The total value of the “fiscal cliff” is $600 billion plus another $125 billion in current debts ($60 billion for Sandy aid, $20 billion in current debts each for the U.S. Post Office, the FHA and Freddie Mae/Fannie Mac) equals $725 billion that Congress needs to “avert the fiscal cliff.”
Speaker Boehner’s latest offer equals $100 billion in tax increases and $100 billion in tax cuts or $200 billion in net revenues. Boehner’s tax revenues are vague at best.
Changing the Social Security CPI index won’t make any money at all next year, if ever. Indexing payments that are next to nothing ($1200 a month) still equals nothing. Nor will raising taxes on millionaires and billionaires…
Only o.1% or one tenth of one percent of the over $250,000 group earns more than $1 million, according to the IRS. This means the government’s net will be $10 billion instead of $84 billion (the general consensus for the net from raising taxes on people earning over $250,000). This assumes the rich folks won’t find new loopholes, move their assets overseas, or move their asses overseas to avoid taxes altogether.
The government spends $6 billion more each day than it takes in, so that $10 billion from taxing the rich will be gone in 36 hours or less. Arguably, Boehner’s “grand bargain” will be lucky to cover our current debts.
The Democrat’s reduction in government expenses aren’t much better. Raising the Medicare eligibility age won’t do squat. By that time everybody will be covered by Obamacare so all you’re doing is moving them from one government program to another. The net savings is zero.
Optimistically, a $200 billion deal still leaves a fiscal cliff of $400 billion. Adding current debts, it’s $525 billion. That still sounds like a pretty damn big cliff to me. Sequestration is still inevitable. The Alternate Minimum Tax kicks back in. Jobless benefits expire. The payroll tax holiday still goes away.
No matter what Congress does, taxes will still zoom up on every American.
The Republicans are trying to make it into a fiscal slope, calling for “discussions on entitlement reform” over the next 12 months. We’ve been having “discussions” for 24 months now. Nothing’s going to change in the next 12 months.
Finally, if you look closely at the Democrat’s generous offer of $100 billion in savings it’s just an accounting trick. They assume government spending goes up by 7-8% to account for population growth and inflation. Then they say we save all that money if we keep spending at current levels.
That’s $100 billion of hot air. The Federal Reserve will keep the interest rate at 0.25% for years, until unemployment drops below 6.5%. And population growth? The size of the workforce has decreased by 3 million since Obama took office. They have no business growing government spending at all.
Smoke and mirrors. It’s all just smoke and mirrors.
