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Sens. Alexander, Bennet give leaders emergency plan to avoid 'fiscal cliff

jonny5

jonny5

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Sens. Alexander, Bennet give leaders emergency plan to avoid 'fiscal cliff' - The Hill

The break-the-glass emergency proposal would make a substantial down payment toward deficit reduction during the lame-duck session, create a streamlined process to reach a broader deal next year and implement a default deficit-reduction plan if Congress still cannot break a stalemate in 2013.
“It simply pushes the pause button on all the elements of the fiscal cliff, extends everything for a year and then gives us six months in which to reform entitlements and reform taxes and reduce the debt,” said Alexander
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Now this sounds like the congress we have come to know and love. Stall for another year, then its election time, so we have to put off doing anything till November 2014, call each other hostage takers in the mean time, rinse repeat. And you democrats and republicans keep reelecting these people. Thanks!
 
jonny5 said:
Now this sounds like the congress we have come to know and love. Stall for another year, then its election time, so we have to put off doing anything till November 2014, call each other hostage takers in the mean time, rinse repeat. And you democrats and republicans keep reelecting these people. Thanks!
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It's not necessarily a bad idea. There's got to be a lot of talks and negotiations before anything comes out. But I think we all know, it's just gonna be another fiscal cliff.
 
I thought Obama has already rejected this idea publicly when the Speaker suggested it. At this point, there is greater pressure on the democratic side than the GOP side to avoid the automatic cuts because the ones the GOP wants to keep (cap gains and marginal rates) can be applied retroactively to satisfy the wealthy but the guys getting the weekly/bi-weekly check will be hit first and they are more the dem base.
 
rocket88 said:
It's not necessarily a bad idea. There's got to be a lot of talks and negotiations before anything comes out. But I think we all know, it's just gonna be another fiscal cliff.
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Its a bad idea because its the same old idea. Stalling for yet another year then implementing minor changes under threat is what congress has been doing since the 50s. It has almsot never balanced the budget or reduced the deficit. What worked in the 90s though? Govt shut down (and a technological revolution).
 
Congress and the President have had ample time to work out an agreement to avoid the "fiscal cliff." The timeline has long been known. There are no surprises associated with it.

Painful as it might be--and the U.S. would likely experience a recession--I believe the better course in the absence of a credible fiscal consolidation agreement is to see the sequester/tax hikes take effect than to "punt" the issue into the future yet again. If the Congress and President can't agree on specifics, enactment of the Bowles-Simpson recommendations should be the fallback position. Merely postponing a decision on how to make the first downpayment toward fiscal consolidation should not be a fallback position, even if it is politically-enticing to avoid tough choices.
 
donsutherland1 said:
Congress and the President have had ample time to work out an agreement to avoid the "fiscal cliff." The timeline has long been known. There are no surprises associated with it.

Painful as it might be--and the U.S. would likely experience a recession--I believe the better course in the absence of a credible fiscal consolidation agreement is to see the sequester/tax hikes take effect than to "punt" the issue into the future yet again. If the Congress and President can't agree on specifics, enactment of the Bowles-Simpson recommendations should be the fallback position. Merely postponing a decision on how to make the first downpayment toward fiscal consolidation should not be a fallback position, even if it is politically-enticing to avoid tough choices.
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The only problem is the sequester doesnt actually cut spending. Its better than no sequester, but not by much. I say let everything expire (or make everythign permanent) and then start over with a new budget process as required by law. Do not increase the debt cieling. Force congress to cut.
 
jonny5 said:
The only problem is the sequester doesnt actually cut spending. Its better than no sequester, but not by much. I say let everything expire (or make everythign permanent) and then start over with a new budget process as required by law. Do not increase the debt cieling. Force congress to cut.
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A combination of savings from slower spending growth (discretionary and mandatory spending programs) and increased tax revenues would make it possible to stabilize and then reduce the nation's debt relative to GDP and then later in absolute terms. The process will take time and for economic and social reasons a transition is necessary. One cannot instantly eliminate the nation's enormous budget deficits without inflicting a major macroeconomic crunch and/or social hardship on a signficant slice of the population e.g., the elderly who rely on Social Security and Medicare. Hence, not raising the debt ceiling isn't a viable approach.
 
