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The Fiscal Cliff

PostPosted: Fri Nov 09, 2012 2:43 pm
by jcjm
There are a lot of things that can be done in both the immediate and long term to get things back on track. Here are some of the things people have been tossing around for years, put into a timetable.


SHORT TERM (Immediate)

Do 3 simple things
1. Freeze all spending at current levels-----that is to say if your social security is $1,500 a month it will stay the same. It is hard to control the total dollar amount on a short term basis as you have no control over who will die and who will retire that year. The same goes for other things like schools, etc. keep the same budget although the amount may be higher or lower due to participation in some cases.
2. Impose a 1 year 3% Surtax on income tax-----I didn’t like it in the 70s but it worked. If you pay $1000 in tax, just times that times 1.03 and you would end up paying $1030. Not much increase for each person, but a lot combined.
3. Extend the cliff 1 year with no additional extensions permitted, provided Congress does the 1st two-----that gives Congress a frozen budget with 3% increase in income and 1 year to come to a long term solution, otherwise the freeze and surtax continue until they do.


Do the following in that year
1. Outlaw pork barrel projects -----there is little chance of true reform as long as officials are taking contributions from special interest groups, then selling their vote to get pork put in a bill which has nothing to do with the bill itself. Such as a roads project in xyz district to get that Senator to vote for a defense bill.
2. Take Social Security back out of general revenue ad back into a trust-----Social Security has 4 Trillion dollars of money in US Treasuries which is a result of more money being collected than being paid, enough to sustain it for 25 years. That money was taken out of trust to make the deficit look smaller, because it is money we owe ourselves, not others. However, now politicians are referring to Social Security as an entitlement (kind of like welfare) instead of something that people have been contributing 7.5% of every check to since 1933. If it isn’t taken out of the general budget, its only time until the politicians steal it entirely.
3. Put everything on the table-----it’s been hard to do, but once you get the pork out, it would be easier.
4. Start to take off the table things agreed upon by both parties and a 2/3 vote. Some things shouldn’t be touched and level minded people will know what they are. It would be easier to do once they can’t put pork in.
5. Eliminate outdated spending-----some things could be eliminated, like some foreign aid that dates back 50 years and may not be relevant anymore or things like PBS which was funded when there were only 3 networks, no cable, no internet, etc. I like PBS but times have changed and things aren’t the same as they were in 1950. However, once something is in the budget it rarely gets eliminated. Its time for a review of old spending and make some of these things sink or swim on their own.
6. Make cuts on the rest-----if it isn’t off the table its up for deduction. It would really be up to them, but to keep money for some, others would have to be cut or eliminated. Finally after 5 other steps, negotiation begins, not sidestepping them.


1. Pass a balanced budget amendment-----once you get everything in line, we need to keep it there. An amendment may not be necessary, but something binding needs to be entered into law.
2. Treat all income the same-----no reason why working people have to pay a higher rate than investors.
3. Increase the standard deduction-----this gives everybody the same tax cut.
4. Increase tax levels on very high incomes-----I’m not for taking from the rich and giving to the poor, but taxing very very high incomes keeps people from monopolizing the market. If this had been in place we would have 50 millionaires for every billionaire like Bill Gates. It wouldn’t stop innovation, just give more people a chance to grab a piece of the pie.
5. Get started on revising Immigration-----we need people to pay taxes and social security, buy cars and houses. More immigrants will grow the economy, not hurt it. We need a plan to grow the country, not shrink it and it needs to be unrelated to who will vote for my party.
6. Reform Global business taxes-----the US rate is not the same as in Switzerland or Africa and this needs to be considered to entice businesses to come to the US and not stay elsewhere. Consequently some Global businesses have over 100 business entities, 1 for each country they do business in. By thinking globally, we could bring more of that business back to the US.
7. Pass a line item veto for the President-----this has been a problem in the past because of the pork. Once the pork is gone, it’s less of a problem and gives the President discretion to eliminate some but not reject in total.
8. Reform tax deductions and loopholes-----how is the big question, but I would start by cutting out most deductions, leaving a few like those below which have a sound basis as being needed:
• legitimate business expenses (you pay only on the profit after expense is a given in business)
• medical expenses (you can’t pay taxes if you are dead or sick and out of work)
• charitable contributions (this is needed as the government will supply less)
• education (we need to have an educated workforce)
• daycare (you need this if you are going to work and pay taxes and is really part of the legitimate business expenses.

