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Gold and Silver • Silver Inventories Fall Off Cliff As Registered Silver Decli
Silver Inventories Fall Off Cliff As Registered Silver Declines by 10% in 48 Hours!
April 11, 2013 By The Doc COMEX registered silver inventories have fallen off the proverbial cliff this week, as registered supplies have dropped a massive 10% in the last 48 hours!
Nearly 4 million ounces of physical metal has vaporized from COMEX vaults as the rush to physical intensifies in the wake of the Cyprus bail-in wealth confiscation as news has spread that nations the Western world over are preparing to shove the next banking crisis down the throats of depositors.
http://silverdoctors.com/comex-silver-i … -48-hours/
Statistics: Posted by yoda — Thu Apr 11, 2013 8:57 pm
View full post on opinions.caduceusx.com
Fiscal Cliff Deal A “Crony Capitalist Blowout.” Taxes go up for average Americans, but these companies will get paid instead.
The gall of the lobbyists is astounding. Here we are, teetering we are told on the edge of a “fiscal cliff.” Below us is the abyss of renewed acute recession (depression). We must do something! Anything! Just don’t let us go off the cliff!
That “something” apparently means millions of dollars in gifts to Nascar, and Starkist Tuna, and GE, and Captain Morgan’s Rum, and Whirlpool, and Hollywood, and who knows who else. Not you though—sorry.
Good thing we acted. Boy, we didn’t have a dime to spare. We needed to raise taxes on those successful small business owners so that we could subsidize the big corporations. Oh, and payroll taxes are going up for everyone else. Fairness I tell ya.
And this package of corporate welfare was constructed in the summer and put into the fiscal cliff bill at the insistence for the Obama Administration. They had it ready to go. They were just waiting for the right opportunity. Anyone who supported this president and in the same breath talked about government working for the 99%, I’m not going to say it. I won’t but boy do I want to.
At this point its just looting. It’s theft. Like the guys who break into liquor stores when the power goes out. It’s the same thing only on a colossally larger scale. It’s completely dishonorable. And the former head of the Senate, Republican Trent Lott, helped make all of it happen to boot. See bipartisanship isn’t a thing of the past. Who cares if the country is supposedly staring at economic disaster—again. Make sure our donors get their subsidies, their taxpayer funded subsidies.
Take all that you can, when you can. That is the Washington DC ethic these days. Crony capitalism central.
How are we going to turn this around people?
(From The Wall Street Journal)
In praising Congress’s huge new tax increase, President Obama said Tuesday that “millionaires and billionaires” will finally “pay their fair share.” That is, unless you are a Nascar track owner, a wind-energy company or the owners of StarKist Tuna, among many others who managed to get their taxes reduced in Congress’s New Year celebration.
There’s plenty to lament about the capital and income tax hikes, but the bill’s seedier underside is the $40 billion or so in tax payoffs to every crony capitalist and special pleader with a lobbyist worth his million-dollar salary. Congress and the White House want everyone to ignore this corporate-welfare blowout, so allow us to shine a light on the merriment.
The post Fiscal Cliff Deal A “Crony Capitalist Blowout.” Taxes go up for average Americans, but these companies will get paid instead. appeared first on AgainstCronyCapitalism.org.
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Your Paycheck After the Fiscal Cliff Deal
How much will your paycheck change as a result of the recently passed fiscal cliff deal in Washington D.C.?
The answer to that question depends not just upon how quickly your employer can incorporate the required changes in federal withholding tax rates, but also upon which set of instructions they received from the IRS as it reacted throughout the fiscal cliff debate. It’s quite possible that your actual take-home pay will change from paycheck to paycheck for the next several weeks as a result.
Political Calculations features a number of calculators based on each of the different possibilities – here’s a short guide to each of them, which might help explain why your paycheck looks the way it does as we go into 2013:
This tool is based completely on the federal income tax withholding rules for 2012, which your employer might have stuck with into 2013 because of the IRS’ very late changes for 2013. At the very least, this calculator provides the baseline by which you can see how each of IRS’s various withholding tax schemes has changed your paycheck since 2012.
The IRS did notify employers back in October 2012 that Social Security taxes would be increased by 2% of your pay to restore the 6.2% flat tax rate that last applied in 2010. But because the IRS didn’t notify employers of any changes to make for year-over-year inflation, this tool also shows what your take-home pay would look like if 1970s-style bracket creep was once again the law of the land.
Late on December 31, 2012, the IRS rushed out new withholding tax instructions that fortunately would account for year-over-year inflation, but unfortunately would re-impose the income tax rates that last applied in 2001, in addition to Social Security’s 2% payroll tax hike. This tool shows what your paycheck would look like if no deal on the fiscal cliff had been struck, or what it might look like if your employer got this memo from the IRS, but not the next one before cutting any paychecks….
This final version reflects the results of the fiscal cliff deal that was signed into law on January 3, 2013. The IRS has given U.S. employers until February 15, 2013 to implement this version of its withholding tax rates for 2013, so its possible that your paychecks might look like one of the previous versions listed above until then!
Hopefully, our national politicians in Washington D.C. will stop monkeying about with the tax code long enough so we can know how much money we can actually keep out of our paychecks for a while.
View full post on MyGovCost | Government Cost Calculator
Obama’s Fiscal Cliff Deal Gifts to Big Business More than Tax Revenue Raised with New Taxes?
If you don’t know already the fiscal cliff deal done earlier this week is full of tax credits to big businesses of all sorts. That’s bad enough, but it appears that the money going to these businesses is actually more than what the new taxes will raise.
In other words, the deficit gets worse while the tax burden increases. That’s pretty good for the overall economy. All the while the big companies who have access to the White House, GE, Starkist, Hollywood, the crony capitalists, get paid. The tax payer loses on 3 fronts.
It feels good doesn’t it America?
(From the Washington Examiner)
Think about this: just the business and energy tax extenders reduce federal revenue by $67.7 billion in 2013. The tax hikes on the rich Obama won — higher rates on those over $400,000 and reduced deductions on those over $250,000 — raise $620 billion over a decade. As far as I know, we can safely guess that this would be less than $62 billion in 2013.
The post Obama’s Fiscal Cliff Deal Gifts to Big Business More than Tax Revenue Raised with New Taxes? appeared first on AgainstCronyCapitalism.org.
View full post on AgainstCronyCapitalism.org
Wait, Didn’t the Fiscal Cliff Deal Originate in the Senate?
Ilya Shapiro
If you thought the policy side of the “American Taxpayer Relief Act of 2012” is bad, did you notice that there’s a constitutional problem too? I’m sure there’s more than one, actually, but this one was easy to spot without even digging into the gory details.
Recall that the fiscal cliff bill was first passed by the Senate in the wee hours of New Year’s Day, and then seconded by a vote of the House some 20 hours later. And yet, Article I, Section 7, Clause 1—known as the Origination Clause—states: “All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”
Far from being “archaic, idiosyncratic and downright evil”—as Georgetown law professor Mike Seidman claimed as part of his argument for throwing out the Constitution altogether—this provision serves, or at least is supposed to serve, the very real and timeless purpose of keeping the taxing power as close to the voters as possible. Mindful of the potential for abuses of this awesome power (see, e.g., John Roberts on Obamacare) the Constitution’s authors chose to give it to the congressional body that is elected every two years directly by people in local districts (the House), instead of the one whose members serve alternating six-year terms and weren’t initially directly elected (the Senate). As Cato adjunct scholar Tim Sandefur explains in a forthcoming law review article (footnotes/citations omitted):
When the Anti-Federalist “Brutus” warned that the taxing power, “exercised without limitation,” will “introduce itself into every corner of the city, and country” and “light upon the head of every person in the United States” crying “GIVE! GIVE!” the Constitution’s supporters answered that this risk was minimized by the political checks over the taxing power. “The exclusive privilege of originating money bills [belongs] to the house of representatives,” wrote Alexander Hamilton. This would ensure that the power to tax belonged to “the most popular branch” of the government, “the favorite of the people.” James Madison reiterated this point: the “principal reason” why the House was given the power “of originating money bills” was that the Representatives “were chosen by the people, and supposed to be the best acquainted with their interest and ability.” Perhaps the point was put best by George Mason, who considered the Senate “[a]n aristocratic body” which “should ever be suspected of an encroaching tendency,” and believed that “[t]he purse strings should never be put into its hands.”
