Thursday, November 29, 2012

Fiscal Cliff: Episode 3 What if we go over it?

What happens if the USA goes over the "fiscal cliff"?  Seems a fair question giving the total absence of common sense or regard for the average American shown by both parties.
.
As an aside, I tried to come up with a cartoon representation of Republicans and Democrats and this was the best I could do....
Get it?  Spineless Jellyfish in Blue and Red?  Yeah, I didn't like it that much either.

.
So anyway, what happens....
.
Episode 3: The Good, The Bad and the Ugly
.
Tax Rates:  Well, the Bush tax cuts expire.  For everyone.  That is getting the most attention.  Democrats in the Senate have allowed a vote to continue the current tax rates for the first $250,000 of income, Republicans won't vote on anything piece meal because they say they want a comprehensive solution - and their super rich donors won't let them.  Note: The Republican position is the position shared by California and New York Democrat Senators, where $250,000 per family per year isn't considered "rich" - but the 4 of them all voted for it knowing it was a no go for the Republicans.
.
Tax Rates would go back to Clinton Era rates (remember, when the deficit was being paid down and the economy was booming?).
.
Other Taxes - For the middle.  If it was only the rates changing, that might not be bad. But the 2% Social Security "holiday" due to the recession will expire as well.
Other Taxes - For the High Middle. Alternative Minimum Tax (which limits your deductions) falls to Clinton Era rates and starts to bite more people.  It was designed to make sure very high earners paid something - but was never indexed to inflation
Other Taxes - For the Wealthy.  Taxes on Capital Gains (where Mittens screwed us all) raise from 15% to 20%.
.
Unemployment Insurance: The unemployment insurance period will fall back to state levels (from 99 weeks  / 52 weeks currently).  They have been extended due to the recession, and will probably not be extended again in any case.
.
Depending on who you are, you think some of this is good and some is bad.
.
Budget Cuts: The Good, The Bad and The Ugly
Well, this is a funny one.  Everyone thinks we should cut the budget, but most everyone disagrees on what should be cut.  So the idea was to cut equally what could be.  What is left out? Entitlements (Medicare / Social Security) and Interest on the Debt.  The rest is divided between Defense and Discretionary.
.
Everyone has a dog in this hunt.  So I will try not to be partisan on this.  I am just turning to CBS News. (follow up below).
.
So maybe, MAYBE, going off the cliff is better than a screwed up deal.  Personally, I don't want to pay for Ann Romney's Olympic Therapy Horse.  A lot of people don't want to give Foreign Aid to Egypt, or Israel.  Or support Pell grants (Mitt said just borrow it from your parents).  At the very least, maybe it's time to look at the details of what we spend - not just wrap it all up in a bow that you just fracking know will mainly support Exxon.
.
(CBS on Cuts): What will be cut:
Entitlements: OK, we just said that entitlements won't be cut, but some entitlements will receive a 7.6 percent cut across the board, though benefits won't be affected. The biggest chunk of this section is cuts to Medicare providers - not beneficiaries. Nurses, doctors, and insurance plans would receive a two percent cut in their payments.
In addition, farm subsidies would see reductions and states would see cuts in grants that provide funding social services departments as well as vocation and rehabilitation programs. It is a certainty that states will fight for that funding to stay in place.
Defense Spending: This is an area where Republicans are likely to launch a major opposition campaign because defense programs would receive a 9.4 to 10 percent reduction from its 2013 budget of $580 billion, or about $55 billion. Although the president exempted military personnel pay and benefits, defense programs, including weapons and procurement programs, are subject to half of the automatic budget cuts, even though defense programs are about one-fifth of the federal budget. States that have a very large defense presence have been very vocal about opposing these cuts.
Discretionary Spending: Subject to about 40 percent of the budget cuts in the sequester are discretionary programs. Programs in this budget category, which is one of the smallest slivers of the federal budget pie, are programs Democrats are likely to try and protect.
Programs subject to cuts include international aid, funding for NASA and the Department of Energy's research program. It would cut funding for national parks and resources for the Environmental Protection Agency's toxic waste and water clean up programs. States and cities would see cuts to education funding and community block grants, funding that gives local entities the flexibility to fund necessary programs. Job training programs would also be on the chopping block. Funds for Section 8  and public housing programs, homeless shelters, law enforcement, Head Start programs and low-income heating assistance would also be cut.

No comments: