Posted on 11/16/2012 2:44:21 PM PST by ExxonPatrolUs
Brian Beutler of Talking Points Memo may have been the first person to use the term “austerity bomb” for the expired tax cuts and automatic spending cuts to take effect at the beginning of next year.
Paul Krugman adopts the term in his blog entry "The Austerity Bomb" in the New York Times. Beutler wrote: “A giant austerity bomb is timed to go off at the beginning of next year, and the threat of significantly higher taxes and lower spending has Republicans running around the Capitol sounding more like John Maynard Keynes than John Boehner.”
The term "fiscal cliff" makes it sound as if the problem is basically an excessive deficit, Krugman suggests, but the problem for Krugman is that the deficit is actually not high enough given that more spending is needed to make the economy grow. Many would no doubt disagree with Krugman.
As Krugman points out, calling the problem a fiscal cliff suggests that it is the deficit that is the problem not austerity and so it leads to tackling the problem with a grand bargain such as that suggested by Bowles and Simpson. Among the proposals of the Bowles and Simpson plan is to raise the retirement age for Social Security and also increase the payroll tax. At the same time, they recommend that the corporate tax rate be reduced from 35 percent to 26 percent. In other words, entitlements are to be cut for those growing old but increased for American corporate persons!
(Excerpt) Read more at allvoices.com ...
government spending does not grow the economy, Krudman
I agree with the liberals on this. They got Obama re-elected, now it’s time for them to PAY UP.
I’m sick of giving the poor and the lower middle class a FREE RIDE. It’s time to let the Bush Tax Cuts expire, so that a LOT MORE people start to give a bit, rather than just take and take.
(and yes, I too will get reamed if nothing is done, but I also know that the Republicans, in some form, will cave)
The fiscal cliff is a joke. The real cliff is the mountian of debt that we are accumulating.
Even Keynes admitted stimulus spending could go to far.
Well, he’s right that Keynes advocated tax cuts and deficit spending for the sake of stimulus. It was one of the few things Keynes got right. The stimulative tax cut part, not the deficit part.
The thing about Pubs, though, is that they aren’t in favor of deficits. They only corner themselves into advocating them because tax cuts are easier to argue for than spending cuts. Or maybe, as I’ve increasingly come to believe, they don’t actually believe in spending cuts. Either way tax cuts are supposed to pay for themselves, theoretically. Dems are wrong, wrong, wrong to treat them as if they were just another form of spending.
But it is a shame Pubs were tricked ir tricked themselves into arguing for deficits. The same with how they are tricked into arguing against spending cuts as soon as a Dem somewhere in the world whispers “defense.”
Couldn’t take much of that article.
Writer is correct though that Rs should embrace the cliff and fight for refunding the defense cuts for national security. We need a larger tax base, and we need more people with skin in the game.
I do have a problem with high taxes. Those who labor should be able to enjoy ALL the fruits of their labor. Those who are truly in NEED would be taken care of via charities. There would be so much giving from the heart because of the prosperity, those people would be never be in need of anything.
The scrounging freeloaders who simply WANT should get their own jobs. They have sown nothing, so they deserve to reap nothing. Let them make living in their own stench their new lifestyle choice.
Oh, and the reason some Republicans are running around in a panic over the cliff is because they are not conservatives.
Isn't it time, for once in decades, the democrats sacrifice something for "the cause?" Isn't it time they did something to contribute their "fair share?"
Getting rid of social programs all together would be the best thing that ever happened to this country (besides national Independence).
No, the “fiscal cliff” is yet another example of the left trying to manipulate the argument by changing the language.
We students of the Austrian school of economics have been calling for a fiscal Armageddon (falling off the fiscal cliff) for a decade.
That cliff is the result of Keynesian-based deficit spending based upon borrowed money with the mathematically irrefutable reality of compound interest.
In short, we are borrow-and-spending ourselves into complete monetary collapse.