rocket88 said:
It's not necessarily a bad idea.
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Kicking the can down the road is always a bad idea, and that's all they have been doing for decades.
 
jonny5 said:
Now this sounds like the congress we have come to know and love. Stall for another year, then its election time, so we have to put off doing anything till November 2014, call each other hostage takers in the mean time, rinse repeat. And you democrats and republicans keep reelecting these people. Thanks!
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Since there is littlle time left and we are not likely to reach a hasty decision why not postpone it for another 6 months or so while putting some kind of stop gap measure in place. That way a reasonable decision can be made.

Any plan is not as good as a good plan
 
donsutherland1 said:
A combination of savings from slower spending growth (discretionary and mandatory spending programs) and increased tax revenues would make it possible to stabilize and then reduce the nation's debt relative to GDP and then later in absolute terms. The process will take time and for economic and social reasons a transition is necessary. One cannot instantly eliminate the nation's enormous budget deficits without inflicting a major macroeconomic crunch and/or social hardship on a signficant slice of the population e.g., the elderly who rely on Social Security and Medicare. Hence, not raising the debt ceiling isn't a viable approach.
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We can easily eliminate the deficit by getting rid of unneeded spending, and minor reforms to social spending. The problem with a slow approach is damage to credit and mounting interest costs. We got into the mess pretty quick, quadrupling the deficit in two years. We can get out of it pretty quick.
 
wolfman24 said:
Since there is littlle time left and we are not likely to reach a hasty decision why not postpone it for another 6 months or so while putting some kind of stop gap measure in place. That way a reasonable decision can be made.

Any plan is not as good as a good plan
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Because they said that 6 months ago, and a year before that. The only thing that works, as it did in the 90s, is refusing to go any further.
 
jonny5 said:
Because they said that 6 months ago, and a year before that. The only thing that works, as it did in the 90s, is refusing to go any further.
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Ok point taken, but do you really expect something even remotely decent in the next 5 weeks?
 
wolfman24 said:
Ok point taken, but do you really expect something even remotely decent in the next 5 weeks?
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Of course not, but Im ok with going over the cliff. The country needs to be knocked down so it can learn to get back up.
 
jonny5 said:
We can easily eliminate the deficit by getting rid of unneeded spending, and minor reforms to social spending. The problem with a slow approach is damage to credit and mounting interest costs. We got into the mess pretty quick, quadrupling the deficit in two years. We can get out of it pretty quick.
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The impact of such parametric reforms as raising the age of eligibility on Social Security and Medicare, introducing a degree of means-testing for Medicare, additional benefit restructuring, and raising the payroll taxes used to fund those programs to address the remaining funding gap would substantially reduce the nation's long-term structural imbalances. Over time, revenue growth and discretionary spending reductions coupled with a substantial reduction of the nation's long-term imbalances would allow it to achieve budget surpluses. That will take time. The first challenge is to stabilize. The next is to reduce debt as a share of GDP. The third is to reduce debt in absolute terms to a level consistent with pre-financial crisis/pre-recession norms.

I don't believe there's any reasonable way the nation can immediately eliminate its entire annual budget deficits at once. Full-fledged austerity would lead to a recession. In turn, the recession would lead to a dampening of tax revenue. Additional savings would need to be found for the lost revenue and those savings would have their own adverse macroeconomic impact. The nation would experience a near self-reinforcing cycle of austerity-economic pain-need for additional austerity. The outcome would be a much deeper and longer recession than would have been necessary. Greece is currently caught in that kind of long-duration austerity trap. Such an approach would be an inferior means of achieving the same kind of savings that could be realized over time by a credible fiscal consolidation strategy that includes discretionary savings, parametric reforms, and some tax hikes over a reasonable transitional period.
 
donsutherland1 said:
The impact of such parametric reforms as raising the age of eligibility on Social Security and Medicare, introducing a degree of means-testing for Medicare, additional benefit restructuring, and raising the payroll taxes used to fund those programs to address the remaining funding gap would substantially reduce the nation's long-term structural imbalances. Over time, revenue growth and discretionary spending reductions coupled with a substantial reduction of the nation's long-term imbalances would allow it to achieve budget surpluses. That will take time. The first challenge is to stabilize. The next is to reduce debt as a share of GDP. The third is to reduce debt in absolute terms to a level consistent with pre-financial crisis/pre-recession norms.