So what happened last week? Did Harry Reid, John Boehner, and Barack Obama simply agree to ignore the Constitution? (Specifically here, I mean—we know they do generally where federal power is concerned.) Were the House and Senate parliamentarians overruled by a naked political deal?
No, actually what happened is an end-run around the Origination Clause that alas happens with some regularity (and at the hands of both parties): some other revenue bill that passed the House but hasn’t been acted on by the Senate (deliberately or not) gets “amended” by a complete removal and replacement of its entire contents, including the title. This is, of course, what happened with Obamacare, as Sandefur again explains:
On November 19, 2009, Senator Harry Reid submitted an “amendment” to a bill that the House had passed the previous month, H.B. 3590. That bill, the “Service Members Home Ownership Act of 2009,” provided incentives for veterans to buy houses. Reid’s amendment struck out the entire text of H.B. 3590, and replaced it with what became the PPACA—including the Individual Mandate and 17 other separate revenue-raising provisions, estimated to increase federal revenue by $486 billion by 2019. Although this “strike and replace” procedure—sometimes called “gut and amend”—is not uncommon, the Court has never determined whether Congress can use the trick to get around the Origination Clause’s mandate.
(The reason Tim knows so much about this seemingly obscure – if important – clause is that he’s the lead attorney on Pacific Legal Foundation’s case, Sissel v. U.S. Dept. of Health & Human Services, that challenges Obamacare’s individual mandate in its metamorphosis into a tax.)
And so too with the “American Taxpayer Relief Act of 2012,” which was a true tax-relief bill of the same name that House Republicans (and 19 Democrats) passed on August 1, 2012. That bill was naturally DOA in Harry Reid’s Senate, but it did become a useful shell for last week’s shenanigans.
So there you have it: What’s a little Constitution between friends?
Oh, and a langiappe about our favorite new law: given that it was passed on January 1—but alas has not gone away with that day’s hangovers —even the year in the title is wrong. To be fair, however, it was both American and an act of Congress.
View full post on Cato @ Liberty
The Obama Admin Insisted that Giveaways to GE, Diageo, and Hollywood be Added to the Fiscal Cliff Deal
For anyone who is not familiar with the work Tim Carney is doing at the Washington Examiner they should be. Yesterday he reported on how it is that tax credits for certain companies found their way into the fiscal cliff bill.
It wasn’t some last minute insertion executed via some arcane legislative procedure. In fact it was a bundle of gifts constructed back in August just waiting to go at the right moment. The fiscal cliff debate was the right moment.
According to Carney former Senators-turned-lobbyists Breaux and Lott carried the deal. No wonder we can’t clean things up in Washington DC. The former head of the Senate is working against the taxpayer.
(From The Washington Examiner)
The “fiscal cliff” legislation passed this week included $76 billion in special-interest tax credits for the likes of General Electric, Hollywood and even Captain Morgan. But these subsidies weren’t the fruit of eleventh-hour lobbying conducted on the cliff’s edge — they were crafted back in August in a Senate committee, and they sat dormant until the White House reportedly insisted on them this week.
The post The Obama Admin Insisted that Giveaways to GE, Diageo, and Hollywood be Added to the Fiscal Cliff Deal appeared first on AgainstCronyCapitalism.org.
View full post on AgainstCronyCapitalism.org
Rum Subsidies Included in Fiscal Cliff Pork
K. William Watson
Among the various provisions in the recent fiscal cliff deal was a two-year extension of the rum cover-over program that sends federal revenue from rum excises to the governments of Puerto Rico and the U.S. Virgin Islands. The program was originally designed to provide development aid to these U.S. territories, but in recent years it has become a tool of industrial policy and corporate welfare.
I wrote about the program back in May last year:
As it does with all distilled spirits, the federal government charges an excise tax of $13.50 per proof gallon of rum sold in the United States. This equates to roughly $2 per bottle. Under the cover-over program, almost all of that money is directly granted to the U.S. Virgin Islands and the Commonwealth of Puerto Rico using a complex formula so that each receives a share of the money based on how much rum it produces relative to the other. The tax is collected from sales of all rum imported to the mainland, even from other countries.
In 2009 the U.S. Virgin Islands figured out how to increase its haul under the program by luring Captain Morgan maker Diageo to relocate its production facility there from Puerto Rico with a promise to share the loot. Diageo now has a 30 year deal to produce rum in the Virgin Islands backed by subsidies that cover almost the entire cost of production.
