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CBO on "Ultimate Can Kicking"
The Congressional Budget Office is out with a very well timed report on what the hell should be done with debt, deficits, taxes and the economy.
There is a lot of information in the reports. (link), (link) I doubt that too many of the folks in Congress will bother to read it. I looked through it; I think the following chart is the one the deciders in D.C. will focus on:
Lots of policy options are measured in the chart. Think like a politician, and go to the bottom line. What set of proposals has the biggest bang? My summary from the CBO chart:
-Totally junk the scheduled spending cuts for the military.
-Do away with all of the mandatory non-defense cuts (sequestration).
-Don’t do anything with taxes. Roll over everything for a couple of more years.
-Extend the 2% payroll tax break for two years.
If we kick the can down the road for a few more years, what do we get? The deep thinkers have come up with numbers that look pretty attractive. The CBO thinks that significant benefits could be realized as soon as September 30, 2013.
In terms of jobs, the CBO reckons that as many as 3.4m jobs could be created/saved if everything on the cliff is pushed off to the future.
The economy would be much stronger if the can is kicked. The difference between falling off the cliff and extending everything is 2.9% of GDP. That’s a very big number; it comes to $500Bn of top-line growth.
Well, that sounds good. What would this cost? The CBO puts the tab at an incremental $503Bn in 2013 and another dollop of red ink in 2014 of $682Bn. (The base line debt is ~$850Bn for 2012/13. The can-kick would be on top of the base line numbers)
Who would go for a plan like this? Very Important People like Paul Krugman and Larry Summers, would probably say that the stimulus was too small, but they would come down in favor of it.
The Administration would like this idea. It would give them two years of breathing room.
The Fed would love this plan. This is what Bernanke has been advocating. The IMF and the rest of the G-20 would hail it.
The Republicans would hate it, but what can they do but complain? After all, the Reds did get clobbered in the election. Republicans want to keep the tax rate on those making more than $250k and they definitely want to avoid cutbacks in military spending. If Republicans play hardball, they will lose big. They know that they are cornered. To save face, and to have a say in the outcome, they might go along, provided they got the "big" prize. A chance to change the tax code.
The grand compromise that could make this happen is a legislative commitment to rewrite the tax code. There would have to be a “promise” to achieve the necessary tax-code changes within twelve months. If there were no agreement on the changes in tax laws by 12/31/13, then the country would revert to falling off the cliff.
I think there is going to be a can-kick. I think it will include all the existing tax issues (Bush cuts and AMT). The sequestered cut backs in spending will be pushed out for a year. But, importantly, the 2% payroll tax break will not be extended. As part of the deal, there will be a promise to write the tax code.
We’ll see what Obama has to say in a few hours. Obama is no dope. He knows that the market cap of all US stocks is down by $600Bn the last few days. He knows that the market wants a can-kick. He knows that a tax re-write is necessary. He knows that the economy needs a boost. He knows that there is next to nobody left who gives a damn about the debt picture. He knows that Bernake will buy up all the extra debt. So he will push to kick-the-can.
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My regret was I was too green to understand what he was talking about.
Long Live Cheeky Bastard!
Gosh I had so much fun bashing Leo, GW is all we have left now, pile on everybody, get GW kicked off the site and I'll be happy.
Why? He serves a purpose in that he sates the conspiracy theory bunch (count me in...). I just can't read his stuff because whenever anyone disagrees, he has something smart to say, shouting some number about CIA brainwashing techniques or some such stuff when it is really only just an argument that has a valid point.
Same with Cognitive Dissonance. Could never disagree with the guy without having never read the piece (which was incredibly long and repetitive...) or unable to grasp his concepts, or be just stupid.
I don't see why contributors can't be more like Bruce: knowledgable, experienced, kind and humble. If it were me, I would want to be like Bruce...only a little less to the left, of course.
:D
Yes, Leo had/has multiple sclerosis, a fact which he never let us forget, in the ongoing combination pity fest, statist cheerleading, arrogant preening and incessant apologizing for corruption and evil that constituted Leo's perverse and worthless ramblings.
He was finally banned by Tyler(s) from ZeroHedge, the precise reasons for which I never discovered. But really, was it any great surprise?
I thought Tyler booted him for certain misrepresentations as he was a "contributor" for ZH IIRC.
JMHO..Leo continually ranted and taunted ayone who ever dared disagree with one of his posts. Most unprofessional, and very much in an "asshole" sort of way. Thay MAY be why he got booted.
Tyler mentioned long ago that Leo was booted for repeatedly disobeying the rules "that he clearly knew" I beleive was the wording.
Anyway, back on topic: The can will be kicked as far as it can be kicked. Repeatedly. If they start dicking with the AMT, I'm fucked. That's my skin in this game.