I don't believe there's any reasonable way the nation can immediately eliminate its entire annual budget deficits at once. Full-fledged austerity would lead to a recession. In turn, the recession would lead to a dampening of tax revenue. Additional savings would need to be found for the lost revenue and those savings would have their own adverse macroeconomic impact. The nation would experience a near self-reinforcing cycle of austerity-economic pain-need for additional austerity. The outcome would be a much deeper and longer recession than would have been necessary. Greece is currently caught in that kind of long-duration austerity trap. Such an approach would be an inferior means of achieving the same kind of savings that could be realized over time by a credible fiscal consolidation strategy that includes discretionary savings, parametric reforms, and some tax hikes over a reasonable transitional period.
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What should happen is a similar tax that Canada has for goods and services, however remove the tax on food. Tax brackets will remain the same for income earned, maybe a little increase from the GOP negotiating side of things could be tolerated in exchange for some of the common sense approaches you list here, but we both know that even that is not enough. It would slow the crash, and provide time to have another election and see if the country realizes it made a huge mistake, or, in the mid-terms it could vote for exactly much of the same, and in this vien, I have zero hope for sanity. Our collective problem as a nation is that we don't send capable business common sense regular Joe's to Washington, we send lawyers mostly, and have for years, and this has to stop.

If the voters keep things the same in the mid's then there is NO hope at all. If this country was an individual, it wouldn't be allowed to borrow a nickle from anyone, period, and THAT's what people need to understand to comphrehend just how bad our situation really is.


Tim-
 
donsutherland1 said:
The impact of such parametric reforms as raising the age of eligibility on Social Security and Medicare, introducing a degree of means-testing for Medicare, additional benefit restructuring, and raising the payroll taxes used to fund those programs to address the remaining funding gap would substantially reduce the nation's long-term structural imbalances. Over time, revenue growth and discretionary spending reductions coupled with a substantial reduction of the nation's long-term imbalances would allow it to achieve budget surpluses. That will take time. The first challenge is to stabilize. The next is to reduce debt as a share of GDP. The third is to reduce debt in absolute terms to a level consistent with pre-financial crisis/pre-recession norms.

I don't believe there's any reasonable way the nation can immediately eliminate its entire annual budget deficits at once. Full-fledged austerity would lead to a recession. In turn, the recession would lead to a dampening of tax revenue. Additional savings would need to be found for the lost revenue and those savings would have their own adverse macroeconomic impact. The nation would experience a near self-reinforcing cycle of austerity-economic pain-need for additional austerity. The outcome would be a much deeper and longer recession than would have been necessary. Greece is currently caught in that kind of long-duration austerity trap. Such an approach would be an inferior means of achieving the same kind of savings that could be realized over time by a credible fiscal consolidation strategy that includes discretionary savings, parametric reforms, and some tax hikes over a reasonable transitional period.
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K, well Ill see you in 10 years when we're still making the same arguments and nothing has changed.
 
jonny5 said:
K, well Ill see you in 10 years when we're still making the same arguments and nothing has changed.
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I don't think enough will be done, but I'm not advocating doing too little. I believe the nation needs to adopt a credible fiscal consolidation strategy. Bowles-Simpson would have made a good down payment on that approach.
 
donsutherland1 said:
I don't think enough will be done, but I'm not advocating doing too little. I believe the nation needs to adopt a credible fiscal consolidation strategy. Bowles-Simpson would have made a good down payment on that approach.
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But it didnt, just like every other solution that will be ignored. Other than one fluke in the 90s, nothing has changed in 100 years, only gotten worse.
 
No more extensions. These guys have had all year to deal with this. There was no magical barrier preventing them from working on this before the election. The incumbency rate was, what, like 90%? It's not even really a lame-duck congress. Do your freaking jobs, you freaking children.

If I had a year to come up with an agreement on something, and failed to do so, you know what my boss would do?

****can me.
 
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