The use of the funds this way and the program’s extension have two major consequences.
First, the ensuing rum war between U.S. Virgin Islands and Puerto Rico to secure a larger portion of the cover over funds has crippled the ability of producers in other Caribbean island nations to compete in the global rum market. The potential for an embarrassing WTO challenge grows greater now that the program has been extended.
Second, Diageo now has a strong incentive to lobby Congress to keep the program in place. As the invaluable Tim Carney reports today in the Washington Examiner, Diageo hired ex-senators Trent Lott and John Breaux to lobby their former colleagues on the issue. The recent extension is merely a sign of more to come.
The program is worth about $450 million per year to the governments of these Caribbean territories. Giving a slice of that to rum producers brings in the lobbying power to keep the program in place, even as it drastically distorts the rum market at the expense of everyone else.
View full post on Cato @ Liberty
American • The Good, The Bad And The Ugly From The Fiscal Cliff Deal
The Good, The Bad And The Ugly From The Fiscal Cliff Deal
By Michael, on January 2nd, 2013
The fiscal cliff deal contains more bad news than it does good news. Yes, the tax increases on the middle class could have been much worse, and we should be thankful that Congress at least did something for the middle class. Unfortunately, they didn’t do enough. Every American worker is going to pay higher taxes next year as a result of this deal. The fiscal cliff deal represents the biggest tax increase in 20 years, and it is also projected to increase the U.S. national debt by an additional 4 trillion dollars over the next decade. In the final analysis, U.S. government finances are still wildly out of control and we are all going to be paying higher taxes. Not a whole lot to be excited about, and nothing has really been fixed for the long-term. Our politicians have kicked the can down the road once again, but someday they will run out of road and all of this debt will absolutely crush us. And of course a lot of our politicians didn’t even really know what they were voting for. The fiscal cliff bill was more than 150 pages long, and our Senators got the bill into their hands just 3 minutes before they voted on it. So none of them actually read the bill. But that is the way things work in America today. The blind are leading the blind and everyone is mindlessly hoping that everything will turn out okay somehow.
For a few moments, let’s take a closer look at the fiscal cliff deal. There are some good things in there, there are some bad things in there, and there are some things about the deal that are downright ugly.
The Good
-One of the best things about the fiscal cliff deal is that income tax rates did not rise on the poor and the middle class. This is great news for millions of families that are struggling to make ends meet each month. A significant rise in income tax rates would have been crippling.
-The Alternative Minimum Tax will now be permanently adjusted for inflation. This is something that I had screamed about in previous articles. If an AMT fix had not been passed, approximately 28 million households would have been hammered with the Alternative Minimum Tax on their 2012 earnings.
-Millions of unemployed workers will continue to receive extended federal unemployment benefits. We probably cannot really afford to keep doing this, but at least now there won’t be millions of unemployed workers that suddenly have their only source of income shut off. The next trick will be to find jobs for all of those workers. Unfortunately, millions of our jobs continue to be shipped to the other side of the world.
The Bad
-Payroll taxes are going up for every American worker. The fiscal cliff deal allows the 2 percent payroll tax cut to expire, and so now the average U.S. household bringing in about $50,000 a year will pay approximately $1,000 more per year in payroll taxes. As a result, it is being projected that U.S. consumers will have $115 billion less in disposable income to spend in 2013. Happy New Year American workers!
-The fiscal cliff deal did nothing about the new Obamacare taxes that went into effect on January 1st. Many of these taxes will hurt the middle class. To see an example of a receipt where a consumer was charged the new "medical excise tax" in Obamacare, just check out this article.
-The carried-interest deduction loophole remains intact, so incredibly wealthy hedge fund managers will continue to get away with paying very little in taxes. If the rest of us are being taxed into oblivion, then they should share in the pain with the rest of us. Of course I personally believe that the income tax should be abolished entirely, but none of our politicians seem interested in that idea at all.
-Income tax rates will increase for high earners. This will hurt a lot of small businesses. Many small businesses that earn more than $400,000 a year will now be faced with making some really tough choices. Some may have to lay off workers. The top rate will now be 39.6 percent, but when other federal and state taxes are factored in, many small businesses will now be paying a top marginal rate of well over 50 percent. That is absolutely obscene.