Its bad news for everyone at some level, but better than making across the board cuts or passing the problem on to our children and grandchildren.


I invite you to delete or add to, as a reflection of what you would propose.

If you don’t like something, just delete it and add what you would propose, instead of debating the issue.

Perhaps if we as a Country start saying what we want instead of what we are against and encourage others to do so, maybe we can get our elected officials to actually do something.

This may sound juvenile, but I think people have had it after this last election. People are disappointed on both sides with the fighting and grid lock. There was no time for celebration. The market tanked the next day and politicians are on notice by the media that if they don’t do something, this will be the media story for the next 4 years.

I think there is pressure on elected officials to perform and that will make them start thinking in a bi-partisan way.
When they do, we need to know what we expect. Not just what we don’t want.

Re: The Fiscal Cliff

PostPosted: Mon Nov 12, 2012 3:50 pm
by SquarePeg
Great ideas!

Regarding LONG TERM #6 Global Business Taxes:

I'm not sure I understand the proposal, but I'll make assumptions. You wrote that the tax rate is different from the rate in other others and that we should entice businesses to establish themselves (or even move) here. So my assumption is that you favor lowering the rate.

I don't think this will change the strategy of global businesses. They will continue to operate in many countries because they can undermine import duties, shift operations in order to leverage monetary exchange rates, take advantage of lax environmental restrictions, and exploit cheap labor. From my POV, I think reducing this rate will not attract much new business here.


I would actually increase all business taxes. Since this tax is taken only on profits, it will favor businesses that reinvest their profits in order to build the business, and it will penalize corporate raiders who run businesses into the ground just to make a quick profit.

Re: The Fiscal Cliff

PostPosted: Tue Nov 13, 2012 7:30 am
by jcjm
The global business tax issue is something that is new to me, but here is what I understand from talking to people in Europe and South America.

Large global companies like those in the Dow 30 and Fortune 500 operate in many countries. In some instances they run a US and Europe operation etc. but in other instances they have a legal entity for each country they do business in (sales).

It is to the US advantage for those countries to keep operations and sales coming from the US entity. If they do, they get taxes not only on profits, but on income taxes from workers, social security, etc.

From the people I talk to in Europe, they do things differently. Instead of paying a higher tax rate on more sales they pay less. Example 100 million euro business gets one rate, 1 billion euro business gets a smaller tax rate. The idea being taxes on 1 billion are going to be more than taxes on 100 million.

Because the countries in Europe are like states in the US, fighting for business, its kind of like the TIF's we have in the US where a state or city will give a tax incentive to relocate there because of the income tax, sales tax, real estate tax that will devolop when they move there.

I'm not for tricle down economics, don't think it works on individuals, but in the case of business, where we are already giving tax incentives in the US by the states and citys, we need to think about being competitive with global companies. It is more about bringing jobs to the US and the resultant prosperity than making a killing on them tax wise.

For example, according to KPMG the 2012 US rate of 40% is the second highest with only the United Arab Emerates higher at 55%, while many countries have none and the European average is 20.5. The EU is 22.6.

The European work model is also much different than in the US. In some countries they work 35 hour weeks with 4 weeks vacation and they have to take 10 days off in a row for holiday. They also have healthcare and other perks. If we stopped allowing companies to make people salaried instead of hourly, made a 35 hour work week with 4 weeks vacation the norm, think how many more people would have jobs. Right now many people in the US work 50 to 60 hours a week, get a week or 2 vacation and poor health insurance.

