Fiscal Cliff

[saxitoxin]

The CBC actually ran a story on this a few weeks ago. The parents of a child in B.C. with Legg Calvé Perthes syndrome decided to take him to the U.S. The U.S. had been running a newly developed treatment for about a year.

It will never be possible for Canada and other small countries - despite some R&D successes - to be nations that do science due to the logarithmic way in which resource requirements increase to bridge each new development. They use off-the-shelf medical procedures developed in other countries (i.e. the U.S., Japan and - to a lesser extent - Germany).

This is usually good for 99.99% of people. But the kid had a rare disease and the Americans who have developed the new procedure haven't had a chance to go on tour teaching it to physicians in the little countries yet. Anyway, this kid's parents took him to the Rubin Institute for Advanced Orthopedics Research in Baltimore which fixed him up neatly. Unfortunately, the story took a turn for the worse as all Canadian physicians are now refusing to treat the child.

http://www.cbc.ca/news/canada/british-c ... enied.html

[saxitoxin]

LOL - Obama was in such a hurry to get back to Hawaii that he was already in the air when the budget deal was passed and the Signing Machine had to sign it into law.

The final twist in the (first) fiscal cliff saga: How did the bill get signed By President Barack Obama? Headed for Hawaii, Obama bolted Washington following the House’s passage of the fiscal cliff compromise on New Year’s Day before signing it. Have no fear, the autopen is here.

Read more: http://www.politico.com/story/2013/01/a ... z2GxM4AIIr

Autopen should run for President in 2016. Look at how much work he or she gets done ...

[thegreekdog]

Lawrence O'Donnell just said everything we've been saying about the fiscal cliff deal but went even further. He noted that the income threshold for the top tax rate under Clinton would be $397,000 today (indexed for inflation). The $250,000 figure was set 20 years ago. So by starting with $250K and "caving" by raising the threshold to $400K, Obama basically undid the Bush tax cuts for the wealthiest taxpayers, and most Republicans (and most pundits on the Left) didn't even realize what he was doing. Not only did he get Republicans to vote to raise taxes for the first time in 22 years (not a single Republican voted for Clinton's tax hike on the wealthy), but he got extended unemployment benefits and a five-year extension in refundable tax credits (i.e., entitlements) for low-income taxpayers. O keeps playing chess, and everyone else keeps seeing checkers.

http://www.washingtonpost.com/blogs/won ... one-chart/

Some other, ummentioned by Stone, items in the law that the president e-signed: renewed business tax provisions including the research credit, CFC (controlled foreign corporation) look-through, the exception for active financing income, film tax credits, renewable energy tax credits, and extension of 50% bonus depreciation.

So basically, he raised taxes on all individuals (more so on wealthy people) and extended tax benefits for big corporations. That sounds about right for a good, business-friendly president.

[BigBallinStalin]

Regarding healthcare costs and medicine, much of that is due to the extremely high safety standards enforced by the FDA. It delays production, increases the cost, prices out competitors, etc.

[DoomYoshi]

THe bottom line in example 1 should read 385, not 38.50.

[Phatscotty]

if you make over 38,000, you will be paying an extra 600$ this year.

That's 50$ a month.

If you live in California and make over 400k, your income tax (fed+state) take 53% of that income, or about 206, which leaves you with 194k take home on a 400k income, and 194k in Cali goes a lot faster than almost anywhere else in America. Of course, this isn't even starting with astronomical sales taxes, gas taxes, city and county taxes, etc etc. Factor in the cost of a healthcare plan,and I don't think anyone who makes over 400k will see even 150k of that. People in New York are in a very similar situation.

I wonder what people who make over 400k in New York and California are going to do?

[Lootifer]

Haha, I imagine live very comfortably off $2000/week disposable income (after tax). I know I would be pretty happy about that.

[Phatscotty]

Haha, I imagine live very comfortably off $2000/week disposable income (after tax). I know I would be pretty happy about that.

But can you really understand what you would have to do to earn 4,000/week? I mean, let's speculate a little, as I'm gonna guess it's not a 28 or 36 hour work week.....and I'll also guess you don't get to sleep in. Probably a job in the city too, but maybe not, so then what time do you have to wake up to deal with traffic in Los Angeles?

