Should America Go Over The Fiscal Cliff?

It'll help fix the deficit, and force changes to the tax code

Anyone ready to play devil's advocate? Let's start now. The best way to solve America's deficit woes is to let the US economy fall off the fiscal cliff. Yes, the very cliff that economists and politicians warn about. Yes, going over may put the US at risk for another credit downgrade and, yes, cuts would plague the Pentagon and entitlement spending.

But it could help the US in the long run, according to the Week.

If you support raising taxes, that's a reason to favor going over the cliff. Major supporters of the Bush tax cuts, which are set to expire at the end of the year, would have to work hard justify another era of cuts, as Marc Theissen of the Washington Post notes.

The expiry will mean a tax hike without Republicans violating their pledge against tax increases, and has the added benefit of forcing Democrats to the tax-code-reform discussion table.

And for all you deficit hawks, here's another big benefit to going over the cliff: it would return tax revenues to 1990 levels and cut spending, both key ingredients in tackling the deficit.

Via the Week

Should the US go over the fiscal cliff, or is it too risky?

[classychazy]

We need both happen!

[DARSB]

Thiessen? Really?

[Neo_NtheMatrix]

Also obama and Democrats would get blamed for it, as it would be their fault we went over the cliff. That means our next president most likely won't be a communist.

[PNWest]

You are correct. Hillary Clinton is a democrat.

[texas_cutie75]

@PNWest

I pray that doesn't happen!

[PNWest]

@texas_cutie75 Well maybe Joe Biden will win instead.

[Heavy-Fed]

@PNWest Hillary Clinton is a war monger... if we manage to survive intact through Obama's second term... and the women, Mexicans, Blacks and gays subject us to Hillary... we're done for!!! Y'all need to quit voting for what is best for yourselves... and vote instead what is best for your country!!!

[IraqWarVeteran]

@Heavy-Fed Amen, Fed

[PoliticalSpice]

It may be the only way to seriously cut military spending. Letting the Bush tax cuts expire would also allow Dems to negotiate, both with Obama and repubs, from a position of streaghth for a more proggressive adgenda. social security is not cut under the legislation.

[PNWest]

Obama should not back down. It will be bad for the US to go over the fiscal cliff but for too long we have coddled the rich at the expense of the poor and middle class. Obama should force the GOP to either make permanent the tax cuts for the poor and middle class or hold the 98% of us hostage in order to protect the interests of the very wealthy. In the long run America will win. Either the 98% will have lower taxes or the GOP will be driven out by the angry 98%.

[commonsense51]

I somewhat agree that the only way to cut spending enough to make a difference is to force the Democrat's hand and go over the cliff. The only problem with that is there are increases in capital gains taxes up to 40% that will kill any investment in our economy. Retirees invest their savings to live on and would be killed by 40% capital gains taxes. We must stop the giveaways to so many Americans who can live without taking Government charity. The income levels for charity are set way too high thanks to bleeding heart Democrats.

[PNWest]

If we do go over the fiscal cliff do you think that the American public won't remember which party refused to vote for a tax cut for 98% of Americans? They will. The GOP will compromise with the dems and raise taxes on the top 2% or else they will be annihilated in the 2014 mid terms. The demographics of the country already make it clear that they have almost no chance in the 2016. Adapt or Die GOP.

[commonsense51]

@PNWest You must think like the idiots who voted for Obama. You would blame the GOP for going over the fiscal cliff when it is the Democrats who will not compromise on cutting spending and cutting LOOP HOLES that the GOP want to do.

[PNWest]

@commonsense51 I hope that the GOP refuses to vote on tax cuts for the bottom 98%. It's easy an easy vote. The GOP refuses. The American public will hold the GOP responsible. And will punish them in 2014. Why is it that you conservatives do nothing but name calling? I guess that's all you are left with when you have no facts to back you up.

[commonsense51]

@PNWest That is funny you did not address mypoint, what a shock. A Democrat changing the subject. I said why do the idiots who voted for Obama not blame Democrats for not compromising on tax loop holes that they always claimed they were for. How about serious spending cuts. If we go over the cliff it will be the Democrat's fought. Enjoy four more years of a dead economy, I will do just fine without Government handouts. When the Government goes belly up, people like you will be the first to whine.

[PNWest]

@commonsense51 The democrats have no need to compromise. The American public wants the mortgage deduction and wants taxes raised on the rich. They are going to either get this now or in 2015. Spending cuts can be negotiated. Let's start with the military. In the 4 years that Obama has been in office I have seen the stock market nearly double. That's after 8 years of bush driving the economy into a ditch. I surely welcome 4 more years of Obama. I can't possibly be the first to whine. You cry babies on the right have been whining for the last 4 years. I'm surprised you are not threatening to leave America. Did you sign one of those hilarious secession petitions?

