I really don't know why the administration doesn't take the "mint the trillion dollar platinum coin" option seriously. It is, as far as I can tell, perfectly legal. - Eschaton
The quote above is in reference to this Firedog Lake post on the Fiscal cliff and the latest Republican Doomsday plan for dealing with the fiscal cliff:
It’s quite simple: House Republicans would allow a vote on extending the Bush middle class tax cuts (the bill passed in August by the Senate) and offer the president nothing more – no extension of the debt ceiling, nothing on unemployment, nothing on closing loopholes. Congress would recess for the holidays and the president would face a big battle early in the year over the debt ceiling.
FireDog Lake responded to this news of the GOP economic bomb with:
if the vote includes just the Senate bill, where does that leave us? On January 1, taxes go up on not just the top marginal rates, but on every income earner, when the Bush tax cuts expire. Two million people immediately lose their unemployment benefits. Medicare reimbursement rates drop 30%. The sequester on defense and discretionary spending goes into place, and while OMB has the ability to lessen the impact there for several weeks, they can’t hold back the tide forever. And the country will hit the debt limit by the end of February or the beginning of March.
The President's budget proposal will not be released until February 14, 2011, yet the leaks and politics are spewing into the Internet beltway.
The budget proposal will recommend ending Bush-era tax cuts for the highest earners when they are set to expire at the end of 2012, though the White House didn't include the projected revenue from this in its budget forecasts. The budget projections are based on the administration's economic forecast which shows a recovering economy, but it was made before the December tax-cut compromise which, most private forecasters say, has boosted the near-term growth outlook. Faster growth could mean higher government tax revenues and a smaller deficit.
Many of the spending cuts or reductions in the budget are already known. It would, for example, freeze levels of domestic non-defense spending for five years, something the White House believes will save $400 billion.
The White House will also propose reductions to a number of federal programs, from the U.S. Forest Service to a program that provides heating assistance for low-income families. It will adopt previously recommended reductions in military spending that would reduce costs by $78 billion over several years. The budget proposal will also recommend targeted spending increases, particularly in education and infrastructure programs.
We have a cut off for heat to the poor, charging interest on student loans while that person is still in school, a comment that maybe we should tax the rich, after just giving the rich a massive tax break.
Well, here's a shocker, my home state of Illinois just got a downgrade from Moody's. The bottom line is that those bastards in Springfield (our capital) still haven't done anything about the $11 billion budget gap. All we do is spend spend spend, and it isn't even all on good projects. We recently saw a spat of construction jobs, but it isn't on any of the scale that is needed, nor mostly on projects that were needed. And yes, there are stories of the usual corruption. Folks here are royally pissed, and all we see is more taxes going up, not to mention fees. I won't even get into Cook County and it's corrupt nepotistic President!
Deflation, inflation, it really doesn't matter. The price for money, that is interest rates, is going up. You can see it in the back month contracts in the futures market. You can see it in the failed auctions for foreign debentures like the Gilt in the UK. Investors/lenders are demanding a higher rate for loaning out money. The banks may be lending, but it's still a capital desert out there. We were at historical lows, not seen in decades. Folks, it was not always going to stay that way.
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