And who are you working for? Are you working for yourself and your family? Or are you working for someone else?

[Lootifer]

Haha, I imagine live very comfortably off $2000/week disposable income (after tax). I know I would be pretty happy about that.

But can you really understand what you would have to do to earn 4,000/week? I mean, let's speculate a little, as I'm gonna guess it's not a 28 or 36 hour work week.....and I'll also guess you don't get to sleep in. Probably a job in the city too, but maybe not, so then what time do you have to wake up to deal with traffic in Los Angeles?

And who are you working for? Are you working for yourself and your family? Or are you working for someone else?

Depends on how much money you currently have; the ole adage of "takes money to make money".

In NZ you could easily (I think) make around 400k by being head of a business unit in a fairly large organisation; for example CFO or something similar. I know a few of these types and sure they work hard, but thats not really why they get paid that much; they get paid because of their responsibility and their intellect/skills (or more specifically their history which shows them to have a high intellect/skill level).

[BigBallinStalin]

Haha, I imagine live very comfortably off $2000/week disposable income (after tax). I know I would be pretty happy about that.

But can you really understand what you would have to do to earn 4,000/week? I mean, let's speculate a little, as I'm gonna guess it's not a 28 or 36 hour work week.....and I'll also guess you don't get to sleep in. Probably a job in the city too, but maybe not, so then what time do you have to wake up to deal with traffic in Los Angeles?

And who are you working for? Are you working for yourself and your family? Or are you working for someone else?

Depends on how much money you currently have; the ole adage of "takes money to make money".

In NZ you could easily (I think) make around 400k by being head of a business unit in a fairly large organisation; for example CFO or something similar. I know a few of these types and sure they work hard, but thats not really why they get paid that much; they get paid because of their responsibility and their intellect/skills (or more specifically their history which shows them to have a high intellect/skill level).

Didn't you say awhile ago that CEOs were in a 'good ol boys' club which colluded internationally in order to increase the price of their labor?

[Juan_Bottom]

The deal with budget cuts - where are they supposed to come from?
You or I would probably target the Department of Homeland Security, and some other bullsh*t budgets, but the Republican Party chose to primarily assail Social Security. At least that's the message that I got. I think that was pretty irresponsible of them.

And I also agree with phatscotty that it's unfair to ask someone to pay in 50% of their income unless they are impoverishing those below them. For example, I'd have no problem taking 99% of the Wal*Mart heir's money. I do have a problem with taking 50% of a successful brain surgeon's income. The Heirs make their money by hurting America, while the brain surgeon isn't intentionally hurting anyone. There's a difference.

[Phatscotty]

The deal with budget cuts - where are they supposed to come from?
You or I would probably target the Department of Homeland Security, and some other bullsh*t budgets, but the Republican Party chose to primarily assail Social Security. At least that's the message that I got. I think that was pretty irresponsible of them.

And I also agree with phatscotty that it's unfair to ask someone to pay in 50% of their income unless they are impoverishing those below them. For example, I'd have no problem taking 99% of the Wal*Mart heir's money. I do have a problem with taking 50% of a successful brain surgeon's income. The Heirs make their money by hurting America, while the brain surgeon isn't intentionally hurting anyone. There's a difference.

Where are they supposed to come from? I think that's the wrong question. The question is, why did the government think they could promise to spend money they don't have??? It's obvious when you look at it this way.



See that interest slice? it's 10% now, and it's growing bigger, and it's growing bigger at a exponentially faster rate. Rather than dealing with this problem, we are throwing Obamacare right on top, and the federal government has doubled in size over the last 10 years, while the federal debt has tripled.

Everything needs to be cut, across the board. I don't even want to call it a spending cut, since we can't spend what we don't have, so if we don't have it, how can it be "cut"?

We already reached the point where we had to start borrowing just to make the interest payments on our debt. We don't have the money, and we can't afford to borrow it or steal from the future anymore.

[saxitoxin]

LOL - some old man gets angry no one is listening to his old man stories today in the Senate ...

http://www.youtube.com/watch?v=nm0W2s-vBFs&t=1m10s

[thegreekdog]

The deal with budget cuts - where are they supposed to come from?
You or I would probably target the Department of Homeland Security, and some other bullsh*t budgets, but the Republican Party chose to primarily assail Social Security. At least that's the message that I got. I think that was pretty irresponsible of them.

