way to avert this without spending cuts. The Dems strategy is to let the cuts happen and blame the Repubs. Meanwhile the Repubs are too wussy to fight for their own point of view. This fight will go the Democrats.

I watched CNN briefly yesterday. Obama is totally out of the negotiations, but Wolf "The Tool" Blitzer was saying how Obama will single-handedly save the nation. Then I switched to Fox and caught Stossel saying how FEMA should not be helping Hurricane Sandy victims.

Bloomberg is my news channel.

In my experience the most dangerous people in the world are charismatic incompetents. So likable many believe they know what they are doing because they "seem smart". The truth is they treat other people like objects and get fired when they get violent.

 

I'll keep trying to stay away from political posturing but its hard with outright attacks on one side from the right wing extreme.

Take away the press and here is the situation. The Dems and GOP have to make a deal. Its different from most business deals in that instead of just 2 decision makers there are a lot. The dems have to deliver a majority and the GOP has to deliver a majority...or alternatively in the House and the Senate the Dems and GOP have to have a reasonable amt of supporters that will support a deal rather than a black or white alternative.

The whole reason to do this is to respond to the crisis that was created by the debt ceiling issue from mid 2011 (which was an entirely artificial crisis IMHO) and one created b/c there were no serious negotiations at the time.

Now is the time.

Its not that freakin hard. If you haven't been reading one Dem Senator put out that they would hold increases on taxes to people below $500 K and another put out less than $1 million.

The GOP has to grab at something like that and put out strong demands for cuts they want. If that emerges (and none of us will probably know) then they all gotta run around and get supporters and count their votes.

Its not rocket science nor is it a case when you demonize one party or person or the other.

BTW: the reason to do this is to cut the budget deficit. That is the thing that the far right has been screaming about for the past 3.5 years, or have you forgotten about it?

 

One would think that would be the case. Then Obama ponies up with 1.6 trillion in new taxes, and 500 billion in cuts coupled with far more in new spending. This is apparently his idea of a "balanced approach". With lunacy like that, you can tell right off, it is going to be REALLY REALLY freakin hard.

 

Nope. there is an amazingly simple real life solution. Its called make a counter offer. Don't play o-nation political bs. just make a counter offer. That is how its done in the real world.

 

In the real world, Barack Obama is President and it's up to him. It's his responsibility. It's up to him to come up with a deal that both parties will settle for. Is Obama the President, or is he the Excuses-In-Chief?

At the end of the day legislators exercise power by spending money. Bloomberg and CNBC are both saying that the Democrats are not serious about cutting spending. All they are interested in is POWER.

I'd like to hear what gworld has to say... Oops! No, he's been banned, hasn't he

 

Lets look at the negotiation. In the "grand bargain" of two years ago, Obama agreed to 800bn in new taxes in exchange for a myriad of spending cuts. According to Bob Woodward, the guy who brought Nixon down, Obama scrapped the deal at the last minute by insisting on another 400bn in taxes, for a total of 1.2 trillion in new taxes.

Here we are, two years later, after the President campaigned on a "balanced approach". Boehner comes out of the gates making an offer by immediately putting revenue on the table. Obama comes into the "negotiation" by taking his previous deal killing offer of 1.2trillion in new taxes, and hiking it up to 1.6 trillion in new taxes. Obama then adds in nearly a trillion dollars in new spending, and offers only 600bn in unspecified and unguaranteed spending cuts, amounting to a net gain in spending.

Obama is not moving towards balance, he is moving away from it. In any real business deal, this is where the party on the opposite end of the deal laughs and walks away from the table. If it were me at the other end of this deal, I would reciprocate Obama's "move to the middle" by rescinding the previously negotiated 800bn in new revenues and offering only 400bn, coupled with 2 trillion in cuts. I'm sure that neither you or Obama would find that insulting.

This is not a business deal, and these are not business people. Obama thinks he can win a political battle with his negotiating position. House Republicans will get voted out in their primaries if they agree to his terms. We are going over the BS fiscal cliff, and we will be better for it. Congress and the White House will then spend the next two years doing nothing but blaming the other in preparation for the 2014 election, where Obama hopes he can gain seats in the house, and maybe he can.

Then again, looking at Obama's poll numbers dip with his BS tactics, perhaps the 2014 Tea Party beat down of Senate and House Democrats will look like something out of Good Fellas.

[video=youtube;gkEUyvG9dEk]http://www.youtube.com/watch?v=gkEUyvG9dEk[/video]

 

As if on queue, Boehner speaks.

Boehner took my advice, though he offered 800bn in taxes, which is more than I would have offered. 800bn is a great ending point, not a great starting point. Worth mentioning that Obama's original offer also proposed to take the power of the purse strings from congress and move it to the White House. He and President Morsi have more than a little in common.

 

Following the election it was time to deal with this big issue as the ramifications could reportedly push the US into a recession. Now the real business of making a deal has started. The parties had to get to a point of putting hard offers on the table. As far as I'm concerned taking the politics out of it it really doesn't matter where the parties start as the next steps require digging through competing offers, evaluating and quantifying/estimating all the impacts, getting specific as to topics etc. and it should take up a lot of manpower on both sides to cut through everything and make a deal.

Unlike business deals this one will have some level of public awareness as the stakeholders on the decisions and outcome are only the US public and an enormous variety of entities from Defense to elderly and babies, let alone possible elements such as deductions on home mortgages or deductions on charitable contributions, just to name a couple of hugely significant elements of the nation that have been referenced elsewhere, the nations population and the economy.

For about 2-3 weeks after the election nobody was getting anywhere as nothing concrete was established. Now its there.

PLAY BALL!!!!