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We are trapped in a Roadrunner cartoon

June 22, 2012 @ 8:00 am (Updated: 9:22 am - 6/22/12 )

coyote

It's a term every economist uses sooner or later: The fiscal cliff. So what is it?

We are right now enjoying George W. Bush's income tax cuts, as we have for the past ten years. They're cuts that were designed to bring the economy roaring back so that in ten years we wouldn't need them. But the ten years are up in 2013.

We're also enjoying Barack Obama's social security tax cut. Which made everyone's paycheck fatter so that consumer spending would come roaring back. That too is up in 2013. Because at some point, you need money to pay Social Security.

And then you have huge federal budget cuts scheduled to take effect - at the insistence of House Republicans - who demanded automatic cuts as their price for approving an increase in the debt ceiling.

Everybody wants budget cuts, but they do throw people out of work - at the very time that emergency unemployment benefits are set to expire. Add it all up and GDP next year will automatically drop 3.5 percent, which the GAO says will throw us into recession for the first six months of next year.

Ben Bernanke has said even he can't print enough money to prevent this, unless Congress acts.

It's a Roadrunner cartoon. There's a fiscal cliff up ahead. Congress knows it's there, and that we're about to run past the edge, but they think 'well it's a cartoon, and we can remain suspended in space as long as we don't realize we are.' Because politics runs on the same principle as cartoon gravity. No one falls as long as they can resist the temptation to look down.

In fact, they may even have time to turn around and beat it back to the cliff. Which of course is when the cliff itself falls.

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Comments (55)


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  • SeattleNative wrote...
    Tell you what.
    June 22, 2012 8:14 am
    Why don't we try implementing the Senate's budget plan?

    (crickets chirping...)

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  • delvin wrote...
    what do you mean huge federal budget cuts? As a % of the budget they are tiny-come on Dave R
    June 22, 2012 9:38 am
    The economy will start to come back when Obama is out, Obamacare is dumped, Keystone get the OK, ANWR is opened for drilling along with some other off-shore spots, SOME business regulations are deleted, US consumers have confidence and business see an ally in congress and the president, instead of a class warrior, anti-business college professor as pres. You watch Dave R!!
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  • ron prevost wrote...
    Crickets ?
    June 22, 2012 9:52 am
    I thought it was the sound of one hand clapping.
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  • SeattleNative wrote...
    We can also try...
    June 22, 2012 8:15 am
    ...selling off Fannie Mae & Freddie Mac for a tidy little profit.
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  • Alex Mason wrote...
    We can also try...
    June 22, 2012 8:41 am
    Disbanding the Department of Education, Energy, and EPA. ... for a "tidy little savings".
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  • Glover W wrote...
    toocrazytotalktoo........you
    June 22, 2012 8:43 am
    Dave you just do not get that government is way to BIG! Way to intrusive. Our country was never set upt to have the size and scope of government that we do today.
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  • Fuego wrote...
    You're facts are misleading....
    June 22, 2012 9:03 am
    The G.W. Bush tax cuts were set to expire. President Obama thought it was worthwhile to extend them so he got together with Congress and signed the extension into law. By all rights they are Obama tax cuts not G.W.
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  • hnuh wrote...
    06-22-2012 We are trapped...
    June 22, 2012 9:13 am
    Notice how it's Bush's fault? Bush's tax cuts? Those aren't tax cuts Dave, those are tax rates. And 0bama continued them. (remember?) This reminds me of, I think Tolstoy, a vignette where a peasant in the Russian countryside decides to become a veterenarian, not that he knows anything, and begins treating horses. Well, the more horses he treats, bleeds, medicates and generally does to death, the greater his reputation as a vet becomes! This is the essence of the left in Europe and the USA. Start out ignorant of what works to make economies wealthy. Deliberately remain ignorant. Manipulate, regulate, oppress, tax, suppress, coerce, demonize, force... and cheer yourselves on in the faculty lounge, on television and in your "we're great" parties while things disintegrate around you. When the xhit finally hits the fan, first blame everyone else and second, demand that more of your ignorant poisonous medicine be applied to the poor near dead patient. Soviet socialism lasted seventy years. European socialism about sixty. Cuba finally begins to move toward markets after fifty years of misery. China moves toward straight fascism in forty and saves itself for a time. Nice work and thanks a bunch lefty. More misery spread among more people than all the wealth capitalism ever produced throughout history. Your ideology is a dead end.
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  • Glover W wrote...
    This Is Why There Are No Jobs in America
    June 22, 2012 9:16 am
    This Is Why There Are No Jobs in America By Porter Stansberry I'd like to make you a business offer. Seriously. This is a real offer. In fact, you really can't turn me down, as you'll come to understand in a moment… Here's the deal. You're going to start a business or expand the one you've got now. It doesn't really matter what you do or what you're going to do. I'll partner with you no matter what business you're in – as long as it's legal. But I can't give you any capital – you have to come up with that on your own. I won't give you any labor – that's definitely up to you. What I will do, however, is demand you follow all sorts of rules about what products and services you can offer, how much (and how often) you pay your employees, and where and when you're allowed to operate your business. That's my role in the affair – to tell you what to do. Now in return for my rules, I'm going to take roughly half of whatever you make in the business each year. Half seems fair, doesn't it? I think so. Of course, that's half of your profits. You're also going to have to pay me about 12% of whatever you decide to pay your employees because you've got to cover my expenses for promulgating all of the rules about who you can employ, when, where, and how. Come on, you're my partner. It's only "fair." Now… after you've put your hard-earned savings at risk to start this business, and after you've worked hard at it for a few decades (paying me my 50% or a bit more along the way each year), you might decide you'd like to cash out – to finally live the good life. Whether or not this is "fair" – some people never can afford to retire – is a different argument. As your partner, I'm happy for you to sell whenever you'd like… because our agreement says, if you sell, you have to pay me an additional 20% of whatever the capitalized value of the business is at that time. I know… I know… you put up all the original capital. You took all the risks. You put in all of the labor. That's all true. But I've done my part, too. I've collected 50% of the profits each year. And I've always come up with more rules for you to follow each year. Therefore, I deserve another, final 20% slice of the business. Oh… and one more thing… Even after you've sold the business and paid all of my fees… I'd recommend buying lots of life insurance. You see, even after you've been retired for years, when you die, you'll have to pay me 50% of whatever your estate is worth. After all, I've got lots of partners and not all of them are as successful as you and your family. We don't think it's "fair" for your kids to have such a big advantage. But if you buy enough life insurance, you can finance this expense for your children. All in all, if you're a very successful entrepreneur… if you're one of the rare, lucky, and hard-working people who can create a new company, employ lots of people, and satisfy the public… you'll end up paying me more than 75% of your income over your life. Thanks so much. I'm sure you'll think my offer is reasonable and happily partner with me… but it doesn't really matter how you feel about it because if you ever try to stiff me – or cheat me on any of my fees or rules – I'll break down your door in the middle of the night, threaten you and your family with heavy, automatic weapons, and throw you in jail. That's how civil society is supposed to work, right? This is Amerika, isn't it? That's the offer Amerika gives its entrepreneurs. And the idiots in Washington (Dave Ross included) wonder why there are no new jobs…
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  • kata wrote...
    thanks for the read GloverW
    June 22, 2012 10:05 am
    I am self employed and if I didn't have my dad to help me with the taxes (he does taxes on the side for a lot of our extended family) I think I would have given up a long time ago. I cannot imagine the paperwork entailed with hiring even a single person, much less many.
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  • ron prevost wrote...
    My tax cuts can beat your tax cuts.
    June 22, 2012 9:25 am
    Let's see progressive logic. Bush cut income taxes on the rich - and that's bad. Except he cut them on everybody - and that's good. Except .......