Because the countries are like bordering states in the US a company can be courted by France, Belgium, and Switzerland to locate there.

I'm not sure of all the specifics but from conversations with people in Europe these are some of the differences, which keep jobs outside the US. Not everone in Europe is going broke, its pretty much just the PIGS, Portugal-Italy-Greece-Spain. The rest of the countries are trying to either ditch them or bail them out and are better off than the US.

So, this is kind of new to me, but the things I have heard lead me to believe that we need to compete with them, not tax them so high they move.

The arguement I hear is that 10% of $5 billion is more than 20% of nothing. Plus you get the residual effects of income taxes, social security and sales tax, not to mention real estate tax, etc.

I don't want to bring the US down to that of a 3rd world country, but we need to be competitive where possible and explore things thinking globally.

Something to think about, but I can understand anyones disagreement.

Re: The Fiscal Cliff

PostPosted: Thu Nov 15, 2012 2:52 pm
by SquarePeg
That makes sense.

There is one thing I still question. It has to do with this:
If we stopped allowing companies to make people salaried instead of hourly, made a 35 hour work week with 4 weeks vacation the norm, think how many more people would have jobs. Right now many people in the US work 50 to 60 hours a week, get a week or 2 vacation and poor health insurance.
I sense that you want me to say more people will have jobs because a company would have to double its work force to maintain productivity. But my initial reaction to this scenario is that just the opposite will happen. Companies will want to move somewhere else (China? Japan?) to hire folks who want to work long hours for less vacation and spotty health insurance. Or they will hire somewhat more part timers to work 5 fewer hours each week and not be obliged to provide any benefits whatsoever. Unless, along with a 35 hour work week, the US legislates that anyone working more than 20 hours per week is considered full time and should be provided all the benefits of a full time employee.

Re: The Fiscal Cliff

PostPosted: Fri Nov 16, 2012 7:31 am
by jcjm
Because Europe is several countries things vary but here is some of the things I have heard from people living there.

First of all, the countries I am talking about are first world caliber not third world countrys where you can get a college graduate for $150 a week. Not the places that the call centers are located in, but the places of world wide status like Geneva, Switzerland, and others. So I am speaking of competing countries not places where people have it so bad and the cost of living is so low they work for peanuts and where we send our sweat shops.

In some countries like Italy, almost all manufacturing (not hotels, restaurants, etc) close for 2 weeks in August. I'm not sure if it is government or union sanctioned, but they do it. August is considered holiday time for locals, and that's not the time you want to be a tourist from the US. Some countries also impose a mandatory 2 consecutive week holiday, not sure if that has to be done in August or just sometime, but the people I know do it in August. They work and live in the area around France, Belgium, Switzerland, Austria, Northern Italy.

The 35 hour week and time off are most likely because of the union/socialist leaning of many European countries. We have backed away from that in the US as of late, but by each person working less there are more jobs. Many people in Europe see people in the US as greedy and workaholics. The government in the US adds to that by being pretty lax on the hourly vs. salaried debate.

Originally you just about had to be in management or be in sales working for commission to be salaried. Now many companies give titles of manager to make a job salaried or give a yearly bonus of 3-5% for performance to skirt the restrictions. If things were tightened on what management was (not just a title but that you actually managed someone) and clamped down on token bonuses designed to change a jobs classification, this wouldn't happen. But since Ronald Reagan broke the Air Traffic Controllers Union we have seen a deterioration of unions and workers rights.

An example of this is changing a bookkeepers job to an accountant even though they do the same thing. We don't have very many bookkeepers today, even though thats all a lot of "Accountants" do. Also, a lot of call centers give minimal bonuses for "performance" to skirt paying a decent hourly wage.

We in the US have steared away from Unions and Socialistist reforms since the 1980s. My thought is that many people were either greedy or thought that they were big shots having a manager title (even though they were still just a clerk). Whatever the reason, many people would still rather face being downsized than job share or cut their hours (and pay). I think we have a long way to go until people value time off and vacation with family as more important than getting a Mercedes and a big house where everybody can isolate themselves from each other.

