As the United States approaches yet another debt ceiling fight, an interesting idea has surfaced that might allow the whole mess to be circumnavigated altogether–the minting of a trillion dollar super coin. There are a few things to examine with regard to this proposal–why are we considering it, can it be done, what consequences would it have, and what are the possible alternatives?
Tag: Barack Obama
The Fiscal Cliff: Stepping Back From the Abyss
A couple days later than perhaps would have made a decent show, Congress managed to slap together a stop-gap and avert the economic catastrophe that the CBO projected would have resulted from the fiscal cliff. So let’s get to business–what does the cliff deal do, and where does this leave us going forward?
Continue reading “The Fiscal Cliff: Stepping Back From the Abyss”
Boehner’s Hindenburg
Remember a few days ago when we were discussing a possible fiscal cliff deal that Obama might or might not go for? Well, Speaker of the House John Boehner discovered that his republicans would not support the tax increases on the those earning more than $400,000, the increase in capital gains and dividends taxes, and the cap on deductions at 28% of income. So Boehner abandoned that arrangement–it’s dead. Instead, Boehner proposed something called “Plan B”. (British readers are familiar with a different Plan B that proposes a stimulus alternative to their coalition government’s austerity policy; this is not that.) Plan B was substantially more favourable to the republican position, but nonetheless, the republicans in the house refused to support it, and now it is dead too. So where does this leave us in our struggle to avoid the fiscal cliff, the combination of large spending cuts and tax increases that kick in on January 1st and which the CBO forecasts will lead to a recession in 2013?
The Decision: Obama’s Difficult Position
Rumour has it the republicans have given Obama an offer to avert the fiscal cliff, the combination of deep, immediate spending cuts and tax increases that the CBO predicts would send the country into a new recession. The offer gives Obama something he cannot get without a deal–most notably, an extension of emergency unemployment benefits. The offer comes at a cost, however. In exchange, the republicans demand a small but painful cut in social security benefits.
If You Believe in the Fiscal Cliff…
Lest we forget, the fiscal cliff is still coming–the dismal set of negative economic consequences that come from cutting government spending and raising taxes too fast in the face of a weak economic recovery. While 87% of the general public do not realise that the fiscal cliff is about preventing spending cuts rather than making them, regular readers (and those of you who read the linked pieces) know better. That’s all ground we have covered. However, that there is a particularly interesting implication of belief in the danger of the fiscal cliff that I have yet to discuss, and this I seek to remedy.