-A compromise was reached on the estate tax. The exemption was scheduled to fall to just $1 million and the rate was scheduled to go up to 55 percent, and fortunately Congress decided to do something about that. As I have written about previously, that would have been a disaster for many small businesses and family farms. As a result of the fiscal cliff deal, the estate tax will only rise from 35 percent to 40 percent. The exemption for individuals will be about 5 million dollars and for couples it will be about 10 million dollars, and those figures will now be indexed for inflation. A tax increase is never a good thing, but if Congress had done nothing things would have been far worse.
-The fiscal cliff deal contains a lot of pork. In particular, it contains provisions that extend specific tax breaks related to Puerto Rican rum, electric motorcycles, biodiesel and renewable diesel fuel, the film and television business, and motorsports entertainment complexes.
The Ugly
According to the Congressional Budget Office, as a result of this deal the U.S. national debt will be about $4 trillion higher a decade from now than it would have been if Congress had done nothing.
The deficit for fiscal year 2013 alone will be about $330 billion higher than it would have been if Congress had done nothing.
So this deal has made our debt problems even worse.
Right now, the U.S. has a debt to GDP ratio of about 103 percent. We are already well into the "danger zone", yet most Americans still don’t seem very concerned about all of this debt.
The fiscal cliff deal contained hardly any spending cuts at all. In fact, there was a 41 to 1 ratio of tax increases to spending cuts in the deal. The Democrats definitely won this round. But of course they had most of the leverage. If Congress had done nothing, the middle class would have been absolutely devastated by all of the tax increases, and the Republicans were desperate to prevent that.
But now that the battle over taxes is done, the leverage is going to shift over to the Republicans for the next big fight.
The battle over the debt ceiling is next. If Congress does not act, the U.S. government will soon not be able to borrow any additional money. This battle will be one of the stories that dominates the headlines over the next few months.
If the Republicans want to do something serious about spending, now is their chance. The battle over tax rates is already over, and there is no election in November. The Republicans could conceivably say "NO" to a debt ceiling increase if they want to. If that happened, the federal government would only be able to spend the money that it already has. It would not be able to borrow more. That would mean that we would have to start living within our means.
What a novel concept.
Of course there is no reason to believe that the Republicans in the House will suddenly grow a spine. They have folded every other time that the debt ceiling has come up. It will probably be the same again in 2013.
And Barack Obama is already saying that there will be "no negotiations" over the debt ceiling this time. He expects the Republicans to raise the debt ceiling for him without getting anything in return…
"I will not have another debate with this Congress over whether they will pay the bills they’ve already racked up."
But the U.S. government cannot spend a single penny or borrow a single penny without the approval of the U.S. House of Representatives.
If the Republicans in the House want to ever get serious about government spending, the upcoming battle over the debt ceiling is a golden opportunity.
They could stop the Obama administration from piling up crazy amounts of debt if they want to. All they need is the courage to take a stand.
During the first four years of the Obama administration, the U.S. government accumulated about as much debt as it did from the time that George Washington took office to the time that George W. Bush took office.
The Republicans have had control of the House for about half of that time. That means that they have been willing accomplices.
So will they take a stand?
That is very doubtful. Over the past few years they have exhibited the intestinal fortitude of a frightened chicken. They will probably huff and puff a little bit, but in the end they will probably give in to Obama once again.
But what we are doing to our children and our grandchildren is so immoral that it is hard to describe. We are stealing more than 100 million dollars from them every single hour of every single day, and we plan on leaving them with the biggest pile of debt the world has ever seen. We should be absolutely ashamed of ourselves.
Why can’t we just spend the money that we have?
What would be so wrong with that?
Unfortunately, that would mean such a painful downward adjustment in our standard of living that most Americans would freak out. We are addicted to debt-fueled prosperity, and so we can’t stop stealing from future generations. We need their money to feed our addiction.
In the end, this gigantic mountain of debt is absolutely going to destroy everything that our forefathers built for us. There have been some people that have been warning about this for decades, but the American people did not listen.