[jessejaymes]

I say let it happen. The Dems then can go back and demand the cuts for the middle class taxes and if the GOP won't play ball then it's their own demise yet again. As for the Military spending it has to stop and the welfare system has to stop being cradle to grave. WORFARE. Teaches work ethic and cuts the overall expense of assisting people. While we're at it, how about only those who have paid into social security gets social security and medicare? The working class poor have no health care and the lazy layabouts have better health care than the seniors. What's wrong with that picture?

[mudzangandoro]

Let it happen? Do you want to see your payroll taxes go up?

[jessejaymes]

I couldn't care less. This nation can't continue acting in the manner they do or else it turns into another Mexico. You can support the ultra rich all you want. I don't.

[martydotcom]

Just want to point out to all those saying "good", bring on the Fiscal Cliff" that it would hit virtually every American with significantly higher taxes. The sequestration of govt spending is only a part of the 'cliff' that hits in January. It also includes the AMT, expiration of the Bush tax cuts, payroll tax reduction, and various other spending/revenue provisions. If you collect a legitimate paycheck, you will be among those falling over the 'cliff'.
Also, if you think all those cuts under sequestration won't affect you, you've apparently never driven a car on a highway, tried to get a SS number for a child, applied for a fed. loan, had a parent on SS of Medicare or Medicaid, had a loved one in a hospital or health faclity, visited a national park, or purchased meat or produce or an imported product. Emploed in the defence industry, a fed financed grant or program? Look to your right, look to your left two of the three of you will be laid off. Have your IRA invested in the market look for a 30 to 40% drop. As the CEO of Godman Sachs said to congress, "in the market there is no two minute warning and
Be careful of what you wish for. NO Do overs"

[Suff]

It will eventually happen, Marty. You can continue to delay it, or have an extremely rough crash down the road. Americans will most likely select the 'tax and spend out of a recession' option.

[martydotcom]

@Suff

[PNWest]

The solution is quite clear. Make the cuts permanent for the bottom 98%. Cut defense spending. If the GOP is unwilling to do this then we go over the cliff and the GOP will rightly be blamed. If this happens I think you are grossly overestimating how bad things will get and are not mentioning the benefit the country will experience with the rapid decline of the GOP which would surely accompany any economic downturn.

[martydotcom]

@Suff "The Congressional Budget Office estimates that the automatic spending cuts and tax increases outlined in the Budget Control Act of 2011, often referred to as the “fiscal cliff”, would decrease 2013 GDP by more than 4%. To put this in perspective, the average decrease in GDP during the five recessions occurring between 1980 and 2001 was 1.65%. With second quarter GDP increasing a meager 1.5% a 4% reduction in 2013 GDP would put the American economy squarely back into a recession, a deep recession -Depression." CBRE.COM

[blue_yahoo]

The pre-Bush area tax rates were from Clinton.....I paid them back then I'm ready to pay them again. Social Security won't be cut but annual raises will be limited. Hope those on SS treated their kids good. Medicare needs the shit cut out of it along with medicaid. I work in a field where I see so much waste of money from these 2 it ain't funny. I even remember the Reagan years where in the area I lived in had 95% unemployment.....now that sucked but I survived. The stock market has been overinflated with rouge investors for decades now and maybe this will put the kabash on that (for a bit anyways). The unions have literally bankrupt so many city, state and independent business's that I do see more and more companies/cities going belly up but then again they will rise up out of the fire and be able to run without being strapped by employee retirement debt that killed them in the first place.

[Suff]

The U.S will eventually crash; it's inevitable.

[martydotcom]

The only inevitability of a crash will be due to intransigence of the Tea party and sheer greed GOP and ignorance of the idiots on both sides of the aisle

[UScentral]

I think the risks are over-stated. If a single digit tax rise or spending cut by the feds is dooming, we're already in trouble.

[mtkopf]

Theissen have you been hanging in Colorado doing quality control on the legal marijuana? Why promote risking another recession (as economists have warned)? Is it too much to ask for POTUS, Boehner, Reid, Pelosi, and EVERY SINGLE tea party wack job to actually act like ADULTS for the love of Pete? BTW who is Pete anyway?
When my wife and I are a little short on
cash I give up a day at the bar and she picks up an extra shift at work. Its really not rocket surgery.

[EL_Guapo]

No.

[Lorth]

What should happen is the government should raise taxes on the wealthy (including making the capital gains rates equal to the income tax rates) and either freeze or cut spending. What will happen? I don't know but it looks like if they won't do it - The Fiscal Cliff will....

