Submitted by: Mike Spindell, guest blogger
I don’t know about you but I was certainly happy that I woke up this morning. For a few years now there has been great speculation that the world was going to end yesterday. As I fell asleep about 1:00pm last night it was with knowing that in Mexico it was three hours earlier and so that the dread prediction of the world’s end by the Mayan Calendar still may have been possible. The whole idea was a blatant misrepresentation of Mayan belief and hoax-like, yet that didn’t prevent many from making this non-story into yet another way to frighten people. Frightening people with made-up nonsense seems to be a human trait and certainly has been exploited throughout history for one sort of gain or another.
Fear not though, because just as the collective We has just bitten one bullet, another comes along to frighten us once again with disaster and that “disaster” will occur on December 31, 2012, as we come to the end of another turmoil ridden year in societal intercourse. I’m writing, of course, about the “Looming Fiscal Cliff” that has been so very prominent in what our mainstream media calls “news and commentary” and our leaders of both parties call governance. My opinion and that of many others with far more economic expertise than myself, is that the “Fiscal Cliff” is a mere “bogeyman”, used by those politicians on the Right and the Left as leverage to accomplish their particular political agendas.
Since one of the interests of this blog is the Constitution and the consequent Rule of Law that should be its’ result, this comes within our purview because serious issues of national interest are being driven by false mythology grown to myth like proportion. Let’s look at what is behind this mythology and its propaganda.
The premise of the “Fiscal Cliff” is that unless something is accomplished to prevent its dire consequences from occurring on December 31st, our country will slip into the throes of economic disaster. What is the nature of the dire events that will occur?
“The “fiscal cliff’, however, is an invented term applied by politicians to the date various temporary legislative changes to the country’s tax code and spending policy take effect. Politicians began instituting temporary tax cuts with the intention of later transforming them into permanent law in the 1990s. According to a Center on Budget and Policy Priorities report, this practice exploded during the George W. Bush administration and was accompanied by budget gimmickry to hide their affect on the federal deficit.
The Bush era tax cuts, known respectively as the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003, are at the center of the storm that is raging around the “fiscal cliff’. The legislation, which was set to expire in 2010 but was extended to 2012, significantly reduced rates on income, estate and dividends and capital gains taxes and exemptions.
After the sunset of the Bush era tax cuts, estate and gift tax exemptions will end raising the tax rates on transferred estates over $1 million to 55%. Long-term capital gains taxes will rise from its current rate of 15% to 20%. The tax bracket for the country’s wealthiest citizens will rise from the current 35% to 39.6%. In other words, the tax code will largely return to the rates that were in place prior to the George W. Bush administration.”http://www.opednews.com/articles/The-Myth-of-the-Fiscal-Cli-by-Abigail-W-Adams-121218-861.html
Now when I read the above my feeling is what does this have to do with me? The Bush Era Tax cuts did little for me, perhaps an extra few hundred dollars a year in my pocket, but given the cost of living today that effect is negligible. As far as Estate Taxes, my children know enough about my financial wealth to understand that what they stand to inherit could possibly pay for my burial and little else that would make them economically better off. In truth by the ideas presented above it seems those most in turmoil about this “disaster” are those whose income is at the top of the heap. Now those on the Left argue that this will also mean the expiration of the so-called middle class tax cuts. As a member of the middle class I remember those cuts well and my overall impression then as now is, the little extra money was nice, but really insignificant in terms of its effect on my standard of living. Where I guess it had some meaning is in a collective sense of the actual extra money spent being circulated in and therefore boosting our economy. The bald reality is that the extra money gained by the working classes does enter the economy, while the extra money garnered by our elite, is simply re-invested in financial instruments for their interest yield and have little effect on the economy via the hoary theory of “trickle down’. It doesn’t “trickle down”, rather it pools at the top.
“This return to the pre-Bush era tax code, coupled with the implementation of spending cuts to reduce the federal deficit and tax penalties associated with health care reform, have many economists screaming recession. Fear of a recession has politicians scrambling to reach a deal that would prevent the parameters of already established legislation from taking effect. The Republican demand in “fiscal cliff’ negotiations in Congress: the permanent implementation of the Bush era tax cuts.