Soon enough, we will all pay the price for this foolishness.
http://theeconomiccollapseblog.com/arch … cliff-deal
Statistics: Posted by yoda — Thu Jan 03, 2013 1:29 am
View full post on opinions.caduceusx.com
The Good, The Bad And The Ugly From The Fiscal Cliff Deal
The fiscal cliff deal contains more bad news than it does good news. Yes, the tax increases on the middle class could have been much worse, and we should be thankful that Congress at least did something for the middle class. Unfortunately, they didn’t do enough. Every American worker is going to pay higher taxes next year as a result of this deal. The fiscal cliff deal represents the biggest tax increase in 20 years, and it is also projected to increase the U.S. national debt by an additional 4 trillion dollars over the next decade. In the final analysis, U.S. government finances are still wildly out of control and we are all going to be paying higher taxes. Not a whole lot to be excited about, and nothing has really been fixed for the long-term. Our politicians have kicked the can down the road once again, but someday they will run out of road and all of this debt will absolutely crush us. And of course a lot of our politicians didn’t even really know what they were voting for. The fiscal cliff bill was more than 150 pages long, and our Senators got the bill into their hands just 3 minutes before they voted on it. So none of them actually read the bill. But that is the way things work in America today. The blind are leading the blind and everyone is mindlessly hoping that everything will turn out okay somehow.
For a few moments, let’s take a closer look at the fiscal cliff deal. There are some good things in there, there are some bad things in there, and there are some things about the deal that are downright ugly.
The Good
-One of the best things about the fiscal cliff deal is that income tax rates did not rise on the poor and the middle class. This is great news for millions of families that are struggling to make ends meet each month. A significant rise in income tax rates would have been crippling.
-The Alternative Minimum Tax will now be permanently adjusted for inflation. This is something that I had screamed about in previous articles. If an AMT fix had not been passed, approximately 28 million households would have been hammered with the Alternative Minimum Tax on their 2012 earnings.
-Millions of unemployed workers will continue to receive extended federal unemployment benefits. We probably cannot really afford to keep doing this, but at least now there won’t be millions of unemployed workers that suddenly have their only source of income shut off. The next trick will be to find jobs for all of those workers. Unfortunately, millions of our jobs continue to be shipped to the other side of the world.
The Bad
-Payroll taxes are going up for every American worker. The fiscal cliff deal allows the 2 percent payroll tax cut to expire, and so now the average U.S. household bringing in about $50,000 a year will pay approximately $1,000 more per year in payroll taxes. As a result, it is being projected that U.S. consumers will have $115 billion less in disposable income to spend in 2013. Happy New Year American workers!
-The fiscal cliff deal did nothing about the new Obamacare taxes that went into effect on January 1st. Many of these taxes will hurt the middle class. To see an example of a receipt where a consumer was charged the new “medical excise tax” in Obamacare, just check out this article.
-The carried-interest deduction loophole remains intact, so incredibly wealthy hedge fund managers will continue to get away with paying very little in taxes. If the rest of us are being taxed into oblivion, then they should share in the pain with the rest of us. Of course I personally believe that the income tax should be abolished entirely, but none of our politicians seem interested in that idea at all.
-Income tax rates will increase for high earners. This will hurt a lot of small businesses. Many small businesses that earn more than $400,000 a year will now be faced with making some really tough choices. Some may have to lay off workers. The top rate will now be 39.6 percent, but when other federal and state taxes are factored in, many small businesses will now be paying a top marginal rate of well over 50 percent. That is absolutely obscene.
-A compromise was reached on the estate tax. The exemption was scheduled to fall to just $1 million and the rate was scheduled to go up to 55 percent, and fortunately Congress decided to do something about that. As I have written about previously, that would have been a disaster for many small businesses and family farms. As a result of the fiscal cliff deal, the estate tax will only rise from 35 percent to 40 percent. The exemption for individuals will be about 5 million dollars and for couples it will be about 10 million dollars, and those figures will now be indexed for inflation. A tax increase is never a good thing, but if Congress had done nothing things would have been far worse.
-The fiscal cliff deal contains a lot of pork. In particular, it contains provisions that extend specific tax breaks related to Puerto Rican rum, electric motorcycles, biodiesel and renewable diesel fuel, the film and television business, and motorsports entertainment complexes.
The Ugly
According to the Congressional Budget Office, as a result of this deal the U.S. national debt will be about $4 trillion higher a decade from now than it would have been if Congress had done nothing.
The deficit for fiscal year 2013 alone will be about $330 billion higher than it would have been if Congress had done nothing.