THAT is the fiscal cliff.
But the left, knowing that they are the champions of the very economic policies that are leading to monetary collapse, still don’t want to give up their borrow-and-spending ways, because they want to continue to buy votes.
If the money runs out, the handouts run out. And then the DNC has absolutely nothing to offer the electorate in exchange for votes. Except the legalization of complete moral degeneracy.
So here the left is, trying to redefine the fiscal situation we face because of their FAILED ECONOMIC POLICIES.
In short, they are paving the way to blaming Capitalism, the free-market economy, and limited-government conservatives and Austrian economists by saying that if we STOP the government spending THAT will be the cause of the monetary collapse.
Meanwhile, we have been saying for half a decade that the only way to avoid the true fiscal cliff is to cut spending massively and to reduce our deficit spending and debt. There was a tipping point BEFORE which we could have avoided monetary collapse. But we have passed that tipping point and it cannot be avoided now.
We know it. And they know it. That is why they are changing the argument. As ‘austerity’ (which means handing out only the funds you have, which will shortly be nearly nothing) occurs, they will try to blame us. But they are the ones who destroyed our currency and our credit with their buy-a-voting-bloc monetary policy.
Keep the argument straight, my FRiends.
The coming collapse will sit squarely on the shoulders of the socialists and their socialist monetary policy.
Do not let them argue otherwise.
From the same people who tried to sell us “FUNemployed”...
To be fair to Keynes (whom the leftists have taken far out of context to justify their socialist spending), Keynes never argued for the type of stimulus spending we see today.
Keynes’s economic policies were for the government to take a little cream off the top of a HEALTHY economy during good times and to put that aside and then, when the economy hit a valley, to use some of the saved-up funds to channel back into the economy to pick it back up.
This “redistributive” policy is pure socialism and vote-buying and has nothing to do with any soundly reasoned (if proved to be flawed) policies to strengthen an economy.
What we are seeing is what Beck keeps talking about, the Cloward and Piven plan to spend/indebt our economy to collapse, all the while using that borrowed/stolen money to purchase entire voting blocs which then become dependents of the state, who will gladly fight to keep their handouts (Obamaphones, etc.) coming.
What cliff, 1 trillion over 10 years is 100 billion per year or 3% of present spending, if we can’t cut 3% then it truely is over
What cliff, 1 trillion over 10 years is 100 billion per year or 3% of present spending, if we can’t cut 3% then it truely is over
Amazing how fast the media adopted the White House propaganda
Thanks, great points.
Yep, even the measly “draconian” 3% ain’t nearly enough
Forced government spending cuts are nothing but good for the economy.
I think the real Keynesian multiplier is not > 1.0 as Liberalism hopes. I do not even think the multiplier is >0.0, but rather < 0.0. In other words, when the government spends $1.00, I think they burn that $1.00 and probably another $0.50 or so of people’s motivation to do anything outside the government’s sphere.
So, sequestration of spending would have an astoundingly positive impact on the economy.
On the tax side, the opposite is true. The “Fiscal Cliff” requires tax increases. Tax something, and you get less of it. Taxing any economic activity results in less of it. So, by definition taxes retard growth, the only question is how much.
I know of no serious economic study that says the Laffer Curve could possibly show a revenue increase with a tax increase when the overall economy is taxed at 40% as it currently is. That’s not a known phenomenon in even the most Liberal Economist’s wet dream. So, tax increases from here can only result in BOTH less economic activity (a recession) and less revenue to the treasury (bigger deficits). So, the Fiscal Cliff’s tax effect is absolutely and purely bad.
There you go. Perfect goodness and perfect badness for the economy. Only Congress could construct such a stupid set of circumstances.
“Forced government spending cuts are nothing but good for the economy.”
Indeed. If we can’t get along with the relatively measly cuts from sequestration, how in heck could we expect to survive cuts the size that would really prevent catastrophe?
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