The Congressional Budget Office reported that the Bush era tax cuts were responsible for 14% of the swing from federal budget surplus to federal budget deficit over 2002-2011. The Council of Foreign Relations projects that a permanent extension of the tax cuts will increase federal debt by $3 trillion over the next 10 years. However, due to the fear inspired by the economic catastrophe that is associated with the “fiscal cliff’, the temporary tax cuts instituted to fulfill the campaign promises of George W. Bush may become permanent under Barack Obama. http://www.opednews.com/articles/The-Myth-of-the-Fiscal-Cli-by-Abigail-W-Adams-121218-861.html
So what are the consequences of jumping off the “fiscal cliff’? According to many experts, there are none, because the “fiscal cliff’ does not exist. Ken Fisher, named as one of the thirty most influential people in the investment industry, pointed out in an interview with Forbes that changes to the tax code and federal spending do not take affect in one fell swoop. He refers to the “fiscal cliff’ as, “more of a fiscal rolling plain.” (Ken Fisher Talks the Fiscal Cliff, Forbes, 12/18/2012)
There is no “Fiscal Cliff” that this country will fall off from immediately in the New Year, but merely a sequence of events that could be adequately dealt with due process and due diligence as 2013 proceeds. However, the major political parties, each for their own reasons, are willing to say “boo” to the American People to push forward their different agendas. My own suspicion is that much of this fear mongering propaganda has been put forth by those whose economic interests are most vitally at stake and those whose political canon dictates less taxes and less government. “Less Government” except for that “government” most vital to their economic interests, with our bloated Defense Budget being a prime example. The other party of the corporatocracy, the Democratic Party, has once again been upstaged by masterful propaganda and so must play along with this “Fiscal Cliff” mythology by adding their own spin to it. Lately, that has included our President seeming to offer up “entitlement cuts” to programs that aren’t really “entitlements”, but must be pretended to be, since the prevailing propaganda war calling Social Security an “entitlement” seemingly has been won by his opposition. Those who pay payroll taxes, in many case significantly more money than their income taxes, should know that Social Security is not an “entitlement”. However, they have become confused by the propaganda created myth that “Social Security” is not an insurance program, which it most certainly is.
What is going on here put in simple terms is that the wealthy elite of our country have used their media minions and pundit hangers-on to control the public discussion and pollute it into mythology. To understand this better I would to present “Ten Numbers the Rich Would Like Fudged” by Paul Buchheit, from a Nationofchange OpEd.
“1, Only THREE PERCENT of the very rich are entrepreneurs.
2. Only FOUR OUT OF 150 countries have more wealth inequality than us.
3. An amount equal to ONE-HALF the GDP is held untaxed overseas by rich Americans.
4. Corporations stopped paying HALF OF THEIR TAXES after the recession.
5. Just TEN Americans made a total of FIFTY BILLION DOLLARS in one year.
6. Tax deductions for the rich could pay off 100 PERCENT of the deficit.
7. The average single black or Hispanic woman has about $100 IN NET WORTH.
8. Elderly and disabled food stamp recipients get $4.30 A DAY FOR FOOD.
9. Young adults have lost TWO-THIRDS OF THEIR NET WORTH since 1984.
10. The American public paid about FOUR TRILLION DOLLARS to bail out the banks.
Bonus for the super-rich: A QUADRILLION DOLLARS in securities trading nets ZERO sales tax revenue for the U.S.” http://www.nationofchange.org/ten-numbers-rich-would-fudged-1353335225
The article linked above provides the backup information and reasoning behin those ten and a bonus numbers that nobody seems to include in this national debate over what the true issues of economic policy entail. The responsibility for this is bi-partisan, since both parties merely represent to different approaches to how to continue the elite in their stranglehold of power in the American System. This is a situation that I think the Founding Fathers might have envisioned, but in giving us the tool of the Constitution, felt the people were those who would have to ensure that their liberties remained in intact.
The question that Americans need to examine is how do they look beyond the propaganda spawned mythology spouted by almost all politicians in this country and come to grips with the real issues that lie below these myths we live by. The “Fiscal Cliff” is a sham and yet we see the most “serious people” in our Nation, like our President play along with it, rather than expose it for the sham it is.
There are deep problems and there are deep divisions in our country that is real and can be agreed with by all. However, the only way to solve these issues is too see what they actually are, rather than solving problems that are chimeric.
Submitted by: Mike Spindell, guest blogger.
Mike:
I wonder if the introduction of the idea “fiscal cliff” is just symptomatic of congress not effectively doing anything until a crisis unfolds. So the term comes up because they are only used to being proded by a crisis. In a way it is more of a reverse action.
