The Fiscal Cliff, In Three And A Half Graphics

[explanade]

You really think both parties are equally at fault?

 

[Midpack]

I like to get my morning news watching CBS This Morning (Mon - Sat). Bob Schieffer was guest asked today, and put it best. He said something like "I've said it before, I can't believe that both sides are so stupid to not have an agreement and put the nation in a recession." Well said.

I like Bob Schieffer and I hope they do something substantial before 2013, but who knows. Fortunately there is no cliff despite all the hype, it's a slope, nothing actually happens fiscally on Jan 2nd. Unfortunately, markets may overreact, so we may see some volatility while the executive and legislative "chuckleheads" (quoting Rep. Steve LaTourette, R-Ohio) play around. Lots of talk both sides can say they're cutting taxes after they let the Bush tax cuts expire. What a joke...like anyone can't see through the nonsense.

 

[easysurfer]

Some actually believe going over the cliff is a good thing.

On the other hand, I remember reading listening to on the radio a couple of months back, saying that if there is no agreement, then come 2013 the firing starts. Folks will start getting pink slips as the cliff impacts everyone and businesses aren't gonna hire but instead let folks go.

Will be interesting to see how things play out in the next week and a half.

 

[youbet]

+1, now if we could only disolve congress and start over with more objective reps.

I think ya need to tie the executive and judicial branches in there too. The whole lot of politicians seems to be living life apart from the rest of us.

 

[youbet]

Some actually believe going over the cliff is a good thing.

Well, we would be going back to something near the tax and spending levels of the Clinton Administration. If you liked that then, you might like it now?

Agree with midpack that this isn't a cliff so much as a slope. The media, of course, has to stirr it up to appear as though an asteroid will be hitting earth Jan 2nd....... Bless their hearts......

At our house, we've put on our life jackets and have proceded to the life boat deck but doubt that the ship will actually sink. Thank goodness that in these modern times, women have won their rights and no longer have priority if we need to abandon ship.......

 

[samclem]

Well, we would be going back to something near the tax and spending levels of the Clinton Administration. If you liked that then, you might like it now?

We might be going back to the tax rates of the Clinton/Gingrich years, but I haven't heard anyone say we'd be going back to the spending levels of those years. If get back to those spending levels, or even back to historic norms, a lot of other problems would be more easily solved. (Disregard "projected" levels below--I don't know the assumptions made)

 

[youbet]

We might be going back to the tax rates of the Clinton/Gingrich years, but I haven't heard anyone say we'd be going back to the spending levels of those years. If get back to those spending levels, or even back to historic norms, a lot of other problems would be more easily solved. (Disregard "projected" levels below--I don't know the assumptions made)

Thanks, and I stand corrected. Spending seems to have increased so much since the Clinton years it's hard for me to comprehend. So, yes, we'd be back to near the Clinton tax levels but still way above the Clinton spending levels since the proposed spending cuts are modest.

 

[explanade]

A couple of wars and a financial crisis, followed by bailouts.

 

[imoldernu]

DJIA
May 2008 $13000
March 2009 $6600

Mar 2002 $10500
Sept 2002 $7700

memories

 

[target2019]

That's know as the Microsoft fix. You know, Ctrl+Alt+Del, reboot, hope for the best.

If that doesn't fix the problem, reinstall Congress. I'd go with a previous version.

 

[brewer12345]

Somehow, this seems appropriate:

Bailout! - Video Clips - South Park Studios

 

[UnderTheRadar]

Fiscal Cliff - what does it really mean?

1. Payroll tax rate goes from 4.2 to 6.2%

2. Income tax brackets go from 6 to 5. (10, 15, 25, 28, 33, 35) to (15, 28, 31, 36, 40)

3. Capital gain rate goes from 15 to 20% (including lots of minutia detail)

4. Standard deduction for married couples goes from 2x single filers to 1.67x

5. Child tax credit goes from $1000/dependent to $500/dependent.

6. Child dependent care tax credit reduced from $3k to $2.4k per child.

7. Estate tax (death tax) goes up from 35% on estates over $5M to 55% on estates over $1M.

 

[youbet]

Fiscal Cliff - what does it really mean?

