The Actual Fiscal Cliff

Wednesday, January 2, AD 2013


Well the so-called Fiscal Cliff was avoided through the mechanism that I predicted back in November:


What will happen I suspect is that the fiscal cliff will be avoided through taxes increasing on “the rich”, that will produce revenue that amounts to a rounding error in today’s federal budget, with completely illusory spending cuts.  In short, the can will be kicked down the road.  Unfortunately for the nation, the end of the road is almost here.


85 Republicans in the House voted for the Fiscal Cliff deal, and 151 voted against it.  The Deal passed courtesy of 172 Democrat votes in the House.

The main  terms of the agreement are as follows:

1.  The Bush tax cuts were made permanent for single filers below 400,000 and married filers below 450,000.

2.  The Alternative Minimum Tax has been permanently fixed by adjusting it for inflation.

(I would note that these portions of the deal should be considered as victories for the GOP.  Permanently extending the Bush tax cuts for 98% of the population takes away from Democrats the opportunity to use this as a stick against Republicans.  The Republicans have fought for a permanent inflation fix to the the Alternative Minimum Tax since it was first proposed in 1969.)

3.  Yet another showdown over mandated spending cuts was set up for two months down the road.

4.  The tax increases on those earning over 400,000 for single filers and 450,000 for married couple will bring in an estimated 35 billion a year.

5.  Capital gains tax will go from 15-20 percent on those earning 400,000 for single filers and 450,000 for married couples.

6.  The Estate Tax goes from 35%-40%.  (The estate tax only applies to estates over five million dollars.)

7.  Factoring in the estate tax increase and the capital gains tax increase estimated additional taxes come to 60 billion a year.  For comparison purposes the deficit last year was 1.2 trillion dollars.

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3 Responses to The Actual Fiscal Cliff

  • Folks,

    I am not trying to change the subject of this post, but I cannot resist asking: how much of the revenue from this fiscal crisis bill, if any, will go into making our country energy independent, thereby relieving us of the burden to get involved in wars of foreign adventurism to secure the steady supply of mineral slime from lands of Islamic fascism?

    We could build hundreds and hundreds of passively safe new nuclear power plants immune to events like Fukushima, Chernobyl and TMI, and use the energy therefrom to produce via either the Fischer–Tropsch process as much liquid hydrocarbon fuels from our abundant coal reserves or, via the silver iodine thermo-chemical process, as much hydrogen from water as we could possibly need for tens of thousands of years.

    Again, I cannot resist. Here is the GEH ESBWR (click on the triangle in the Media Gallery field at the following web link to watch the animation):

    Or the Westinghouse AP-1000 (the animation isn’t as polished, but just click on the triangle beneath the diagram to watch the passive core cooling system in action here):

    And to consume the long lived actinides from the used nuclear fuel (forever making long-term geologic repository a moot point), there’s the GEH PRISM (there’s only a PDF file on this; no really good animation that I have found so far):

    Low cost, safe, clean, abundant energy is a key prerequisite to economic prosperity. But what do we do? Tax and spend with no real planning for the future. There will be more wars for natural resources because of our greed. As St. Paul states in 1st Timothy 6:10, “For the love of money is a root of all kinds of evil.”

  • Mac,

    This is an outstanding post.

    Next, we can anticipate a USA credit-rating agency downgrade.

    Uncertainties and risks accompanying today’s stock market euphoria: annually $1,000,000,000,000.00 deficits/more debt, $60,000,000,000.00 more tax receipts. Does nothing to curb spending.

    This doesn’t improve the economic outlook. In couple months they will confront another debt ceiling fiasco – dems focus will be on tax increases: will target deductions, credits and so-called loop-holes. This will be adverse for the economy, cuts consumer spending and cash flows, it will not touch the real crisis: government spending; and likely America will go two months without being able to incur an additional dollar in debt courtesy of the debt ceiling.

    In conclusion, perpetual (Why still needed three years after the recession ended?) fiscal and monetary stimuli are unsafe, unsound, and unsustainable.

  • If I heard it correctly, the bill also enacts $1.5 billion of spending cuts per year, a ratio of 20:1. Republicans had been complaining about a plan that with a 1:5 ratio a few months ago. Nice job negotiating, fellas.

The Fiscal Cliff, Taxes, Math and the End of the Road

Friday, November 30, AD 2012


The above video by Bill Whittle from 2011 illustrates how deep in the hole we are when it comes to annual deficits.  The idea of the Obama administration that the Bush tax cuts must expire for “the rich” earning over 250K (In Chicago that would be a cop and his schoolteacher wife.) has everything to do with politics and almost nothing to do with deficit reduction.  Here is why.

If you abolished all of the Bush tax cuts for “the rich” earning over 250K a year, and assuming they did not come up with ways to legally avoid the additional tax by deferring income,  the Treasury, further making the rash assumption that increasing taxes does not have any negative impact on the economy, would receive about 70 billion dollars in additional taxes, according to the Congressional Budget Office.  This year our deficit is approximately 1.1 trillion dollars.  If we eliminate the Bush tax cuts for all taxpayers, the increase in taxes would be about 370 billion, according to the CBO, assuming, rashly, that increasing taxes on the middle class would not have a negative impact on the economy and swell the ranks of people qualifying for “freebies” from Uncle Sucker.

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9 Responses to The Fiscal Cliff, Taxes, Math and the End of the Road

  • Maybe it’s time to make “fiscal cliff diving” an Olympic sport….

  • Elaine, Medals of paper, tin foil, and CD’s of sounds of insane laughter from politicians/government spenders with a back beat of their footfalls running for cover as ill-gotten gains jingle in their pockets thinking they won the game.

  • With the lying, liberal (I repeat myself again) media 24/7 fabricating facts it is impossible to guide popular opinion or to make known the truth.

  • The problem is too many people want to believe that 1+1=1,000,000,000. Either we need a populace with better knowledge of arithmetic, or we ride the delusion to its inevitable conclusion.

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  • Wow!! What an anti-Catholic sentiment. What a shame that many so-called Catholic web-sites like this one have become a champion of the greedy and corrupt. The republican econoimc platform is precisely what Thomas More called in “Utopia” a “a conspracy of the rich”. Church doctrine has alays suported left-leaning economic theory. Including such great Popes as Pius XI, John XXIII and John Paul II. We have consistently suported labor rights and government assistance in bringing about economic equality. You seem to support the same type of wealthy, elite, fascist government that got Oscar Romero murdered in San Salvador. How dare you call youreslf Catholic.

  • Ah Stephen, your comment should be preserved in amber to represent the mind set of leftist Catholics at the dawn of the second decade of the twenty-first century! Of course you wasted not a moment in dealing with the substance of the post which is that the tax increases asked for by the President I am confident you voted for will do absolutely nothing to solve our basic budget problem of attempting to spend money that we do not have. Screeching insults against those who do not share your political ideoplogy will do nothing to alter reality, although I am confident you will attempt to continue to do so.

  • I think Gerald L. Campbell has a spam generator.

  • I call them hard-working, diligent, responsible. Stephen calls them “greedy and corrupt.”

    I can’t go on.

    Stephen is exempli gratia for my comment of 1130 hours, 30 November:,

    “With the lying, liberal (I repeat myself again) media 24/7 fabricating facts it is impossible to guide popular opinion or to make known the truth.” Add to the “lying, liberal” media, the brain-washing, so-called public schools and higher education systems.

    Again, in November 2008, they prove they are not racists. On November 6 and again on December 7, Stephen proves he is an imbecile.