I use to tell people if you like Europe so much, move there. But as of late, I can see Europe has some things the US could model itself after. I wouldn't want to live full time in Europe, but I would be willing to work 1500 hours a year instead of 2500, for both myself and so that others would have a job.

But its hard to find a full time job for 1500 hours a year in the US. Its cheaper for the company to work you longer, (they already paid you benefits, why pay someone elses) and the government lets them do it.

Re: The Fiscal Cliff

PostPosted: Fri Nov 16, 2012 9:49 am
by Scenario Thinker
I've been salaried my entire career, and have never been in management. And, I've worked in 4 different companies (and industries), over the 33 years or so. Plus, I've never had a job where I'm consistently working much over 40 hours per week. There were times, but never in a slave-driven mentality where people burn out and quit. The (smart) companies realize we are human and need time to decompress, both daily and periodic vacations. Maybe I've just been lucky, I don't know.

In my current company, we're given 5 weeks of time off to start (including sick, too, though), and many people from China or India will go back there for 2 or 3 weeks, and still have a couple/3 weeks of time off left for the year. Granted, the work load has to adjust for the people covering for the vacationer (and they all can't do it at once), but it seems to be getting close to a European-type of work-life style. Personally, I've taken a week in the summer, a week in October, and plan another couple weeks in December (I hardly ever take a sick day, though). My coworkers pick up the slack, and I do the same for them.

Couple things I've read about workers in Europe. They're not incentivized to work a lot of extra hours, because the (hourly) tax rate is so high. The other thing is in Europe, you can't just go work there very easily. They won't let you in their work force society, thus keeping the job pool consistent in numbers. This affects both employment and health care. Now, I don't know if this is up to the minute facts, but it's stuff I've read in the past.

Re: The Fiscal Cliff

PostPosted: Fri Nov 30, 2012 5:00 pm
by jcjm
If you saw my other post, you will see I am against stealing from social secuity to reduce the deficite and for taxing high earners.

Social secuirty isn't some type of welfare. We paid into it for years.

High wage earners need to be kept from monopolizing opportunity and buying lobbyists to promote their unfair advantage.

Re: The Fiscal Cliff

PostPosted: Wed Dec 05, 2012 7:38 am
by jcjm
Radicals on both sides holding the rest of us hostage, because they won't give up anything.

At this point, as far as I'm concerned both sides are wrong, but the right is way out there and just doesn't get it.

They think we are so stupid as to buy another round of trickle down economics when the only reason it worked the first time was because of timing. Things were getting better on their own and Reagan just happend to be in the right place at the right time.

Seems like politicians only goal is to support their donors. Not do what is right or in the best interest.

Re: The Fiscal Cliff

PostPosted: Wed Dec 05, 2012 12:38 pm
by merk
For now I actually agree with Obama not budging. The republicans are doing the same thing Romney tried to do - they are making sh*t up as they go along. They say they are going to close loop holes and whatnot. But when asked for some specifics as to what loop holes they will close to get to the $800 billion figure they came up with, they had nothing to say.

To be blunt, i think the republicans economic policy is crap. I'm not even sure they really have an economic policy. I think their policy has turned into just opposing whatever the democrats come up with and also doing whatever they can to keep their base happy. I dont think they really care about the economy of the country as a whole, otherwise they would change their stance since so many reports have indicated their tax cuts didnt work - at least not if the goal was to improve the country overall and not just a tiny minority.

Re: The Fiscal Cliff

PostPosted: Thu Dec 06, 2012 7:14 am
by jcjm
The right wing and most Republicans in office are more interested in donors than a healthy economy.

They say they need the Bush tax cuts to stay the same for growth, but for half of the 10 years they were in effect, the economy was in the toilet. So how is that going to work?

They also use the tricle down economics which George Bush called "vodoo economics" when running against Reagan. Never citing that the economy was in turn around on its own. One instance when the economy was already turning around and they try to fool everybody else into thinking that its a law of nature that always works.

