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ECONOMY

Catch 22: A New Recession or a $1 Trillion Deficit?

Averting the fiscal cliff means a spending bonanza

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by PolitixMayday

Staff Writer t

"Do we have a deal?" "No!" / Image: BBC

A $1.1 trillion deficit or a double-dip recession: that's the choice in 2013.

The Congressional Budget Office (CBO) projects the US deficit for 2012 will exceed $1 trillion - for the fourth year in a row - if Congress preserves the Bush tax cuts and keeps up government spending, averting the "fiscal cliff." If Congress lets the fiscal cliff kick in, the deficit will be only $641 billion - but Americans will probably face another recession.

The CBO estimates the economy will contract by 2.9% in the first half of 2013 followed by a jump in unemployment up to 9% if the fiscal cliff is triggered by the expiry of the Bush tax cuts and automatic government spending cuts.

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Should we increase the deficit to avert another recession?

Comments (view in Forum)

  • marine1
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    somewhere along the line someone is going to have to get their head and hind end wired togeather would't you think?
  • Thunderchicken
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    @PuroChorizo361

    Sorry, I don't have a name but how about a narrative of a kid who started out cleaning out weeds and ditches and before he was twenty had three trucks and seven employees doing landscape work. He put himself through collage this way. His name is Karl and I've always admired him. I'll bet he's quite successful by now.
  • ir0nw0lfe
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    No, printing money makes money. It also devalues all those bold new and old until they no longer matter. Welcome to Greece, the bread Libra are over there or will be when we have enough money to buy bread.
  • View all 19 replies >
  • Jack-Black
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    @Keyjo Romney's "forst" as you put it, is his forest. He worked for that Forest. Obama's Tree is filled with the tax money of the middle class and future generations of middle class tax payers. BTW, The United states goverment has investments and holdings in off shore accounts.
  • Keyjo
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    @Jack-Black
    Romney's forest is made up of money middle class money too. Money lost by the middle class because Romney gave them all pink slips and shipped their jobs overseas to nickle a day sweat shops.
  • BrotherMan
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    Bill Clinton was one of the Presidents who signed all the trade agreements that made foreign labor an option for US Businesses. You can't get upset with Romney for being smart and using whatever the law provides to maximize profits for himself and his investors. What idiot wouldn't legally reduce his business expenses and legally avoid a high tax bill?

    If you think unnecessarily leaving money on the table is such a great idea, why don't you let the Government keep all your Income Tax Refund checks. You won't do that because you aren't stupid, and neither is Mitt Romney.
  • View all 18 replies >
  • Thunderchicken
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    I'll vote recession. More deficit will postpone the inevitable recession and make it deeper. The sooner we deal with it the easier it'll be for everyone. And even at that it's going to be rough for those who haven't planned for it.
  • o
    Sonny
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    According to historians who studied the Great Depression, what is actually needed is just the opposite of what you are suggesting....."---In the Great Depression, Roosevelt tried deficit spending, but he was too timid. Then he stopped in 1937 and the economy nose-dived. It took the humongous deficits of WWII to pull us out of the Great Depression. Those deficits blasted the economy from depression into overdrive.---"..........B ut I fear that the drum-beat of "Stop The Spending"...will be listened to, by Washington...and we will have another Great Depression-like disaster on our hands when there is NO money or demand circulating...At All!!
  • Thunderchicken
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    @Sonny

    According to historians who studied the Great Depression, what is actually needed is just the opposite of what you are suggesting.

    And there are other historians who've said that say Roosevelt's policies prolonged and deepened the depression.

    Those deficits blasted the economy from depression into overdrive.---"..........

    And piled up more debt. Sooner or later we'll run out of credit.

    Debt is a powerful tool that many people, cities, states and countries use poorly enough to destroy their lives. I fear that we (as a country) are headed there. When you run a tab, sooner or later you have to pay it off.
  • o
    Sonny
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    @Thunderchicken --Ok...so since there are conflicting conclusions..then why not find some other "middle ground" and NOT resort to one extreme measure or the other?
  • Thunderchicken
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    @Sonny

