So how screwed are we (Fiscal Cliff)?

[Vypernight]

I been hearing/reading about this Fiscal Cliff and the fear that if things aren't settled, we could be in for yet another recession.  How likely is this to happen and will it be worse than before?

Also, I can understand Obama and Romney not wanting to discuss it, but why didn't anyone else?  Why didn't anyone drill them at a debate, asking, "What are you going to do to avert this?"

[Material Defender]

Because it's pretty much just how every time coming out of a recession works. It's not a Cliff, it's a slope by the way. The government will reduce spending and introduce new taxes, slowly, and they'll be integrated slowly into the economy, offset by standard economic growth.

[worlder]

Because it's pretty much just how every time coming out of a recession works. It's not a Cliff, it's a slope by the way. The government will reduce spending and introduce new taxes, slowly, and they'll be integrated slowly into the economy, offset by standard economic growth.

If that is the case I would like to know in what government document is that specified?

[Old Viking]

This is the current scary topic.  It will soon be replaced by another.

[m52nickerson]

Because it's pretty much just how every time coming out of a recession works. It's not a Cliff, it's a slope by the way. The government will reduce spending and introduce new taxes, slowly, and they'll be integrated slowly into the economy, offset by standard economic growth.

The spending cuts and tax increases that are scheduled to go into effect January 1st are not gradual.  There is a change that the reduction of government spending could throw the economy back into recession.

However that is not going to happen on the first if nothing is done by that time.

[Material Defender]

Spending cuts may not be gradual, but taxes are not instantly sucked out of the economy but are instituted gradually, no matter how 'immediate' they may seem. I get my information from a Masters of Accounting Tax Accountant, so they know these things. It's likely that the government will try to space the cuts across the year to avoid too quick a drop.

A recession requires multiple quarters of reduced growth, regardless, so a temporary dip and then coming back up as the economy takes it in. A small dip a trend does not make.

[niam2023]

I've heard from Moveon that Boehner made it up or something, and that he only wants to make sure the Bush Tax Cuts stay.

[Lt. Fred]

It's not a 'cliff', it's a bomb. For whatever reason, congress decided to lay this bomb last year- as a condition for passing a routine, meaningless administrative law last year, a law that's always passed without comment when Republicans are in charge, clear double standard, shock doctrine attack on needed social welfare spending, ect, ect. If congress decides to set it off, it will probably drive the economy into double-dip recession. But so would any austerity. The wailing and gnashing of teeth over this austerity shows nobody seriously cares about the debt- they care about destroying Medicare and Social Security, and don't care how long the recession has to go to achieve that.

Personally, I feel that congress won't come to a decision and will just repeal the stupid, needless legislation (can Obama veto it?). Nobody really wants their military-industrial donors being out of a job. But let this be a lesson- austerity is for the boom, not the bust.

[worlder]

I've heard from Moveon that Boehner made it up or something, and that he only wants to make sure the Bush Tax Cuts stay.

Oh no it is not a made up thing. CNN and the CS Monitor have articles on the thing and the major details are consistent with each other.

[m52nickerson]

Spending cuts may not be gradual, but taxes are not instantly sucked out of the economy but are instituted gradually, no matter how 'immediate' they may seem. I get my information from a Masters of Accounting Tax Accountant, so they know these things. It's likely that the government will try to space the cuts across the year to avoid too quick a drop.

There is a difference between an Economist and a Masters of Accounting Tax Accountant. 

Now if a deal is reached spending cuts will most likely be gradual.  If nothing gets passed the cuts will be all at once.

http://en.wikipedia.org/wiki/United_States_fiscal_cliff

[Her3tiK]

I've heard from Moveon that Boehner made it up or something, and that he only wants to make sure the Bush Tax Cuts stay.

Oh no it is not a made up thing. CNN and the CS Monitor have articles on the thing and the major details are consistent with each other.

Yes... let's use CNN as an example of "not made up things". Have you seen their portrayal of Israel/Gaza?

[worlder]

Ok ok if you don't trust CNN, I can link a dozen results from sources.

And perhaps there is some misunderstanding on the details as to how abrupt the changes will be, but as to whether or not the fiscal "cliff" is real, I would say yes.

[Vypernight]

In other words, same old?

[Distind]

In other words, same old?

It's a bipartisan gun to the head of the federal government. If they can't manage something better, it'll automatically do something neither want. An attempt to get them to do SOMETHING actively rather than the constant flow of nos.

Not that it's terribly likely to be honored, I remember hearing about republicans rejecting it some time early this year.

[Veras]

Yeah, it was put into place because it was considered to be so bad that neither side could live with it, and it would force the debt supercommittee to reach an agreement.  It consists of increasing taxes and cutting the military (which Republicans don't want to do) and implementing massive cuts to social programs (which Democrats don't want to do).

As soon as the supercommittee failed, Republicans started talking about how tax increases would be bad for the economy and military defense cuts would be bad for national security.  Instead, they proposed restructuring the fiscal cliff so it didn't do these things, and instead cut social spending deeper.  Because, obviously, the best compromise is one in which you give up nothing and the other side gives up twice as much as they originally agreed to.