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Just ahead: avoidable recession (Any compromise that cuts spending and/or raises taxes won't work)
Marketwatch ^ | 11/20/2012 | IRWIN KELLNER

Posted on 11/20/2012 1:58:04 PM PST by SeekAndFind

For one reason or another, this economy is going down.

As everyone must know by now, a fiscal cliff looms ahead. Unless current law is changed, the U.S. economy will take a $600-billion hit starting next year. Taxes will go up by $500 billion, while spending will have to be slashed by $100 billion.

These are big numbers for a healthy economy to absorb, much less one that’s in the shape this economy is in. It amounts to at least 4% of our gross domestic product — enough to push the fledgling recovery back into recession.

In an attempt to avert such an event, the administration and the Congress are working feverishly to come up with an alternative way to reduce Washington’s budget deficit. As in any negotiation, both sides are staking out positions they know the other side won’t accept — and announcing it to the press day by day.

The markets rise and fall according to the tenor of these announcements.

What concerns me is that both sides will reach an agreement that they think will keep us from going over the cliff. Then they will head home for the holidays, nearly breaking their arms as they pat themselves on the back, thinking that they avoided an economic disaster.

Well, pols, I have news for you. Any compromise that cuts spending and/or raises taxes in the name of avoiding the cliff will bash the economy as well. It may not be as hard, but it will be enough to do damage, nevertheless.

The reason for this bleak outlook is not hard to fathom. Cutting spending and raising taxes (or whatever you want to call the subsequent increase in tax revenues) removes purchasing power from the economy.

(Excerpt) Read more at marketwatch.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: debt; recession; spending; taxes

1 posted on 11/20/2012 1:58:13 PM PST by SeekAndFind
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To: SeekAndFind

Don’t worry, Obayma will do what he does best, GOLF!


2 posted on 11/20/2012 2:00:03 PM PST by exnavy (Got ammo, Godspeed!)
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To: SeekAndFind

How did the GOP-e idiots agree to $500 billion in tax increases and only $100 billion in spending cuts? Spending is the problem and this does nothing to solve that.

We continue to surrender and call it victory.


3 posted on 11/20/2012 2:05:39 PM PST by Lets Roll NOW (A baby isn't a punishment, Obama is)
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To: SeekAndFind

Ubama should raise the tax rate to 100% on everyone except Eric Holder’s people.


4 posted on 11/20/2012 2:07:11 PM PST by E. Pluribus Unum (Government is the religion of the psychopath.)
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To: SeekAndFind

Too kate. The voters, by their Nov 6 choices, said they want socialism, so give the idiots the tax hikes they want.

When the job market sinks further into the crapper, they can suck it up. Let them learn the hard way.


5 posted on 11/20/2012 2:07:32 PM PST by ScottinVA (I've never been more disgusted with American voters.)
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To: SeekAndFind
The Laffer curve is laughing.
6 posted on 11/20/2012 2:08:20 PM PST by E. Pluribus Unum (Government is the religion of the psychopath.)
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To: Lets Roll NOW

And surely the 500 billion in tax increases take effect immediately and are retroactive whereas the 100 billion in cuts will occur over the next 20,000 years.

Screw the GOP, they are a useless farce.


7 posted on 11/20/2012 2:10:03 PM PST by chris37 (Heartless.)
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To: SeekAndFind

“Spending cuts” are only good for the current budget year. Promises of stepped spending cuts spaced over several years are tricks to get us to accept the concept of a tax increase balanced by cuts. But once the next budget is written, those cuts have no legal standing and don’t exist any more.

If this were not so, then the current president, whoever she is, would be bound by budget cuts piled up from earlier presidents, which does not happen.

Taxes, though, last from budget to budget because they are not “budget” items, they are either codified in the US Code or are regulations. “Spending cuts” are enshrined in appropriations bills and budget documents, which are ephemeral.


8 posted on 11/20/2012 2:11:29 PM PST by DBrow
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To: SeekAndFind

a.) What recovery?

b.) Sooo, massive tax hikes will kill the economy? That’s not what Krugman says. He wants to bring back the 91% tax rate from the 1950’s. He says that’s when we lived in an Ozzie and Harriet Nirvana of middle class prosperity - all thanks to massive income taxes on high earners. Who am I to question a Nobel laureate?

Burn. It. Down. I’m all for going Thelma and Louise.