The contiual growth of the public debt is going to eventually, if left unabated, cripple our economy just as it has done elsewhere.
I wonder if some game theory could be beneficial here. If one assumes congress only waits until a crisis has unfolded before change is made, I would opin that if congress was forced into a different threashhold for a crisis, rather than having unspecific limits it might react more appropriately.
Many states have balanced budget requirements. Our state legislature has such requirements. The reps and senators fight tooth and nail to balance the budget and politics dictates everything, but the outcome is that the budget must be balanced. With the federal congress there is no solid limit to what they can spend, other than a debt ceiling that they can change on their own, so what happens is they just fight it out as to how much over budget they are going to be. If they were foced to constrain their battles to balancing the budget and that was an unbreakable law that they would be looked at as being failures for not balancing the budget, I would say it would happen during this session.
Excuse me for again displaying my ignorance, but I vaguely remember being taught that the “American Dream” was that all men are created equal, that they are endowed with certain unalienable rights, that among these are life, liberty and the pursuit of happiness, and that to secure these rights governments are instituted among men, deriving their just powers from the consent of the governed.
Now, I am well aware that our Revolutionary founders crafted a white dictatorship and that “all men” basically meant enlightened (or entitled) WASPs. But then came the Civil War, and our Reconstructionist forefathers universalized “all men,” and true “American” exceptionalism shone forth — a new birth of freedom dedicated to finishing the work of our founders: equal protection under the law for all people. Equal opportunity. Equal respect. Equal dignity.
The struggle continues, or at least I thought it did. I just don’t recall when the “American Dream” morphed into the AmeRican Wetdream of rampant consumerism, and a government dedicated to me, mine, and more.
Ame Rica — Loves Riches
Boy. Talk about myth. That is one dog we have to keep off the Dogalogue Machine. You cant pick on Boehner like that. Down boy.
There is a lot of mis pronounciation going on in Washington and on the Fox Channel. The dumb ones who went in dumb and came out dumb too can not pronounce the word “fiscal”. Whether they are trying to say “fiscal policy” or the “fiscal cliff” they pronounce it as “physical”. The head of the Grand Old Gophers in the House is named Boehner and few pronounce it in German as it should be: “Boner”. The fiscal cliff phrase came about when Boner was in the head of a motor yacht reading Cliff Notes on plumbing. This was while he was on vacation. He emailed Eddy Cantor’s son about a crisis on his ranch in Virginia and they went back and forth and then Cantor wrote another email to Fox and the word physical cliff was bolderized by Fox Bolderizer to Fiscal Cliff with no help from the Notes. And that we have it. Fair and balanced, all the news thats fit to print or sprech. And I am one dog who knows how to spell his name.
“He lost control of his U.S. House caucus. He lost a chance to limit the impact of tax increases to only the most wealthy. And he lost face.
So far, he hasn’t lost his title as U.S. House speaker –in part because “no one wants that job,” said Ron Bonjean, a former aide to House Speaker Dennis Hastert, an Illinois Republican. “Right now it’s a hard job to have.”
Boehner’s admission yesterday that he pulled his own deficit-reduction proposal from consideration because he didn’t have enough votes for it to pass is casting doubt on his leadership skills. To successfully manage an agreement now, Boehner, 63, will likely have to rely more on Democrats.
“It weakens the entire Republican Party, the Republican majority,” said Representative Steven LaTourette, a nine-term Ohio Republican who is retiring after this session. “If you’re not a governing majority, you’re not going to be a majority very long.” ” Bloomberg news
Blouise, It looks like Boehner’s republicans will have to forge a deal with Pelosi to get something passed. Hopefully, they will pass the middle class tax cut in the senate and send it over.
Blouise, Yep. Boehner has a real problem. “His problem was that the 2010 mid-term elections brought in a wave of Tea party radicals. He has tried – and failed – to control them. During a stand-off last year over raising the federal debt limit Boehner managed an agreement with Obama, the so-called “grand bargain”, but when he went back to his own party, he faced opposition led by Eric Cantor, the House majority leader.
This time around it seemed Boehner would pull it off. He purged radicals from prized committee positions and lined up Cantor and other fiscal hawks such as Paul Ryan and Grover Norquist on side. On the nightly news he would stride confidently in and out of meetings, seemingly in control. No longer an enigma, ordinary Americans learned to pronounce his name (Bay-ner).
