Fiscal Cliff
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Fiscal Cliff
A combination of tax increases, spending cuts, and a corresponding reduction in the budget deficit beginning in 2013
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Fiscal Cliff Didn’t Hold Back Business Spending

Fiscal Cliff Didn’t Hold Back Business Spending | Fiscal Cliff | Scoop.it
Corporate executives warned Washington late last year they were delaying investment plans amid rising uncertainty over the fiscal cliff, raising risks for the economy. Turns out they did nothing of the sort.
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Ryan johnson's curator insight, February 27, 2013 5:29 PM

Leading up to the fiscal cliff, many executives warned the government they were going to delay spending and investments until the cliffs passed.  In this article, it explains how they did nothing like this, and actually increased this spending greatly.  

Anna Zamzow's comment, March 2, 2013 8:06 PM
I think it is really frustrating how the government is so indecisive. With the fiscal cliff, they kept pushing off a decision farther and farther until they reached an agreement in the final hours. I also think it is frustrating how they want to reduce spending, but end up spending more in the end.
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Will Japan lead the path away from the fiscal cliff?

Dean Baker - What is new is Abe’s stated agenda. Abe wants to get Japan off its two-decade-long path of near stagnation, promising a policy of vigorous stimulus. There are two main parts to this policy. First, he promises to embark on another round of infrastructure spending, with the goal being the direct creation of tens of thousands of jobs. 

Perhaps more importantly, he wants Japan’s central bank to explicitly target a higher rate of inflation. If they follow Abe’s recipe, the central bank will commit itself to raising the inflation rate to 2.0 percent, buying as many Japanese government bonds or other assets as necessary to bring about this result.

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Why Corporate Subsidies in the Fiscal Cliff Bill Matter: We Can Stop Corruption If We Understand It « naked capitalism

But we can’t solve our social problems if we’re distracted by the glitter and pomp of fake debates. David Cay Johnston’s The Fine Print goes into these problems in detail, Tom Ferguson’s The Golden Rule describes the political dynamic underlying money driven political systems, and William Hogeland shows us that fights over economic fairness and special favors defined America at its founding.  Read these books. Understand these problems.

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The American People are the Big Losers In The Cliff Deal - Washington's Blog

The “fiscal cliff” deal will raise taxes for 77% of the American public.

It will add $4 trillion dollars to the deficit over the next 10 years.

It will create a drag on the economy equal to 1% of the gross domestic product.

It creates uncertainty in the following areas:

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The fiscal cliff has never been a market theme

The fiscal cliff has never been a market theme | Fiscal Cliff | Scoop.it
I am normally not making predictions here, but I today predict that “fiscal cliff” searches on Google has already peaked (but no I am not a betting man). From today the fiscal cliff is so much 2012. It is time to focus on something else…also for the financial media.
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America’s deceptive fiscal cliff – Part III

This Federal Reserve and Treasury credit was not counted as part of the government’s operating deficit. Yet it increased public debt, without being spent on “real” GDP. The banks used this money mainly to gamble on foreign exchange and interest-rate arbitrage as noted above, to buy smaller banks (helping make themselves Too Big To Fail), and to keep paying their managers high salaries and bonuses.  This monetization of debt shows how different government budgets are from family budgets. Individuals must save to pay for retirement or other spending. They cannot print their own money, or tax others. But governments do not need to “save” (or tax) to pay for their spending. Their ability to create money means that they do not need to save in advance to pay for wars, Social Security or other needs.

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A Dash of Insight: Analyzing the Fiscal Cliff Outcome

A Dash of Insight: Analyzing the Fiscal Cliff Outcome | Fiscal Cliff | Scoop.it
With some amusement, our office gang watched the parade of pundits today. In general the media focus was on everything that was wrong with the deal, mostly based on the idea that spending was not slashed.
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NAKED KEYNESIANISM: A brief perspective on the cliff deal

NAKED KEYNESIANISM: A brief perspective on the cliff deal | Fiscal Cliff | Scoop.it
The agreement actually makes the US political system look less dysfunctional than the European, which continues to be tangled in their austerity policies. All in all, a pretty decent start for 2013.
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Fake Deal Rushed Through Congress | The Daily Capitalist

Congress broke a rancorous stalemate Tuesday to pass legislation designed to avert the so-called fiscal cliff. But the compromise bill, which blocked most
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Details of the New Fiscal Deal | The Big Picture

Click for larger graphics ~~~ Sources: NYT see also NYT
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The Fiscal Cliff: A Love Story : NPR

The Fiscal Cliff: A Love Story : NPR | Fiscal Cliff | Scoop.it
Wonks from across the political spectrum look at the upside of the cliff.
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TheMoneyIllusion » Initial thoughts on the deal

The GOP did get one minor victory; the dividend tax increase on the rich was scaled back from an absurd 28.4% to “only” 8.8%.  It will rise from 15% to 23.8% on the rich.  Recall that dividend income is triple-taxed.