[HughAkston]

Should America go over the fiscal cliff? I don't think America has a choice in the matter. A fundamental law of reality is that you can't consume more than you produce. Look at any cheap grocery store almanac and you'll see that America has consumed more than it has produced for decades. So when is the payback for all this excess consumption? Don't worry, reality will find us soon, and it WILL collect. It doesn't matter how you vote, who is elected, or what laws are passed. Reality will aways prevail and the reality is if we could raise $16 trillion by tomorrow .......... then tomorrow we would be broke.

[artjeb]

Heck ye are broke in the next decade from the present.
We are overspent & under paid

[DARSB]

Good thing the deficit is shrinking faster under President Obama than any time since WWII - but that doesn't mitigate the damage to be done by the Alternative Minimum Tax. The" cliff" has also been described as a " slope" since not all the horribilomas happen on the first day.http://goo.gl/L2zBp

[jessejaymes]

You are my favorite person to read here. While I am more conservative than you, you always seem to make decent sense and your wit is outstanding. Having said that, you are correct that Obama is spending less in today's dollars than any president since WWII. At the same time Military spending will never shrink unless something drastic like this happens. The other things can be rectified by congress looking to get reelected but that military spending has to be cute.

[DARSB]

@jessejaymes Thanks for the props, I appreciate the chance to discuss things with an intelligent group of sincere patriots.

The Pentagon had been blessed for quite a long time. I read someplace this week that even if the sequester knicks off $500 BILLION from its budget we'll still be spending more than the next biggest military spender, China.

My personal view is we haven't yet dealt with the end of the Cold War and all that it implies. It's important to do so, to get the military sized for our actual needs. If we hadn't had so much military might lying around unused we wouldn't have gotten tangled up in two unnecessary wars.

[jessejaymes]

@DARSB We currently spend more on the Military than the next 9 nations combined. And we spend 10 times what China spends. We have 30,000 Abrams tanks retrofitted at a cost of 5 million per tank sitting idle beyond what is in use and another 4,000 waiting to be retrofitted. The Pentagon says this unnecessary yet the GOP House says they will retrofit those tanks. We could sell them to Israel or another ally and make money instead of spending it. This has to stop.

[jessejaymes]

@DARSB My mistake. I should have said 30,000 tanks retrofitted at a cost of TWENTY 5 million per tank.

[Bobolinsky]

I have always been for current Americans to get their fiscal house in order. I consider it morally wrong to saddle future generations with debt that is accrued as a result overspending on recurring "monthly bills."

There's a difference between assuming debt for "one-time costs" and "recurring costs." One-time costs are like the construction of the interstate system during the Eisenhower Administration or the park in Wasilla when Palin was mayor. Recurring costs are like the maintenance costs of the interstate system or the park in Wasilla.

So long as the recurring costs won't accrue debt, cases can be made for taking on debt that future citizens could be responsible for paying.

Not so with recurring costs.

[Bobolinsky]

So... What does all of the above have to do with the fiscal cliff? Simple. At present, we are accruing more debt every year in order to pay our "monthly bills"... recurring costs.

I would prefer it if we could get our fiscal house in order without having to prove to half of America that raising the "revenue" rates when we are already on the wrong side of the Laffer Curve will result in less revenue as a result of less growth or even shrinkage of our GDP.

Part of me wants at least a temporary fix to the "fiscal cliff" if only to give us more time to educate the masses who have fallen for the Left's Class Warfare rhetoric... But another part of me shakes its head and concludes that half of America need to find out for themselves that the Left's classist economic policies are a recipe for economic collapse.

[Vance1]

Should America Go Over The Fiscal Cliff?
YES! as Americans we know that the system is rigged and a default would reset the system, Put us back onto the Gold Standard, where they cant borrow $$$ and they have to by law have a balanced budget. We are now $16.5 Trillion in debt to China, Because liberal politic's allowed us to go into ruin.

[blue_yahoo]

I'm ready to dive off that sucker. We need to go off this cliff to bring back some fiscal responsibility to the nation. The rich might be taxed more and they will survive and so will the middle class. People might have to get over they can't keep up with the Jones and become fiscally responsible themselves and more foresighted but that will all lead to a debt free future for the kids.

[sjnieto]

There's no such thing as a fiscal cliff.

[twinertia]

Yes, go over the cliff, but with a plan in mind. EVERY American must start businesses that financially support the existing businesses they work for. Converting unused credit into investment capital will lift ALL boats, and bail the state out of debt in short order. Anything else is just rearranging deck chairs on the Titanic; petty, shortsighted, and confiscatory.