And then, on Thursday night, it all fell apart. Boehner in effect admitted powerlessness.
“Now it is up to the president to work with senator Reid on legislation to avert the fiscal cliff,” he said. Resolving the fiscal mess, he suggested, may require divine intervention. “How we get there, God only knows.”
The Hill buzzed with speculation whether he would keep his job as speaker. “In light of what happened last night, if you aren’t concerned, shouldn’t you be?” one reporter asked Friday. ” The Guardian
Thanks, Mike!
The Shock Doctrine:the Rise of Disaster Capitalism
Blouise, Let’s hope those tea baggers find out that the folks back home have wised up and think they’re dunderheads who will vote them out next opportunity.
Mike S. (This is OT but interesting … if the recent polls in Israel prove to be correct, it looks like Netanyahu will get the most seats and be prime minister again. Talk about a cliff … )
Back to finances and politics: Had the House passed Plan B, they could have gone home with adequate cover knowing the Senate probably wouldn’t thus making the Senate (Democrats) the bad guys and improving the Republicans bargaining position in 2013.
But, on the whole, the tea baggers are too inexperienced to see this and as a result may have saved themselves, individually, a smidgen of trouble with their home base but, collectively, done a lot of damage to their party overall and to their bargaining position come January.
Boehner was looking at the bigger picture and will now be able to tell his conference dumba$$es … I told you so when they return to find their bargaining position weakened and public opinion out to get them.
Re Carlin clip: Back in the day much of Carlin’s material was considered edgy but, by the establishment, also hyperbole. Easier to marginalize his incisive work as the foul mouthed product of a malcontent.
But there’s nothing hyperbolic about his insight. All the myth and propaganda around the ‘american dream’, that pseudo concept that keeps millions in line hoping for the gravy train, or at least a dollop,
Take note, amidst the accurate rendering of the status quo, what we now call the PTB and the MOTU, so obvious has it become that they own us, of the prescient line: “and now they’re coming for your Social Security”
If there is a dime not nailed down, they want it. You deserve nothing, and better not to complain because we’ve got a surveillance state to deal with you.
Strange that you should mention the Mayan thing, because …..
Going over the Fiscal Cliff will have a lot in common with how some people imagine the end-of-it-all and the Rapture.
What happens is ‘our betters’ continue to be paralysed and cash flow becomes an exercise in trying to patch over things, robbing Peter to Pay Paul but often discovering that Paul is fresh out of funds.
The trigger event is that someone in the Federal Reserve fails to get delivery of more paper, and the printing presses can’t print dollars.
This brings about an enormous vacuum in cash-dispensing machines.
When people try to operate the machines, they get sucked into them. Whooooosshhhhhhh!
They don’t even have to get the PIN right.
All over the country, crowds will gather around machines in banks, malls, etc. Whooooosh!
Yep y’all heading over that fiscal cliff like Lemmings (another myth).
In fact, it’s deja ve all over again, and again, and again . . .
http://thinkprogress.org/climate/2011/09/05/311854/reflections-of-a-gop-operative-who-left-the-cult/
There is “Crisis Management” and then there is “Management by Crisis.” The former, good; the latter, bad. The response of 9/11 was crisis management; the invasion of Iraq was the end result of “Management by Crisis.”
http://www.naomiklein.org/shock-doctrine/reviews/it-takes-crisis
As one of AmeRica’s wisest sages observed, “It’s deja vu all over again.”
Thank you for the commentary Mr. Spindell. I look forward to reading your occasional postings.
Like Mike S says, these types of plays are diversions from real dangers, which is a part of the propaganda repertoire.
As a nation that is part of human civilization we absolutely do face a very dangerous cliff, and we most certainly will go over it if we keep on doing the Thelma & Louise.
Mike,
Great post. Most Americans, if they really looked at the “Bush Tax Cuts” would find they were really a tax hike. The withholding tables were adjusted so the first 10k of income was not taxed. That income would need to be taxed at some point–when you filled out your 1040.
I found that out the hard way, in 2004/5 when our final tax bill was very big. So big the IRS sent us a letter telling us we needed to pay quarterly tax installments. We opted for extra money on our withholding–not much of a tax cut there. My family got hosed by those cuts as we has extra withholding from our pay for a number of years.
Let us just call it what it really is, “The Fecal Cliff”. A completely fabricated piece of *#%& being used solely for political purposes. Happy Holidays to all!