1. Payroll tax rate goes from 4.2 to 6.2%

2. Income tax brackets go from 6 to 5. (10, 15, 25, 28, 33, 35) to (15, 28, 31, 36, 40)

3. Capital gain rate goes from 15 to 20% (including lots of minutia detail)

4. Standard deduction for married couples goes from 2x single filers to 1.67x

5. Child tax credit goes from $1000/dependent to $500/dependent.

6. Child dependent care tax credit reduced from $3k to $2.4k per child.

7. Estate tax (death tax) goes up from 35% on estates over $5M to 55% on estates over $1M.

Bold above mine.

Thanks for the nice summary UnderTheRadar.

Wasn't this stuff all meant to be temporary to begin with? Instead of saying "goes to" to describe the changes, shouldn't the expression be "returns to?"

Except for some changes coming out of the current administration to help support the new health care program, aren't we just returning to the tax levels of the recent Clinton administration?

I'm confused by the rhetoric referring to raising taxes on the middle class. The so-called fiscal cliff would simply mean allowing some (very unpopular with one of the major parties at the time) tax cuts to return to their former levels. And those are levels which seemed to have wide support at the time.

What's the big deal? I'm really not looking forward to paying higher fed tax rates and having the marriage penalty restored, etc., as the Bush temporary changes expire. Those tax dollars will come right off the top of our FIRE budget. But, hey, more than likely we're going to have to pay the bill eventually. Let's get to it. I suspect folks here on the FIRE Forum know as well as any how to do a bit of belt tightening and still enjoy retired life fully despite having a few les bux to spend.

Those graphs samclem posted above showing the revenue line at or above the spending line for a short time during the Clinton years look very appealing.

 

[scrabbler1]

Bold above mine.

Thanks for the nice summary UnderTheRadar.

Wasn't this stuff all meant to be temporary to begin with? Instead of saying "goes to" to describe the changes, shouldn't the expression be "returns to?"

Except for some changes coming out of the current administration to help support the new health care program, aren't we just returning to the tax levels of the recent Clinton administration?

I'm confused by the rhetoric referring to raising taxes on the middle class. The so-called fiscal cliff would simply mean allowing some (very unpopular with one of the major parties at the time) tax cuts to return to their former levels. And those are levels which seemed to have wide support at the time.

What's the big deal? I'm really not looking forward to paying higher fed tax rates and having the marriage penalty restored, etc., as the Bush temporary changes expire. Those tax dollars will come right off the top of our budget. But, hey, more than likely we're going to have to pay the bill eventually. Let's get to it. I suspect folks here on the FIRE Forum know as well as any how to do a bit of belt tightening and still enjoy retired life fully despite having a few les bux to spend.

Those graphs samclem posted above showing the revenue line at or above the spending line for a short time during the Clinton years look very appealing.

I agree, youbet, with both your preference of wording and policy view.

One more item which should be on the list is "The tax on qualified stock dividends returns to being taxed as ordinary income from 15%."

I was watching Bruce Bartlett (former Treasury official under George H.W. Bush) the other day on C-Span and he thought that the short-term pain resulting from doing nothing and going over the fiscal cliff is well worth the long-term gain from the tax increases and spending cuts needed to reduce the deficit. I agree with him.

[Mod Edit]

 

[youbet]

Unfortunately, scrabbler1, your comment about one of the current Washington personalities (inappropriate to the discussion regarding taxes, the "fiscal cliff" and FIRE IMO) does little to solve the deficit problem. The remaining Washington folks would still continue spending at high levels and exempt 98% of Americans from returning to the Clinton tax levels. So if you believe that reducing the deficit is good for FIRE'd and FIRE wannabee folks, we need a much more broad based house cleaning.

Not that we Chicagoans are calling for anyone to return here..........

 

[REWahoo]

It's almost Christmas! Santa Pig will be here before you know it...

 

[Alan]

Thanks folks for a lively discussion.