Why stop there? If some defecit spending is GOOD then a shitload of defecit spending must be GREAT, right? Go right ahead - I asked my grandchildren if they would mind picking up the tab and (even though they are too young to speak) they nodded "yes". Score!
Your grandkids have as much intention of paying for the deficit as the clowns who are racking it up.
Looks like Mr. Market is pretty upset with Obama's BS. Go figure.
Wages matter Bruce. Especially if take home doesn't cover expenses. In that case, you sure as hell won't be able to collect any new taxes.
Sure they will, just grab it before you even get your paycheck, like they do now.
As long as they have more and bigger guns than us they can get as much of your money as they want.
But they never use the guns to collect the tax. They only tell us about them and we happily pay. It's so pathetic.
This is not the Play-Doh revolutions are made of.
Oh come on now, Bruce makes his nut doing the bidding for the debt merchants, its like complaining about having to fuck that tight ass 20 year old bombshell blonde. "Damn it, got to do the foreplay thing, it takes so long, her sweaters sooo tight, gotta fight like hell to get it off and then there is the four snaps on the bra and her panties never come off straight"
Bruce loves watching the kids play kick the can, he can sell more mystery meat hot dogs to the crowd sweeping the streets.
Keep the looting spree going.
That's the ground rule now.
Loot 'em with taxes or loot 'em with printing and bailouts and buying treasury debt.
Or both, preferably both. Hit 'em with taxes on one side, hit 'em with currency debasement on the other side, the ole 1 - 2 punch. Loot 'em till they're broke, then grab any assets they have, home, 401k, investments (corzine), whatever's worth taking.
Loot 'em under any banner you want, helping the economy, national security, what-the-fuck-ever, just make sure you keep looting 'em till there's nothing left.
All we can do is get ready for what must (eventually) come. The monetary world is a mess. Now we shall see how a completely centrally planned economy does in a 'capitalist' society.
Is there no politican left with balls? Is there no politician left that does not lie?
Good luck being elected dog catcher with a "Tell the Truth" platform.
Not a one.
Great, maybe more can kicking, but what about this:
http://www.gpo.gov/fdsys/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26...
http://www.dol.gov/ebsa/newsroom/tr12-01.html#.UJ1GEXnNkS9
We're going to find out what employers do that are in margin compression industries in about seven weeks. Unless this provision is addressed immediately, because it can't be kicked, people are either going to lose jobs or lose hours. The review period STARTS Jan. 1 2013 for when The Law takes effect on Jan. 1 2014. Benanke QE and/or tax extensions won't fix this.
Bruce –
Your contributions are often valuable, and you are obviously an intelligent guy. But it's a mystery to me why you haven't yet figured out how to scale up and clearly present charts and other graphics.
I cut this and cropped it as best I could. I knew it was going to be small. Sorry about that.
You talk about scaling up. Okay, I'm lost. If this could be presented better, I want to know how. Point me in the right direction? I have photoshop.
Bkrasting@gmail.com
Thanks.
Not So Intelligent Guy
What you do right: create down-sampled images to reduce page load times, allowing interested users to click through to the full size image if desired.
What you do wrong: manually set the size of those thumbnail images using HTML width and height attributes on the img tags to make them bigger than 100% of their natural size, thereby guaranteeing that they look like crap.
What you do wrong: fail to make it obvious that a "click for higher resolution" option exists for users who can't figure it out for themselves.
Example: the top image links through to the original which is a PNG of 966 x 1211 pixels. The thumbnail you use for this (in the article) is a PNG of size 239 x 300 pixels, yet the <img> tag for the thumbnail has width and height set manually to 633 x 794. Being increased in size by 165% guarantees the image looks shit.
Fix: delete the width and height attributes from the thumbnail images, modify the wrapping <a> tag to add a target="_blank" attribute (so that the image loads in a new window), then add a <div> under the image tag (and within the <a> if you like) that says <div class="moron_helper">Click image to expand</div>. If you're worried that the thumbnail is too small when reverted to its natural state, then resample it from the original at a larger size and use a lossy format such as JPG with a high wavelet keep factor (eg, > 70%) rather than a lossless format like PNG, as you'll typically get a smaller filesize with a quality difference that's hard to spot by eye.
ps: proficiency in HTML and CSS has NO relationship to intelligence. Hoo boy, no relationship at all. Even the specs are dumber than a bag of hammers.
Of course they are going to punt this thing. If they are smart they will punt it so far we get upgraded by Fitch etc.
Why call it the 'fiscal cliff' isn't it really the "Obama Plan" he agreed to kick the can past the election on the debt ceiling issue. The GOP should simply say they agreed to the Obama Plan last year and now it is time to implement it.
They will print as long as it works.