9 posted on 11/20/2012 2:11:47 PM PST by SargeK
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To: exnavy

So we will all pay for the stupidity of politicians, especially tax and spend (what you don’t have) Demorats


10 posted on 11/20/2012 2:14:02 PM PST by johnd201 (johnd201)
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To: SeekAndFind

I am ever more of the opinion that the only way out now is through the collapse. Anything less only postpones and deepens the inevitable crash.


11 posted on 11/20/2012 2:18:12 PM PST by Ramius (Personally, I give us one chance in three. More tea anyone?)
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To: SargeK

Forget Krugman, he is a throwback
of the 30’s.


12 posted on 11/20/2012 2:18:12 PM PST by ully2
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To: SeekAndFind

So when will the average American really begin to feel the pain of having to do with out? When will all of this crap start to really kick in! Are we talking a couple of months, year, 2 years, 20 years?????


13 posted on 11/20/2012 2:22:28 PM PST by classified
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To: SeekAndFind

Spending needs to be slashed by 1 T


14 posted on 11/20/2012 2:27:10 PM PST by taxcontrol
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To: ully2

Yes, but he is a celebrated New York Times columnist - a Nobel winner, a leading light of Progressive economics!

We are but blog trash, pajama-clad, secreted away in dimly illuminated basements, clattering away on keyboards that are stained with unmentionable bodily fluids and seething with pathogenic microbes. He is Our Better, the Elite, one of the Official People whose sage guidance we can only slavishly follow, but never hope to understand, so limited are our plebian intellects. He Knows because tongues of heavenly fire danced about his head whilst he was educated in ivy-covered places of higher learning, imbuing him with arcane and esoteric erudition, enabling him to elucidate the nature of God, the Universe, Everything!

( /s - of course)

Yeah, he’s an insufferable POS, but people still buy his paper. Go figure.


15 posted on 11/20/2012 2:33:39 PM PST by SargeK
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To: SeekAndFind
We need to do NOTHING.

Don't spend, don't ammend, don't cut, do nothing.

Let it all ride for 4 years and to hell with the history books.

ANY affort on the Pubbies side to accomplish anything will be fraught with compromise (read, THEY get a little .. which furthers the destruction of America)

So, go play golf too, pubbies ... TRAIL the bastard and claim diplomatic immunity.

16 posted on 11/20/2012 2:34:18 PM PST by knarf (I say things that are true ... I have no proof ... but they're true)
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To: classified

Depends on what part of the country you live in.

Northeast liberals will feel it immediately as they have to pay skyrocketing heating cost with less money.


17 posted on 11/20/2012 3:03:06 PM PST by IMR 4350
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To: SeekAndFind
"...the U.S. economy will take a $600-billion hit starting next year. Taxes will go up by $500 billion, while spending will have to be slashed by $100 billion."

Very dishonest. The most likely tax hike deal will add up to about $40 billion for the first year. The spending cuts, if unaltered, closer to $400 billion. The author likes big, bloated government, even in the absence of a manufacturing base that could have supported some of it. Let those spending cuts happen.


18 posted on 11/20/2012 4:47:46 PM PST by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
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To: SeekAndFind

CBO Report: Avoiding the Fiscal Cliff Costs Over $1 Trillion
http://www.freerepublic.com/focus/f-news/2959776/posts


19 posted on 11/20/2012 5:02:07 PM PST by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
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To: SeekAndFind
When dealing with “compromises” with the Democratic party you must remember one thing - no compromise with the Democratic Party, as individuals or as a group, as long as it takes to hold the post compromise press release photo op.

Seriously, can anyone name a significant ‘compromise agreement” that the Democrats have kept in the last 40 plus years?

Lets see - Regan had an agreement with them over a budget deal - something to do with a ratio between tax increases and budget cuts. That never happened.

Then there was Bush ‘41.

How about Congress 1995 - 1997?

Any thing?

In business and in the military you deal with only those who keep to their agreements; or you end up out of business or dead. I guess politics is on the other side of the looking glass.

How about Bush ‘43?

20 posted on 11/20/2012 5:41:46 PM PST by Nip (BOHEICA and TANSTAAFL - both seem very appropriate today.)
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To: Nip

A fair conclusion is that the Repubs are only a pretend opposition. It’s too late. The only way this will unwind is default, collapse, and war. Know the enemy, they had Dem signs in their yards just a bit ago.


21 posted on 11/20/2012 7:15:10 PM PST by wrencher
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