And I also agree with phatscotty that it's unfair to ask someone to pay in 50% of their income unless they are impoverishing those below them. For example, I'd have no problem taking 99% of the Wal*Mart heir's money. I do have a problem with taking 50% of a successful brain surgeon's income. The Heirs make their money by hurting America, while the brain surgeon isn't intentionally hurting anyone. There's a difference.

I'm not sure you understand the legislation entirely. While the Walmart heir will certainly be taxed more, he will only be taxed more if he chooses to sell stock or recognize any capital gain income. The successful brain surgeon will be taxed more, but will only be taxed more if he continues being a brain surgeon. Additionally, companies like Walmart continue to receive those great tax benefits it has lobbied for and received in the past (things like increased deductions for bonus depreciation, R&D credits, foreign planning that affects US taxes).

It doesn't seem like that's what you wanted the law to accomplish. But I guess you and all the Democratic editorialists are easily duped into believing you got what you want since the president has a "D" next to his name.

[PLAYER57832]

It doesn't seem like that's what you wanted the law to accomplish. But I guess you and all the Democratic editorialists are easily duped into believing you got what you want since the president has a "D" next to his name.

No, its more like media needs to have a relative period of peace.. so they can have an excuse to cover the next imagined tragedy without people just getting so frustrated they will turn off their sets.

The real truth, of course, as you noted is that the so called "fix" did little to change the root causes. And most of the fixes are intent on continuing the status quo with only the most minor of changes.

[BigBallinStalin]

It doesn't seem like that's what you wanted the law to accomplish. But I guess you and all the Democratic editorialists are easily duped into believing you got what you want since the president has a "D" next to his name.

No, its more like media needs to have a relative period of peace.. so they can have an excuse to cover the next imagined tragedy without people just getting so frustrated they will turn off their sets.

The real truth, of course, as you noted is that the so called "fix" did little to change the root causes. And most of the fixes are intent on continuing the status quo with only the most minor of changes.

Thanks for participating in the national election, thus contributing to these half-assed solutions. However, you may be right because it's so much easier to blame 'those evil media' types instead of accounting for one's own actions.

[thegreekdog]

It doesn't seem like that's what you wanted the law to accomplish. But I guess you and all the Democratic editorialists are easily duped into believing you got what you want since the president has a "D" next to his name.

No, its more like media needs to have a relative period of peace.. so they can have an excuse to cover the next imagined tragedy without people just getting so frustrated they will turn off their sets.

The real truth, of course, as you noted is that the so called "fix" did little to change the root causes. And most of the fixes are intent on continuing the status quo with only the most minor of changes.

Yeah, that's not what it is.

The right-leaning editorialists say "oh noes, they raised taxes" and the left-leaning editorialists say "oh yay, they raised taxes."

The right-leaning people should have said (and some of them are) "there are no spending cuts here, Obama lied when he promised spending cuts with tax increases."
The left-leaning people should have said "why are we giving more benefits to corporations, raising taxes on the middle class and working class."

But, again, if I can continue to try to drum this into your head, the Democrats aren't interested in the things you want them to be interested in; they continue to dupe you.

[Juan_Bottom]

I'm not sure you understand the legislation entirely.

I haven't made any comments on the legislation.

[tzor]

We already reached the point where we had to start borrowing just to make the interest payments on our debt. We don't have the money, and we can't afford to borrow it or steal from the future anymore.

Technically that is not true. Revenue >>> Debt Interest. That's a lie Democrats keep using to scare people about the debt ceiling.

Interest in FY 2013 is $247B and the current rate is 1.41%
Revenue in taxes in FY 2013 is $1,707B

If you sort spending according to logical priorities we never need to "borrow" to pay the current interest on the debt. Other "obligations" are another matter. Social Security, Medicare, etc. Their problems will turn this mountain of a fiscal cliff into a molehill.

[patches70]

We already reached the point where we had to start borrowing just to make the interest payments on our debt. We don't have the money, and we can't afford to borrow it or steal from the future anymore.

