Chart Of The Day: The Fiscal Cliff For The Rest Of Us

Tyler Durden's picture

We have discussed the fiscal cliff from many angles: timeline, the potential impact, the scenarios, whether its impact is priced in, why a bounce on success is unlikely, the endgame 'solution', and the long-term fiscal probity of the USA. As it appears everyone is becoming more aware of this pending reality, we note USA Today's great one-stop-shop infographic which simplifies the fiscal cliff impact for the rest of us: A raft of tax and spending changes scheduled to take effect in January will sharply reduce the federal budget deficit, but will also send the economy back into recession if they all happen at once.



Chart: USA Today

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zapdude's picture

When the drooling zombie hoarde arrives at my door, I don't want to go down for lack of shooting back. 

Long 12 ga. shot shells, 9mm and .223 ammo cans!

Everybodys All American's picture

That cliff is not going away at least not without a lot of growth.

Winston Churchill's picture

Growth supplied by cheap oil.

Price of oil will rise and choke the growth to death.

Self limiting feedback loop.

This is as good as it gets.

new game's picture

with 25 percent cost as energy to get the stuff; hmmm.

kinda keynsian petro dolla/gub growth model of sel realization that 7 billion standing hungry naked and desparate...

fonzannoon's picture

watching gold move in a perfect ebb and flow with the spy makes me want to vomit.

DOT's picture

$250,000/ year = Rich ass mutha billionaire

(Nuage maths)


NEOSERF's picture

Would really like to hear the rating agencies weigh in here with a "if you push it off we will downgrade" type comment.

LMAOLORI's picture



Egan Jones weighed in and then obama went after them however they didn't fold they are hero's IMO

'Fiscal Cliff' Deal Won’t Help US Rating: Egan-Jones

SEC Sues the One Rating Firm Not on Wall Street’s Take


SEC Keeps Ratings Game Rigged

SEC Pursues Egan Jones; Moody’s, S&P Remain At Large

nantucket's picture

it's a bad time to be named Cliff. i'd change my name if I was. 

justanothersucker's picture

Damn, I was hoping that going over this cliff thingy was going to be a smoother ride....more like free fall.  It's already quite bumpy and getting worse!  WTF?

Bogdog's picture

As nasty as the cliff is, it barely makes a dent in the annual deficit. And will most probably add to it with all the new unemployed.

Smoke and mirrors. Funny money. I'm sick of it.

Bullish on 5.56mm/7.62mm/.45cal.

buzzsaw99's picture

So between the low income tax increase and the ss tax increase the poor get to pay through the nose because the billionaires write the damn thing. Thanks for the $40B boyz, very generous indeed. Disgusting.

RSBriggs's picture

It is curiious that multi-millionaires, billionaires, actors/actresses, sports figures and politicians always have loopholes written into the tax code so they aren't "the rich" that end up being taxed.  Taxes are for the little people...

buzzsaw99's picture

these are not the rich that you are looking for...

RSBriggs's picture

Ahh.  Good way to put it. 

LMAOLORI's picture



+1 Hey maybe we should all try to get in on this

Tax-Exempt Firm Gets $600 Million Profit Flying First Class

MsCreant's picture

It does not matter. The books cannot balance no matter what we pay and what we do. This is the Long Emergency and it will grind on with crisis after crisis.

Keep prepping. We always should have been. They were always lying to us from the day we were born. Be your own FEMA (you will do a better job) be your own retirement provider they won't do it because they can't. Folks on this site and others are waking up/awake to this fact. We were all always resonsible for ourselves, it just is not built into our culture as "normal" any more. The only thing that pisses me off is the theft from our pocket books that takes place at gunpoint. They can steal, even though the books will never balance, and keep telling us to our face that they need the money and will spend it wisely when they don't.

Grind on brothers and sisters, grind on.

Urban Redneck's picture

If GDP falls, then tax receipts fall at a given level of taxation, the chart above deosn't necessarily reflect that (or the escalating cost of the social safety net as the economy underperforms)

Mercury's picture

Gotta love how taxes never get raised's tax cuts that "expire". 

By the way - can we see some historical data on projected vs. realized tax revenue from past tax hikes?  The notion that the government can simply dial up an exact amount of new tax revenue by raising rates and inventing new taxes is absurd.  People really do change their behavior when incentives change.

nah's picture

der gurn sism' costs to much damn money

ironmace's picture

The rent is too damn high!!

Catullus's picture

I love how much bullshit the "cliff" is. Increased taxes don't subtract from the GDP. You have earn the money for it to be taxed away. It's a transfer payment to the government. The economic activity doesn't cease to be.

It amounts to $160bn in spending cuts which is 1.0% of GDP. THE HORROR. And there will still be a $600bn plus cash deficit.

The taxing will reduce future growth because it digs in deeper into the savings base of the US.

DOT's picture

I would say that the government wants to tax that which has been earned (income), what has been saved and previously taxed (wealth ), and what my children have not yet earned (interest on the debt). The new plantation has no fence. The effective rate will become 100%.

hawk nation's picture

Lets remember historically tax increases do not result in increased revenue for the government

Result will be reduced GDP, reduced revenue to the government and increased costs to entitlment programs as a result of higher unemployment. The net effect of this will be the same size deficits or probably more 

larz's picture

I for one want to take Buffets lead and pay even more taxes so everyone can get the obama phne and everything else they might need!  yea one armed man with very itchy balls

icanhasbailout's picture

A drop in GDP is a GOOD thing, if the drop is mainly attributable to the government component, which should never have been part of the GDP calculation in the first place, as government by definition produces nothing at all.

