Tag Archives: spending cuts

Why are Congress and the White House not panicked about the looming fiscal "cliff"? Why has the Dow pulled back only 2% rather than plunging 2,000 points as time to forge an agreement by year-end has foolishly dwindled down to just a couple of days, and odds of it happening have become remote? Probably because the markets and politicians are aware that the economy is not going to suddenly plunge over a cliff into an abyss on January 2 if an agreement has not been reached by then. [Let me explain just what it does mean, though.] Words: 785

The warnings that the fiscal cliff will cause a recession are delivered as if the government can decide whether or not we have a recession. In fact, the government does not have that power, or we would never have recessions. At the most, the government can influence when, not if, we have a recession. We will most likely undergo a recession when we wean ourselves off the unsustainable deficit spending of the last four years. The choice is not recession or no recession. The choice is recession now or recession later. [Let me explain.] Words: 542

The term “fiscal cliff” was first coined by Ben Bernanke in early 2012, and it refers to the roughly $718 billion that will be withdrawn in some way, shape or form (4.6% of our nation’s annual economic output) from the economy in 2013. This will occur in the form of tax increases and federal spending cuts. If nothing is done, and all the scheduled tax increases and spending cuts go into effect on January 1, the Congressional Budget Office estimates that the economy will contract slightly in 2013. Other estimates (including ours) show a much deeper recession would be likely. Words: 940

Wars and depressions largely characterize the periods of time where there have been significant run-ups in the level of the U.S. National Debt Burden per Capita [i.e. the U.S. National Debt Burden per Capita-to-income Index], with the debt taken on to support the costs of the U.S. Civil War and World War II being the most significant. Today... it is perhaps most comparable to the Great Depression. [Take a look.] Words: 326