Technically that is not true. Revenue >>> Debt Interest. That's a lie Democrats keep using to scare people about the debt ceiling.

Interest in FY 2013 is $247B and the current rate is 1.41%
Revenue in taxes in FY 2013 is $1,707B

If you sort spending according to logical priorities we never need to "borrow" to pay the current interest on the debt. Other "obligations" are another matter. Social Security, Medicare, etc. Their problems will turn this mountain of a fiscal cliff into a molehill.

Consider that that average interest rate is around %6 normally, it's only so low because The Fed is propping up our dying currency. They can't do this forever.

You should probably take a look at this-

https://www.google.com/url?sa=t&rct=j&q ... 4169,d.b2I

FY2013 the interest to be paid is estimated around $321 billion, at a rate of 1.81. If we had to pay what would have been in the past the normal rate we'd have to pay near/or over a trillion.
Even at these artificially low rates we'll be paying half a trillion by 2016 when our debt hits $22 trillion.

At some point The Fed will have to exit their ZIRP strategy because they are taking on far too much exposure.
The real end game is dollar devaluation. Inflate the debt away. I wonder, how will that affect the "middle class" and the poor that all these politicians claim to be looking out for?

That table there you can input your own interest rates if you want. Using 2001 interest rate, we'd have to pay $1.07 trillion on interest FY2013.
These low interest rates have driven everyone but The Fed out of the long term US bond market. No one loans us money for long term anymore, all that money (5year+ bonds) are bought by The Fed. I.E. money printing.

Thus far we've been able to export our inflation (much to the detriment of the other nations of the world, especially China who have been getting crushed by inflation). But that isn't going to last much longer. The world just ain't gonna put up with it.

Just sayin' is all. The only reason we pay such low interest rates is because of manipulation by The Fed, manipulation that is the only thing holding up our currency.

[patches70]

If you sort spending according to logical priorities we never need to "borrow" to pay the current interest on the debt. Other "obligations" are another matter. Social Security, Medicare, etc. Their problems will turn this mountain of a fiscal cliff into a molehill.

Also, of the three types of government spending, discretionary, mandatory and interest on the debt, interest on the debt is the only one that can't be put off.

Discretionary spending can be cut at any time.
Mandatory spending needs legislation to cut the spending.
But interest on the debt, come hell or high water, we have to pay. If it ever comes down to sending out social security checks or paying interest on the debt, interest on the debt wins out every time. The Fed can lower the interest rate (or raise it). But the interest must be paid no matter what.
All the other spending can be worked out through legislation. For instance, we can raise the age for SS. Increase the means for Medicaid. Lower payments, all kinds of things. But the interest, determined by The Fed, is outside control of legislation. Unless we do away with The Fed and just default. But, then that has consequences that make everything else seem like a walk in the park if it's not done wisely.
Interest is the only true obligation we (the US) has to pay. Everything else we've decided for ourselves to be on the hook for and we can decide not to pay it we wanted. But not the interest. There is no negotiation other than raising or lower the rate and that's all done by The Fed, not Congress.

[tzor]

Actually, I think I need to correct myself; I think I fell into that same old trap that everyone makes.

We don't pay "Interest" on the debt. That assumes that we have this big loan and we make monthly interest payments. We do not.

We have a series of bonds at various duration periods that are due at various times. (If you look at it the other way you would call it a "ladder.")

So in any given month a series of these bonds are due. At that point we pay the bonds due plus the interest. (Not just the interest.)

Now given the debt ceiling, we can then just issue another bond to pay the principle, and charge the interest portion to the general budget.

So at any point of time we don't pay the general interest, but the total interest of all the bonds (for their entire duration) that expire in that time.

[patches70]

Actually, I think I need to correct myself; I think I fell into that same old trap that everyone makes.

We don't pay "Interest" on the debt. That assumes that we have this big loan and we make monthly interest payments. We do not.

I'm not sure who assumes that. But point granted.

We have a series of bonds at various duration periods that are due at various times. (If you look at it the other way you would call it a "ladder.")

So in any given month a series of these bonds are due. At that point we pay the bonds due plus the interest. (Not just the interest.)

Correct.