    Obama cut SS payroll taxes - and that's good. Except now social security is going broke - and that's bad. Except more poor people pay SS taxes (and vote democrat), so that's GOOD.

    Dave, if we've been stuck suspended in air, it's been a few years. And we now have a debt that exceeds the incomes of everyone in the country - not the top 1% or even 10% - but EVERYONE, down to our grand kids. ... When Bernanke talks of printing money, he's not kidding. It's starting to look like the only thing that can ever clear our debts is the 1920s German plan - inflate it away. But that's worse than bad, if we all can remember Jimmy Carter. Or Adolf Hitler.

    But, rather than simply PRINT money, we might just make what we have go around a few more times. And that's what a strong economy does. Like Reagan's. Like Clinton's. Like when we actually LOOKED for solutions, rather than blame somebody else.

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  • cdbtx wrote...
    Glover
    June 22, 2012 10:15 am
    What a great analogy... as I sit here with 6 different Gov't permits in hand.. :)... and what do I get in return?????

    6 MORE

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  • mnpat wrote...
    Dave...maybe you should ask 49% of Americans
    June 22, 2012 10:29 am
    That don't pay federal taxes.....to start helping out.
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  • delvin wrote...
    mnpat-right on when the 49% goes over 50% only a knee jerk lib can possibly think that is good for the country
    June 22, 2012 10:38 am
    Why dont libs have a logical side to their brain? React without thinking or studying-pathetic
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  • William Lawn wrote...
    Half don't pay payroll taxes?
    June 22, 2012 11:12 am
    I didn't know that.
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  • Ron_Spins wrote...
    The "rich" pay the lion's share of taxes
    June 22, 2012 11:35 am
    So why the class warfare rhetoric?
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  • delvin wrote...
    come W lawn-the post said 49% dont pay FEDERAL INCOME TAXES
    June 22, 2012 1:12 pm
    you know that
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  • William Lawn wrote...
    This post said
    June 22, 2012 2:49 pm
    mnpat wrote... Dave...maybe you should ask 49% of Americans June 22, 2012 11:29 am That don't pay federal taxes.....to start helping out.

    I was just commenting on it.

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