    I'm not for anything extreme. I believe we can balance the budget in eight to ten years and pay off the debt in another fifty or so. But no one has shown the will to do so.
  • View all 23 replies >
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    Sonny
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    This is sheer nonsense...We are already currently in a recession...If we "reign in" the spending we currently have---we could dip into a depression. But if we are going to "reign in " something how about the bloated defense budget., how about all of the tax loop-holes that we give to corporations? The bush tax cuts need to vanish!...Those little rich "darlings" have had their butts bailed out and given very profitable tax breaks over the years...Now maybe we should end welfare and subsidies for the wealthy & corporations....
  • u
    Lorth
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    Corporations will just lay off people and charge more for their products. It doesn't make any sense to tax corporations. Get rid of all the tax deductions for individuals - lower the tax rates and collect it all from earnings. People aren't going to quit working because they have to pay taxes - plus people will see exactly how much of our money goes to the government and might start electing politicians who aren't quite so generous with my paycheck.
  • o
    Sonny
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    @Lorth ---No way..I think your position is one-sided and unfair...I wouldn't worry about corporations laying off people and charging more for their products or services...After all, the economic theory that most of you conservative types follow is "free enterprise capitalism". If one company does that, than his competitor should be able to do just the opposite and lower his prices...Won't that bring in all of the business from the guy who "charged more"? I mean---this the theory that you guys claim you believe in, right?!?
  • u
    Lorth
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    @Sonny - Probably ought not stereotype quite so quick - my presidential choices in order would be Johnson, Obama and then Romney. I'm far from your typical 'conservative'. Corporations will raise prices or cut costs to make a profit - guaranteed. By taxing them you greatly increase their costs and those costs get passed on to the consumer. It also encourages the big boys to pay off politicians to change the tax code in their favor - hurting the smaller boys and making them less competitive. Yours truly is all in favor of reigning in the big boys so they can't afford to own our government and simplifying the tax code so everybody (who can afford to) pays their fair share.
  • MongoAPillager
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    real debt??http://www.lewrockwell.c om/walker/walker34.html....htt p://www.npr.org/2011/08/06/139 027615/a-national-debt-of-14-t rillion-try-211-trillion
  • u
    seedtick
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    Hummmm....the 4th year of trillion dollar deficit? Let's see, 2009, 2010, 2011, 2012.....now who was president those years? The can is now a barrel and you will rupture yourself trying to kick it down the road.
  • u
    Lorth
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    Come now - he is only following in the footsteps of George Bush. When Clinton was in office - he actually paid the deficit down. Spending is now a mindset - the deficit isn't going to decrease if Romney gets elected. He wants to cut taxes by 20 percent across the board. You think people in debt get out of it that way? You don't cut your income - you cut your bills and get a part-time job to earn more money.
  • u
    seedtick
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    @Lorth No, no, you come now.....Whatever happens on Barack Husssein Obama's watch, he owns....period. Just like Bush owned the bursting bubble that Clinton left...Fannie Mae and Freddie Mac, etc. We know that Clinton was a fiscal conservative, but BHO clearly is a polar opposite as well as being a bullshit artist. We will never know what George Bush would have achieved or not, because 9-11 changed everything.
  • u
    Lorth
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    @seedtick - Bush had 8 years to deal with the bank problems Clinton left. Bush may have had 9-11 but he didn't need to keep us in Afghanistan for his entire presidency and he started a ten year war with Iraq for no reason at all. Obama inherited two wars, a couple of huge bailouts and an economy that was losing 600,000 jobs a month. I don't expect him to do any better his next term but I also don't see that anything will change with Romney. While everyone is fighting 'against' Republican or 'against' Democrat - no one is paying attention to the fact - they're the same thing - they just want to spend too much money in different places (social programs or defense). we need someone who will curb spending - but not many seem willing to even listen to candidates preaching that road.
  • u
    seedtick
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    @Lorth Bush did not get more than the first 7 months to address anything...and during that time he was catching hell from those sore about Gore losing the race. Then 9-11 dominated everything. And then the Dems took congress...game over for Bush on the economy. Now, BHO has not addressed the economy in any way, shape, fashion, or form. He has done nothing but spend, spend, spend. And he had two year in which he owned both houses of congress and the white house. All he did was ram Obamacare through, pay off the unions and the environmentalists, and stir up the Arab world. It is time for him to go.
  • u
    Lorth
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    Two choices - raise revenue and/or cut spending. Let the tax cuts expire - raise taxes on investment and capital gains to the same rates workers have to pay for money they earn - cut Presidential, Senatorial and Congress salaries by twenty percent (just as an incentive to quit being idiots), freeze all spending except defense which gets cut by 3 percent every year until we start paying off the deficit - then freeze defense soending till the deficit is at a manageable level. It's a no-brainer and we have enough people in Washington who qualify as having no brain so I don't see why this hasn't happened yet.
  • ir0nw0lfe
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    Increasing the deficit is just a delaying tactic that protects today's politicians at the expense of tomorrow's tax payers. Enough! Time to stop ear marks, cut govt. Spending, refuge entitlements, cut defense spending, tap traditional fuel sources for energy independence, stop bail outs, and remove over reaching BS political regulations that strangle businesses. Yank wall street's chain as well with annual audits and end the insider trading exemption for Congress. Also end tax returns for those who pay no taxes. If you are already on public assistance then we are already paying your taxes and you are not entitled to a return. Punish employers who hire illegals and deport them as well.
  • blue_yahoo
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    What don't people understand about this subject. More government spending will only FORESTALL the inevitable and then it will be even worse. Let's pull the bandaid off the sore and get some air to it so it can heal.
  • truthsayer
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    Who's going to get this stimulus money if it passes you can bet it won't be us. They want the economy to grow leave us some money to spend. I sat down yesterday and figured up exactly how much of my money went to some tax or another last year it came out to over 50%. Somethings got to change. I'm being robbed blind and I'm real sick of it. Reminds me of that commercial about the phone company. If I were to really fight back I'd go to jail if I do nothing I might as well get a Government check and a medical card. Neither are choices I want to make.Voting the way we have in the past is not working we keep getting the same old crap in a different wrapper. People please wake up we could put an end to all of Washington's BS if we were not afraid to. It's time for them to be more afraid of us than we are them.
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