Now given the debt ceiling, we can then just issue another bond to pay the principle, and charge the interest portion to the general budget.

But....if we issue another bond to pay the principle...then we haven't really paid the principle, have we? We've merely pushed the debt down the road and paid just the interest on it, correct?

I mean, it's very much akin to paying off a credit card with another credit card. You aren't getting out of debt, not in the slightest. In fact, we are increasing the debt.

So at any point of time we don't pay the general interest, but the total interest of all the bonds (for their entire duration) that expire in that time.

Bonds don't expire, they mature. Bonds never expire, they only draw interest for a set amount of time. If you had a bond issued in 1780 then by God it hasn't expired, you can cash it in today and the government must honor it.

Almost all the long term bonds are bought by The Fed. No one else is buying those. No, we don't just take out one huge loan, we take out tons and tons of little loans (little as in 10's of billions of dollars, LOL), but the effect is the same. We don't pay the principle, ever. We pay only the interest, which is fine by the people who buy the bonds. As you say, we simply issue new bonds to pay off the old ones. But the long term bonds are virtually owned completely by The Fed. They are happy to just keep on extending and adding to the principle so long as we pay the interest.

And this can go on for a long time. It has been going on for a long time. But it is foolish to think this can continue forever.

A debt based currency relies on debt continuing to expand. If at any point debt can't expand the economy crashes. Don't we remember the crash in 2008? They called it a credit crunch. Debt must expand and the amount of money we must pay to service that debt must expand as well. At some point it becomes too burdensome and we end up in a real bind. Those debts will be paid one way or another even if we must tax the umpteenth generation into oblivion.
Even if we scrap the current system and implement a new one, something still has to be done with that debt. Repudiation isn't gonna happen. Not without some serious violence, as in violence we have never seen before on Earth.

So the end game is simply inflating the debt away. If we devalue the dollar by 50% then we turn a $16 trillion debt into an $8 trillion debt. That's what's going to happen. When? Who knows, we'll extend and pretend for as long as we can but at some point this sham is going to end.
What people should be doing is protecting themselves and their assets. Get the hell out of debt, don't carry any debt and figure out how to make a little more money today than they did yesterday.
There are lots of ways to do these things, but what is unwise is depending on the government for these things, which is what far too many people already do. It is just unwise. But people will do what they do, so be it I suppose. I just worry that the faith in government is going to be sorely misplaced by far too many people.
Need to live within our means, something the government is unable to do. Better to not go down with them when it finally collapses.
No matter the circumstances there are many ways to profit and improve one's position. The problem is that there are too many people who have no idea how to do that nor do they seem to care. They think this can just keep on forever. They will be sadly disappointed.

[Lootifer]

Haha, I imagine live very comfortably off $2000/week disposable income (after tax). I know I would be pretty happy about that.

But can you really understand what you would have to do to earn 4,000/week? I mean, let's speculate a little, as I'm gonna guess it's not a 28 or 36 hour work week.....and I'll also guess you don't get to sleep in. Probably a job in the city too, but maybe not, so then what time do you have to wake up to deal with traffic in Los Angeles?

And who are you working for? Are you working for yourself and your family? Or are you working for someone else?

Depends on how much money you currently have; the ole adage of "takes money to make money".

In NZ you could easily (I think) make around 400k by being head of a business unit in a fairly large organisation; for example CFO or something similar. I know a few of these types and sure they work hard, but thats not really why they get paid that much; they get paid because of their responsibility and their intellect/skills (or more specifically their history which shows them to have a high intellect/skill level).

Didn't you say awhile ago that CEOs were in a 'good ol boys' club which colluded internationally in order to increase the price of their labor?

Haha, touche.

However I think there is a significant difference between level 1 (CEO) in a major corporate (see list of companies J_B hates), compared to a level 2 (exec team) in large corporates (major >>>>>> large). The labour market is much more liquid. I personally think there is some critical lack of liquidity (or barriers to entry if you will) at the CEO level in major corporates that has lead to them having the aforementioned old boys club, and thus effectively creating some kind of market failure (from a point of view that considers social apsects as well of course).

[jay_a2j]

OTHER MANDATORY???????? That's not MANDATORY. Medicaid is a safety net not a HAMMOCK!!!