I don't like some of the left who want to increase certain spending, but I really don't like the majority of the right who's main goal is to keep rich people from paying taxes.

If tax cuts increase growth, I'd be happy with increasing the standard deduction which gives everybody a tax cut, while incresing the rate on people earning over $250,000 a little and people earning over $1,000,000 a lot. If giving tax breaks speeds up growth then spread it around. But no, they make up this fictional tricle down economics which only works when we only give tax breaks to the rich and everybody else has to pay.

My blood boils when I see some of the right wing Senators in their suits acting like it was 1980 or even 1950. With a condecending look and talk that says trust me I'm smarter than you. When what they are really thinking is, we need to pull one over on these stupid people.

I guess they think if they tell a lie enough people will believe it, but this isn't 1950 where they could control the newspapers. We now have the internet, blogs, cable TV, Iphones and more. They can't control what we hear anymore, so the truth will have equal time and people won't believe lies.

Re: The Fiscal Cliff

PostPosted: Thu Dec 06, 2012 12:18 pm
by merk
jcjm wrote:I guess they think if they tell a lie enough people will believe it, but this isn't 1950 where they could control the newspapers. We now have the internet, blogs, cable TV, Iphones and more. They can't control what we hear anymore, so the truth will have equal time and people won't believe lies.

There still are a lot of people who believe them - but i think you are right. I think the scale is starting to tip. I soooooo wish we had an election process that enabled 3rd party voting - i think we could really see some serious change if we had that right now. It'll be interesting to see if the republican party realizes where they are headed or if they just dig their heels in and what happens to them.

Re: The Fiscal Cliff

PostPosted: Thu Dec 06, 2012 1:11 pm
by jcjm
I soooooo wish we had an election process that enabled 3rd party voting - i think we could really see some serious change if we had that right now.

I thought so too, until I found out Hitler won in a three part race.

With 3 parties you only need 34% of the vote and somebody who is only marginally accepted can win because the 2 others are fracturing the vote.

That's partially what happened with Clinton. Perrot took votes from Bush, allowing Clinton to win with less votes needed than if there had only been 2 people. Some people say Perrot didn't want to win, he just disliked Bush and wanted Bush not to be re-elected.

So with only 34% of the vote needed, a rich person with a grievance could enter the race to steal votes from the person they didn't want elected. Or someone like Hitler could get in office because the other 2 candidates were so much alike that they fractured the vote so neither could win.

Re: The Fiscal Cliff

PostPosted: Thu Dec 06, 2012 2:09 pm
by merk
I didn't explain what i meant - i didn't mean just electing a 3rd party, i meant having an instant runoff type vote. Where you will never have someone elected who doesn't have the majority vote (not counting the electoral college). Basically you would vote for more then one person. You'd pick your first choice, and if they failed to get enough votes, then your 2nd choice would get your vote, or something like that.

That way people can feel free to vote for a 3rd party candidate and not worry they are throwing their vote away AND you wont get a situation like the ones you mentioned.

Re: The Fiscal Cliff

PostPosted: Fri Dec 21, 2012 7:16 am
by jcjm
Not much on this lately even on the news because of the shooting in Conn. but my guess is it will be next weeks top story.

I would guess nothing gets done til after Christmas and then some type of compromise will happen.

Reporters are indicating the Right will cave because they have more at stake if we go over the cliff.

May be true, may be wishfull thinking, may just be pushing what they want to happen.

Re: The Fiscal Cliff

PostPosted: Thu Dec 27, 2012 7:20 am
by jcjm
New theory that is going around.

The Republicans are going to go over the cliff so they can say they didn't vote for tax increases.

If they vote now they would be voting for tax increases, but if they go over the cliff and the rates revert to what they were 10 years ago, they can vote to reduce the higher rate. The rate would still be higher than it is now, but still a tax cut, not a tax increase.

Oh the wonders of the political mind.