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PRAGMATIC CAPITALISM – Early Thoughts on the Fiscal Cliff Deal….

PRAGMATIC CAPITALISM – Early Thoughts on the Fiscal Cliff Deal…. | Fiscal Cliff | Scoop.it

Now that the clowns have left the tent we can make some brief assessments on the fiscal cliff:

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GDP report will reveal fiscal cliff fears' impact

GDP report will reveal fiscal cliff fears' impact | Fiscal Cliff | Scoop.it
Fears of the fiscal cliff may have hurt the fourth-quarter economy much less than feared.
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More on the Fiscal Cliff—Posner - The Becker-Posner Blog

I shall discuss several closely related questions: (1) was the deal that averted the “fiscal cliff” a good one? (2) what would be the best deal to avoid a repetition of a fiscal-cliff type of crisis in the near future? (3) should there be a debt ceiling? (4) what is Republican economic policy and is it coherent and economically sound? and (5) where is Mitt Romney in all this? 

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“Token Libertarian Girl” on Fiscal Cliff

Julie’s big-picture objective is to make libertarian ideas more appealing in the popular culture. I think the above video is a great example of what she’s trying to do.

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Angry Bear - The "Fiscal Cliff" and the Coming Retirement Crisis of the Middle Class

Angry Bear - The "Fiscal Cliff" and the Coming Retirement Crisis of the Middle Class | Fiscal Cliff | Scoop.it

The consensus among most commentators (KrugmanKlein, andYglesias, for example) is that the fiscal cliff deal will work out okay as long as the President does not cave in to the Republicans' threats over the debt ceiling.  I agree as far as that goes. But, as Yglesias points out, there is nothing great about what Klein says is the most likely scenario, where the President gets $1 trillion in new tax revenue for $1 trillion in cuts over 10 years.

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Macroadvisers: (No Big) Deal!

While our fiscal assumptions remain similar to those incorporated in our forecast published on December 28, there are three areas of difference worth noting that arise from ATRA. 

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Fiscal Cliff Deal: Bush Tax Cuts vs. Obama Tax Cuts | EconMatters

Fiscal Cliff Deal: Bush Tax Cuts vs. Obama Tax Cuts | EconMatters | Fiscal Cliff | Scoop.it

The euphoria surrounding the Fiscal Cliff issue has sidelined the origin of the entire debate which was a professed desire to reduce swollen federal deficits. 

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CLASS act pushed over fiscal cliff | The Incidental Economist

One sad outcome of yesterday's vote didn't get much attention: The demise of the Community Living Assistance Services and Supports Act (CLASS). As many TIE
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CoTA and the Fiscal Deal - Credit Slips

CoTA and the Fiscal Deal - Credit Slips | Fiscal Cliff | Scoop.it

Last night's fiscal deal predictably included a number of special-interest tax breaks. The one that caught my attention has been dubbed the "Nascar tax break" by the media. Instead of a long depreciation period of 15 to 39 years, a "motorsports entertainment complex" has been eligible for accelerated depreciation over seven years (26 U.S.C. 168(k)(1)). By accelerating depreciation, the owners of a race track getting bigger tax deductions more quickly instead of smaller deductions spread out over a longer period of time. This particular tax break had been available for any race track placed into service before December 31, 2011, but the fiscal cliff deal extended that date through December 31, 2013.

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The Bonddad Blog: "We now permanently have a tax system that will not raise enough revenue to cover our expenditures"

This is worth repeating. Andrew Samwick writes, seconded by Mark Thoma:

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Credit Suisse: Fiscal cliff deal leaves income lower for everyone, especially millionaires.

Credit Suisse: Fiscal cliff deal leaves income lower for everyone, especially millionaires. | Fiscal Cliff | Scoop.it
Here's Credit Suisse chart of how much everyone's after tax income will be reduced in 2013 relative to 2012. You can see that almost everyone is worse off this year thanks to the expiration of the payroll tax holiday.
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America’s deceptive fiscal cliff – Part I

The Big Deception is that governments should balance their budgets as if they are private households. Governments need to provide the economy with money and credit to expand markets and employment. They do this by running budget deficits, and this can be done by creating their own money
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EconoMonitor : Great Leap Forward » Let’s Leap the Fiscal Cliff: Who’s Afraid of Deficits, Anyhow?

EconoMonitor : Great Leap Forward » Let’s Leap the Fiscal Cliff: Who’s Afraid of Deficits, Anyhow? | Fiscal Cliff | Scoop.it
If policymakers are prudent, they will not take the chance” of finding the precise tipping point that generates unbounded growth in debt service relative to the economy’s capacity.  So, we are told, it is in fact about the current and projected debt ratios, which will ultimately drive debt service through the rates set by private bond markets, and the only guarantee of both mathematical and actual sustainability is to set policy such that the future shows projected futures surpluses, not deficits.  In short, governments—even currency issuing ones—are at the mercy of market confidence.
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