kr!~~_7.JPG "pigdog47"){kind=avatar}
"Hey guys, you (Republican) lost."
???
Not quite.
American voters, in their wisdom, elected a Republican majority in the House of Representatives 234 to 201
At the same time, American voters, in their wisdom, re-elected a Democrat to live in the White House.
Obama 50.6% Romney 47.8%
At the end of the day, both parties can claim the electorate supported their point of view, their policies.
To simplicy things, the President and Democrats want higher taxes and less tax breaks on corporations and high income earners while Republicans want lower government spending while keeping the same low marginal tax rate from the Bush tax cuts for millionaires and billionaires.
Both are right, of course.
Will there be a compromise? Yes
Will the so-called "Fiscal Cliff" be avoided? Yes. (I am an optimist!)_
Will that solve all the problems? Of course not. They will keep in fighting for years.
For more information on the results on the US November election:
What would happen if they reduced their spending on the military?
That’s a catch 22...........
- A lot of soldiers would go back home but they might be hard pressed to find a job.
- Businesses supplying the military would cut production and that would put people out of work and they too have to find jobs.
- People out of work would vote out Obama next election and vote in a Republican with a lot of promises. Then the Republican would get the US into another corporate invented war and things would go back to where they were with the exception of an increase in funeral costs and related items.
One has to never forget what Eisenhower said in his farewell speech to the nation….”beware of the military INDUSTRIAL complex”. He knew what was coming because the US drastically changed after WW2.
To bring back jobs to the USA they have to in some way get, manipulate or force the US corporate owners to return manufacturing of their products from off shore and Mexico and Central America to the US workers. NAFTA and other agreements were good for big business but not the average person (with the exception of cheap products that don't last long). The USA has to return to being a balance between manufacturing and consuming instead of mainly a country based on consumption.
Oh and one final thing…….if the US cut back on military spending and their wars….the world would be a more peaceful place with less people from other countries fleeing those wars.
The could also save a LOT by not supporting Israel with millions upon millions of taxpayers money.
"What would happen if they reduced their spending on the military?"
Why limit the question to spending reduction affecting the military? One needs to look at the bigger picture and it is not pretty.
The US government currently spends about $3,500,000,000,000 (three and half trillion dollars). It represents 24% of their Gross Domestic Product and that level is well above historic and sustainable trend (20%/21%).
Suggested reading: http://en.wikipedia.org/wiki/United_States_federal_budget
In the meantime, thanks the the "Bush Tax Cuts" implemented about ten years ago, personal and corporate tax rates have come down and currently represent the lowest rate in modern American history.
Suggested reading: http://en.wikipedia.org/wiki/Bush_tax_cuts
So, the problem is simple: tax revenue MUST increase to a more traditional 18% of GDP while expenses MUST decrease to a more traditional 21%. A 2% to 3% annual growth in the economy will allow the debt to remain more or less constant as a percentage of GDP.
Now, reality check (nothing to do with political considerations - just forget the rhetoric offered by both political parties).
What happens when a government raises taxes and reduce expenses (or at least the rate of growth in expenses)?
It hurts. It hurts everyone. We experienced a similar problem and solution in Canada nearly twenty years ago when the newly appointed Minister of Finances Paul Martin had to raise taxes, EI contributions, fees, etc... and reduce expenses and provincial transfer payments. Eventually these tough measures resulted in a balance budget, ten years later.
Despite a change of government, that strong fiscal position allowed Canada to survive the 2007-2009 deep recession much better than most developed countries.
Americans face difficult choices. There is no easy solution. Bills have to be paid. They have lived on borrowed money and borrowed time for too long. The party is over. 😞
Suggested reading (Warren Buffett solution to the "Fiscal Cliff"):
"I wonder how much of a difference it will actually make. Is it a hoax or what?"
When it is all said and done, the expectation is that the average American household will be paying $2,000 to $3,000 more in taxes each year—leaving them with $2,000 to $3,000 less to spend in a consumer driven economy.
For more information (Forbes) :
http://www.forbes.com/sites/rickungar/2012/11/10/the-fiscal-cliff-explained/
"That economy will then take a further beating...."
Will?
No, I do not expect American politicians to be that stupid. They will reach a last minute face saving compromise and avoid the "fiscal cliff".
However, I suspect much of the solution will be to simply punt the problem (growing national debt) down the road to be dealt with at a future time.
"If someone would actually go through a process of identifying all these schemes that business lobbies have cooked up in Washington over the years..."
It has been done. They know exactly to the nearest million how much each tax loophole cost.
Now, tax loopholes are not only used by large corporations, they are also used by small businesses and individuals. For example, one of the most expensive loopholes in the USA is mortgage interest deduction. It was a great tool decades ago to help Americans buy their homes. Today, folks are now rethinking it.
Another "loophole" is the lower tax rate charged on dividend income (we have a similar program in Canada). Here the principle beiung the lower tax rate was fairness - minimizing double taxation - since the dividends paid to shareholders comes from the already taxed profits of corporation. However, in the USA, effective corporate tax rates have gone down over the years without adjustment to the rate charged on the dividends. Adjustments are obviously now required. Etc... etc...
Anyone with a few hours to spare can take a look at
http://www.whitehouse.gov/omb/budget/Supplemental
