All in all, more coming in (higher taxes) and less going out (budget cuts) is better than spend, spend, spend so if going over the cliff is what is takes to get We The People to see the light I say lets go over it in a convertable!!
Here's a terrifying thought to consider; we could go through that and even though, in a broader sense, it's really not much at all, it will be real pain for real people if they're cut and then...
Nothing. Just more spending, more entitlements, more government. In short, more of what got us here.
This is why I keep doing two things; on the one hand, asking what could possibly bring about the level of economic growth we need and, two, absent any real growth, the only practical solutions I see; one, enormous write off of debt coupled with higher interest rates and appropriate regulations to avoid going back down the same path and, two, cheap energy.
I keep throwing this out there and no one cares because it is so bleak;
To stop spending $1 trillion more a year we need growth of 6%. That is simply to have $1,000,000,000,000 more if gross dollars and that assumes the government takes ever penny of it.
If we simply cut that much spending, it does NOT matter what it was being spent on, income transfer, defense, studying the sex life of water and air, that is still $1 trillion people are depending on and those folks have lives to live, mouths to feed, bills to pay and if that trillion isn't coming from government spending, it HAS to come from somewhere so, we STILL need 6% just to STOP the bleeding.
Next up is poverty, households earning $22,000 a year or less. $60,000 per household, 17 million households, $1 trillion, IS being spent in one form or another, state and fed, income transfer, subsidies, etc, to help them. That's another 6% in growth we need if the trillion we stop borrowing every year to close the gap for them. That money isn't just for them, it is also the lifeblood of people who make their living in the welfare sector.
The third leg of this stool is paying DOWN debt. We need ANOTHER 6% in growth to pay down a trillion a year.
Now, money is fungible. Not all cuts have to go to the same place and increases can be made here or there but, that requires a corresponding cut elsewhere. The larger point is that we need some combination of;
1. 6% growth to STOP annual deficits averaging over $1 trillion a year.
2. 6% growth to go where that trillion is currently going.
3. 6% to pay down a trillion a year.
President Obama thinks simply taking a few billion a year from rich people is smart. It's not. It only makes the problem worse because, again, money is fungible. If government takes it from the rich, that means wherever they were spending it before...loses it. And it doesn't matter if that is yachts, caviar or vacations; they are putting it in the economy.
Republicans think you can just cut it. Well, where? Why and how? Every single dollar government spends, no matter what it is for, goes into someones groceries, rent or mortgage, cars, health, kids, you name it. So, simply cutting can stop the need for the 6% growth for #1 above but, folks gotta find that $ somewhere.
Corporations are sitting on trillions. The left really just wants to take it. That's all well and good, just like the Stimulus, for a day, for a year or two but, then we still need GROWTH now and next year and the year after.
This is why I keep coming back to debt and energy; if we cut home mortgage debt by half BUT allow interest rates to 7%, banks have half the balance sheet but over twice the REAL income. Same with student loans. Wipe it out. It's government promoted debt for government approved activity, education, that has collapsed in value...because of the government.
And energy. Middle class people are hurt, a lot, every day, by energy costs. At home, in the car, lost wages, increased costs of everything.
Absent those two, both of which put, by my math, $1.5 trillion into the pockets of consumers, per year, where it NEEDS to be, where does the growth come from?
Housing? Commercial real estate? Tech? Lying about your books?
We are in an ENORMOUS whole and tax the rich, cut a few bucks in spending, NONE of that scratches the REAL growth we need. 6% growth is HUGE. 12% is crazy. 18% has happened twice since WWII; right after the war and early in Reagan when tax cuts and defense spending kicked in.
Growth, sustained, above 10% was the 50's, the post war (victory) boom.
We are sooooooooooooooo ####ed.