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What are the consequences if America goes off the fiscal cliff?

Posted by Digger Cartwright
Digger Cartwright
Robert “Digger” Cartwright is the author of several mystery stories, teleplays, and novels including The Versa...
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on Monday, 28 January 2013
in Digger Cartwright

Mystery Novelist Digger Cartwright Participates in Thinking Outside the Boxe’s 9th Annual Symposium

Orlando, FL, Miami, FL & Washington, D.C. (PRWEB) January 22, 2013— The office of Digger Cartwright, mystery novelist and industrialist, released the transcripts of his responses to the question and answer session from Thinking Outside the Boxe’s 9th Annual Symposium held in Orlando from December 23-31, 2012. The symposium focused on topics such as recent economic conditions and the outlook for the coming year, geopolitical events, domestic politics, etc.

 

Take the bus off the damn cliff and get it over with. Fact of the matter is the end of the Bush tax cuts will have a bigger effect on people in the lower tax brackets than people in the higher tax brackets. And guess what, those in the lower brackets are probably the ones who voted Obama a second term. So, when their paychecks get smaller next year, they can thank him. Don’t blame the Republicans, just thank the Democrats. This is what they want. They don’t care if we go off the cliff.

 

If we go off the cliff, it’s not the end of the world. The government’s profligate spending is what is going to destroy us. No one at this event can individually spend more than what they make on an on-going basis. It just doesn’t work that way. Everyone here has a budget that they have to adhere to. We all have spending limits. We can’t just print money. But the politicians in Washington don’t understand that, because they think they can just print more money or tax people more. They’re economic idiots!

 

There’s a fundamental problem when you constantly budget annual increases, and the only reductions in spending are reductions in the increases in spending. It would be like each of us budgeting for a 10% per year increase in our spending budget when in reality our income is only increasing by 3% or so. After the first year, we find ourselves in debt because we spent more than we made. So, for the second year, our spending budget is based on the prior year’s level but with only a 5% increase. And in reality, in the second year, our income only grows by 3% again. We go in the hole again, then we do the same thing in the third year. This is asinine, but this is the way they do it in Washington! Make any sense?

 

If we are ever to get meaningful spending cuts, we need to cut the base spending not just the rate of increase in spending. So, if we spend $1 trillion this year, we spend only $900 billion next year. That’s cuts in spending. And actually, that’s what the sequester does, but have you noticed that no one in Washington wants to go along with that plan now? Oh, let’s not cut spending. Hell, that’s just what we need, but sadly the sequester doesn’t go far enough.

 

But there’s a second part to this equation that we can’t forget—revenues. If the economy were growing at about 5% or 6% annually for a couple of years, we’d be generating a lot more in revenues and the budget deficit wouldn’t be so large. We you have an economy that is producing at its potential, there are a lot of positive benefits—people are working and paying taxes and spending money. All of that leads to a strong economic base and higher revenues brought in from taxes. Just think, if we reduced the headline unemployment rate from 7.9% to 6%, we’d be looking at about 3 million more people employed. That means there’d be 3 million more taxpayers paying payroll taxes, income taxes, sales taxes on goods purchased, etc. And, if we could reduce the real unemployment rate—that counts people who have given up looking for jobs or who are working less than what they want—to 6%, we’d be looking at about 10 million workers back in the workforce. Think that would have an impact on getting the economy going? Obviously, we’re talking big numbers, but I don’t want to overplay what it can do. People working isn’t the cure for all our problems. We have to have spending restraint at the federal and state levels. We’ve got to make meaningful and deep spending cuts across the board. No programme and no department should be spared on the spending cuts. Everything from entitlement programmes to defense to education to foreign aid should be on the chopping block.

 

Sadly, I’m afraid the Republicans in the House of Representatives are going to cave and give in to the President. So, we’ll get higher taxes and virtually no meaningful spending cuts. We won’t get any tax reform or changes to entitlement. Let’s go off the fiscal cliff now, let the economy go into recession again, then have a meaningful debate during mid-term elections in 2014. By then, maybe the Republicans can have their acts together and actually get something accomplished. Ah, but wait a minute! We’ve got the debt ceiling issue coming back up in early 2013. So, maybe that will be an opportunity to force some massive spending cuts. Or maybe they’ll just raise taxes again.

 

But I’d like to make one more point if I may, and that’s about the effects of Obamacare in 2013 and beyond. We’re starting to get a picture of what this is going to mean in terms of new taxes, fees, or whatever they want to call it. Make no mistake, each and every single American worker and taxpayer is going to be paying more to the federal government starting next year just to pay for Obamacare. I know there are a lot of people out there who don’t think it is going to affect them, but they’re going to be in for a rude awakening. There’s stuff in that bill that the IRS is finding out about now that no one ever dreamed of. It isn’t going to be pretty, and businesses aren’t going to take this lightly. Businesses aren’t going to hire or expand if they’ve got this massive new expense. And how are we ever going to get the economy going again if businesses don’t hire workers or start laying off workers again or reducing them all to part time? Not everyone can work for the government. 

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