So this deal has made our debt problems even worse.
Right now, the U.S. has a debt to GDP ratio of about 103 percent. We are already well into the “danger zone”, yet most Americans still don’t seem very concerned about all of this debt.
The fiscal cliff deal contained hardly any spending cuts at all. In fact, there was a 41 to 1 ratio of tax increases to spending cuts in the deal. The Democrats definitely won this round. But of course they had most of the leverage. If Congress had done nothing, the middle class would have been absolutely devastated by all of the tax increases, and the Republicans were desperate to prevent that.
But now that the battle over taxes is done, the leverage is going to shift over to the Republicans for the next big fight.
The battle over the debt ceiling is next. If Congress does not act, the U.S. government will soon not be able to borrow any additional money. This battle will be one of the stories that dominates the headlines over the next few months.
If the Republicans want to do something serious about spending, now is their chance. The battle over tax rates is already over, and there is no election in November. The Republicans could conceivably say “NO” to a debt ceiling increase if they want to. If that happened, the federal government would only be able to spend the money that it already has. It would not be able to borrow more. That would mean that we would have to start living within our means.
What a novel concept.
Of course there is no reason to believe that the Republicans in the House will suddenly grow a spine. They have folded every other time that the debt ceiling has come up. It will probably be the same again in 2013.
And Barack Obama is already saying that there will be “no negotiations” over the debt ceiling this time. He expects the Republicans to raise the debt ceiling for him without getting anything in return…
“I will not have another debate with this Congress over whether they will pay the bills they’ve already racked up.”
But the U.S. government cannot spend a single penny or borrow a single penny without the approval of the U.S. House of Representatives.
If the Republicans in the House want to ever get serious about government spending, the upcoming battle over the debt ceiling is a golden opportunity.
They could stop the Obama administration from piling up crazy amounts of debt if they want to. All they need is the courage to take a stand.
During the first four years of the Obama administration, the U.S. government accumulated about as much debt as it did from the time that George Washington took office to the time that George W. Bush took office.
The Republicans have had control of the House for about half of that time. That means that they have been willing accomplices.
So will they take a stand?
That is very doubtful. Over the past few years they have exhibited the intestinal fortitude of a frightened chicken. They will probably huff and puff a little bit, but in the end they will probably give in to Obama once again.
But what we are doing to our children and our grandchildren is so immoral that it is hard to describe. We are stealing more than 100 million dollars from them every single hour of every single day, and we plan on leaving them with the biggest pile of debt the world has ever seen. We should be absolutely ashamed of ourselves.
Why can’t we just spend the money that we have?
What would be so wrong with that?
Unfortunately, that would mean such a painful downward adjustment in our standard of living that most Americans would freak out. We are addicted to debt-fueled prosperity, and so we can’t stop stealing from future generations. We need their money to feed our addiction.
In the end, this gigantic mountain of debt is absolutely going to destroy everything that our forefathers built for us. There have been some people that have been warning about this for decades, but the American people did not listen.
Soon enough, we will all pay the price for this foolishness.
View full post on The Economic Collapse
It’s the Spending Cliff, Stupid
Steve H. Hanke
Washington has once again rescued the citizenry from another disaster of its own design. Yes. At the eleventh hour, we avoided going over the fiscal cliff. What nonsense. And, alas, not even good nonsense.
With the relative size of government spending surging – something that started under George W. Bush’s presidency – President Obama took the country over the only cliff that matters – the government spending cliff.
For a change, let’s consider a few fiscal facts. The accompanying chart traces the evolution of federal government expenditures, as a percent of GDP since 1952. Based on the data, from 1952 until 2008 – when President Obama was first elected – we would expect, with an assurance of 95% that the size of federal government, as a percent of GDP, would fall in a range of 16.5% to 23.4% (see the accompanying chart).
Since President Obama’s election, in 2008, the federal government has been in uncharted territory. Indeed, government spending has been “over the cliff” in each year of the Obama presidency. Today, for example, federal government expenditures, as a percent of GDP, register at 24.3%. This is nine tenths of a percentage point higher than the high end (23.4%) of the 95% historical range.
So, it’s all about government spending. But, the U.S. Congress and the President, during all their holiday machinations didn’t touch government spending. It would seem they wanted to avoid any hard work until the New Year was rung in on a celebratory note.
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