HurricaneSeason's picture

When the debt ceiling is raised by $2.5 trillion there will be $250 billion in cuts to the annual budget and 5 million or more high paying jobs cut, especially with the unemployment and severance pay costs.

hooligan2009's picture

come on now, be much would the debt "ceiling" have to be increased to in five years time before and after fiscal correction (not cliff, that is a misnomer). if we continue wile e coyoteing the fresh air, the debt ceiling would need ot be increased by at least 5 trillion. if the misnomer is implemented, just the odd what? 3 trillion? whats the difference between 20 trillion and 27 trillion when the dollar is worth close to zero? i will gove you a cant hedge it.

HurricaneSeason's picture

Well, I think the last $2.5 trillion lasted 15 months or something like that. They will lower the $1300 billion annual deficit by $500 billion with the fiscal cliff, except Obama has already said that the draconian cuts of $50 billion to the military will not happen. So certainly he will ask the $50 billion to discretionary spending will not happen either. They'll probably cut the social security tax discount and unemployment extension for a total savings of $150 billion. My guess is a 10% reduction in the annual deficit. With hurricane Sandy and other reduced revenues, it wont be a very big reduction in deficit. Representative Boner will probably give Obama some job stimulus money to keep higher incomes from paying the old tax so the cliff can be put to rest. Then when the ceiling arrives, represetative Boner has the leverage. He who laughs last laughs best.

orangegeek's picture

Market indexes do two things - 1) they represent a combined value of stocks, 2) they represent the FUTURE potential of these companies which are directly related the economy.


Indexes lead the economy by about 3 months.  Indexes will catch up if the economy is worse than first thought.  And this is why markets fall quickly - economic reports in bad times are misleading or just plain lies.


hawk nation's picture

Or are stocks another form of a fixed asset that is a hedge against the falling value of the dollar? Since the stock market is allowed to move up unlike gold perhaps valuations do not apply because they fail to equate the value of the dollar

haskelslocal's picture

Whomever coined "Fiscal Cliff" needs to be seal-clubbed in the head.

Imagine instead you're talking to your financial advisor and he were to say;

"To get your finances on track, it might be a good idea to increase your earnings and reduce your spending by a mere 3.6%."  

haskelslocal's picture

It says at the bottom of that "Scary" Wile-E Coyote chart 3.6%.

Just using their numbers.  

RSBriggs's picture

No, the HORRIBLE fiscal cliff only reduces spending by about 3.5% overall.

SilverFish's picture

Just work harder, slaves!


Oh, and buy more doo-dads from your fav box store.



This will be all for now.

semperfi's picture

GOP please step out of the way and let The Kenyan Thug and his Army have their way and ASS RAPE all the dumb ass apathetic ignoramuses in this country that either stood by and watched or directly voted in the polititians over the last few decades that brought us to this point. We deserve an ass-raping, no lube, good and hard - bring it.

helping_friendly_book's picture

What Army?

You mean those idiots trying to get their 'scripts for testosterone and Viagra filled while writing email novellas to their mistresses?

I think the bonheads will be much to busy testifying in front of the Senate for the next four years and getting probed by the FBI!

I suppose the attack on Iran, the peacful nation, will have to wait four more years bicthz!

We might even see a peace dividend out of this!

What we lose via higher taxes we make up double by the falling gas prices the FC will induce.

Bring it on!!! Let those poor rich people pay their taxes.

Short LMT. Long SPXU.

semperfi's picture

"Let those poor rich people pay their taxes"


TAX THE RICH plan....


Hollywood tax         90%
Mainstream Media tax  90%

Pro athlete tax       90%

Banker tax            90%

Lawyer tax            90%

Politician tax        95%


And because "everyone" needs to pay their "FAIR SHARE"...

Parasite 47% tax      25%
Illegal Alien tax     50%

helping_friendly_book's picture

Sounds like a plan!

You forgot the 95% inheretnce tax for sum greater than $250,000.

Let everyone start on the same level.

No more trust funds.

Let the gov't take the wealth when you die.

That might change political contributions a bit.

Peterus's picture

People would just spend it all than. OK, all the people that did not put Government as the sole benefator in thier testaments right now.

There is no gaming a system of violence. You can't run a gang to actually produce net gains. Whatever it gives away, whoever it will prioritize for help - all of the money is first robbed. Let the gov't die and leave people's wealth alone (and stop shielding all those speciali interests from taking responsiblity!).

are we there yet's picture

Getting a roomful of politicians to vote for fiscal sanity and smaller government is like hearding 255 cats to take a bath.

Money_for_Nothing's picture

Supposedly falling off the cliff would bring in something like 500 billion a year in more taxes. This would be offset by at least 300 billion going out in unemployment, disability and SNAP. Also a bunch of retirement funds would collapse as the stock market would drop sharply. Banks wouldn't be good as the newly unemployed owning bonds and CDs would start cashing them in. FUBAR would be too mild.

hooligan2009's picture

you get some idea of the malthinking when you see how these numbers are portrayed.

"cost ot the economy" is a misnomer.

the title should be "savings to the taxpayer" or "avoidance of debt". these idiots should be avoided, as should talking heads, bank economists and of course THAT Nobel prize winner.


hooligan2009's picture

i vote for two things

1. confiscate all cash sitting on the sidelines in the US

2. impose a tax of 150% on cash held overseas by US companies.

Riquin's picture

Look mathematically is impossible to pay the debt the sooner we accept that the better we are going to be. We need to get the best mathematical, accounting, financial and legal minds in the nation and come out with a gracious plan of debt forgiveness.  The more we wait the worst it going to get. We are going the way of Spain (taxes and cuts) and that is not fun.