C'mon, no administration wants to make the "hard" choices as they can kiss off any re-election hope.
I think BK is right. More can-kicking. More debt. More inflation (or at least stagfation). What are the consequences? Positive for commodities? Gold?
The undercurrent of this is that technological progress (and productivity improvements) continue to accelerate. We are squeezing more GDP out of less energy/labor input. Are the politicians, central bankers, keynsians, just hoping, delaying, and praying for the day when the production of all basic needs (bread and circuses) are automated and they can just sit back and give the 99% all the material stuff (while they play kings of the world)? Like in Marshall Brain's short story Manna.
but what exactly is GDP measuring anymore? Capital good production left long ago. traders selling worthless paper back and forth to each other and the fed trying to soak up the excess? wouldn't stagnant production/energy usage levels coupled with increasing input cost/sales pricing make it LOOK like increasing techno progress without anyone except the very top actually benefitting? the first impact of increased techno efficiency is often the segments labor force gets downsized.
there will be a lot of starvation and anarchy on the road you"ve described.
No, we're not squeezing more production out of less energy and labor. We're getting more waste.
Well, I guess I look around and see an obese and calm nation even though unemployment is very high (by historical norms) and nearly 50 million are on food stamps. It looks like the perfect set-up for the elite politician/banker power-brokers. The nation is really going to hell (by historical standards) but no one is rebelling. Why? Because they are not starving and there is plenty of entertainment. If the people can be kept sedated this easily, then if progress/efficiency and efficiency continue apace, there is no reason Obama cannot add millions more to the dependency life, without fear of rebellion. Do you see where I am coming from?
<--- BK is right. The can will be kicked with ease.
<--- Tyler is right. A deal on the fiscal cliff is nowhere close.
Both are true and correct.
The fiscal cliff is what is being kicked with ease two years out (then two more years, then two more years) until the real shit hits the fan and can kicking is no longer possible.
Kicking the fiscal cliff does not resolve it, only prolong it, and Tyler is right, there is no deal close to resolve the fiscal cliff.
Agreed; the can will be kicked.
But reality cannot be kicked down the road; deficits, national debt, unemployment, etc. are all on track for Hell; one black swan and it all falls.
What will they do if / when Iran, Syria, China, Greece, Spain, etc. all collide at once (war, economic failure, you-name-it)?
Long EVERYTHING; it may not be available for much longer, especially if you really need it (and so does everyone else!)
Does further can-kicking fit 0bama's post-election agenda?
Obama could not care less. he wants the power he can get and leave the mess to Hilary. Yes, thats the deal made to get Bill Clinton to work for the Kenyan Moon Cricket. Zero has to help Hilary have her turn. Bill and Hill have Barry in their back pocket. Now, here's his chance to fuck them both really hard.
FORWARD Detroit, America's New Model Community!
who would seriously even want to be President and try and deal w/ this shitstorm powderkeg?
It's like hot potato or musical chairs. At what point will it all melt down?
Bronco Bama and every other politician out there will be busting their collective balls to kick the can as far down the road as they can. It is, afterall, what politicians do.*
*When they are not on the campaign trail making profound statements about what they will accomplish if elected.
And we reelect them at greater than a 90% rate. Why would they do anything different?
Control Key Kick Can: CTL-K-C
Bruce Krasting writes:
« ... there is next to nobody left who gives a damn about the debt picture ... »
Ain't that the truth
Money-printing to the max ... balls-to-the-wall QE
BK may well have it right here
---
BTW for readers, the phrase 'balls to the wall' actually comes from the operation of steam locomotives, where levers with a ball on the end would be against a metal wall when running at max steam
But who will pay off S&P?
It is inevitable BG (and BK).
The Americans have $16trillion in debts, never to be repaid, balls to the wall fun and spending for the govt machine, gets the hyperinflation over and done with sooner, wipe out the debts, and start afresh (under a shiny new Euro-led monetary system).
A global depression, some wars, some civil unrest to navigate en route. Let's get it on.
Bruce- I don't think it is accurate to say the Reds got clobbered. We pretty much have the same government as before. Blue team in the oval office and senate, red team with the house and governor's mansions. Barry S. pulled in 50% which isn't Saddam like numbers. A big complaint on this board is that there is no difference between the two parties and the republicans spend like the democrats. You say, "The Republicans would hate it, but what can they do but complain?" I suggest they fight for once, that is why people voted for them.
@ Midas and everyone
My belief is that America HAS changed. Demographics and shifting beliefs appear to make "traditional conservatism" no longer the dominant theme. So what can each of us do as individuals in the New America? Become physically fit, financially fit and spiritually fit.
http://tinyurl.com/ae2swg7
íSí, se pueden! I think you are right about all that, DCRB.
No un-kicking the can.
"Yes We Can-Kick"