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"Fiscal cliff" averted -- now what?

Posted by on Jan. 2, 2013 at 8:18 AM
  • 11 Replies

 

"Fiscal cliff" averted -- now what?

Congress didn't completely fall off the "fiscal cliff," but they're still hanging onto the edge.

 

By waiting until the last minute to scrape together a limited bill (which extends the Bush-era tax rates for most Americans and extends long-term unemployment insurance, among other things), Congress sidelined some major fiscal issues they initially sought to resolve before the new year.

 

Leaders in Washington deferred for two months the $1.2 trillion in across-the-board spending cuts (known as "sequestration") set to hit the Pentagon and domestic programs this week. Additionally, the bill passed this week failed to raise the debt ceiling, even though the Treasury technically hit the $16.4 trillion limit Monday. Both of these issues will come to a head just as Congress is expected to vote on a new federal budget. The convergence of these issues practically guarantees that within a matter of weeks, Washington will once again find itself embroiled in another fiscal crisis.

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Obama on "fiscal cliff" deal: good first step

 

Lawmakers on both sides of the aisle in recent days have decried the state of uncertainty that's lingered over Washington for months: "We all know uncertainty is the enemy of prosperity," Rep. David Dreier, R-Calif., said on the House floor Tuesday evening. Congress this week did manage to erase fears that the middle class would face an income tax increase. Still, the next "fiscal cliff" not only keeps the threat of a government shutdown on the horizon, but it is also sure to revive seemingly intractable fights over government spending and programs like Social Security and Medicare.

 

In remarks Tuesday night, President Obama said Washington should strive to address these remaining fiscal issues "with a little bit less drama, a little less brinksmanship, [so as to] not scare the heck out of folks quite as much."

 

 

How'd we get here?

 

 

Congress enacted the $1.2 trillion "sequester" cuts because of the 2011 Budget Control Act. That bill, passed as a result of the last fiscal showdown, required Congress to enact the across-the-board cuts (half hitting the Pentagon and half hitting non-defense spending) if it failed to reach some other deficit reduction plan by late 2011. Not surprisingly, Congress failed. There's near-unanimous agreement in Washington, however, that making mindless, across-the-board cuts to the budget would do more harm than good to the economy.

 

 

The "sequester" cuts were slated for enactment over 10 years, with about $110 billion going into effect this year. The deal passed this week allocates $24 billion in spending cuts and new revenues to defer the "sequester" cuts for two months.

 

Meanwhile, Washington also left negotiations over the "debt ceiling" -- the nation's legal borrowing limit -- for another day. Treasury Secretary Tim Geithner announced last week that the government was expected to hit its $16.4 trillion borrowing limit this past Monday and that Treasury Department is already resorting to accounting gimmicks to skirt the limit, buying Congress a couple more months to raise the ceiling.

 

Raising the debt ceiling was a relatively routine procedure on Capitol Hill until 2011, when tea party-inspired Republicans demanded spending cuts in exchange for allowing the government to go further into the red. The 2011 showdown over the debt limit prompted Standard & Poor's to downgrade the Treasury's debt.

 

In a speech before the Business Roundtable on Dec. 5, 2012, Mr. Obama warned, "We are not going to play that game next year."

by on Jan. 2, 2013 at 8:18 AM
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Replies (1-10):
Simmeringhearts
by on Jan. 2, 2013 at 10:40 AM

Now, we pay out the nose holes in taxes.

gammie
by on Jan. 2, 2013 at 11:21 AM

All this is Theater and its a F&%King JOKE on us.

They are all working together to FUkkkkkkkkkkk us and they get a pay raise.

yourspecialkid
by Platinum Member on Jan. 2, 2013 at 11:40 AM

 They didn't avoid the fiscal cliff....they just played another game of Whack-a-Mole.  We still have a debt ceiling and sequestration coming up.

I think they will come up with some kind of fluff on the debt ceiling and we will NOT avoid sequestration.....Obama has no stomach for real cuts...if he did he would have followed the advice of his own commission.  Besides....the money from the sequestration cuts can just be poured down another rat hole.

 

shimamab
by on Jan. 2, 2013 at 12:48 PM
Now they keep working and working and working until the best combination of cuts and revenue is reached to pay down the debt without stalling the economy further. Progress has been made...in some tiny measure...they need to keep headed in that direction!!!!
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candlegal
by Judy on Jan. 2, 2013 at 12:52 PM
1 mom liked this

Obama doesn't want cuts, he just wants more taxes.

Quoting yourspecialkid:

 They didn't avoid the fiscal cliff....they just played another game of Whack-a-Mole.  We still have a debt ceiling and sequestration coming up.

I think they will come up with some kind of fluff on the debt ceiling and we will NOT avoid sequestration.....Obama has no stomach for real cuts...if he did he would have followed the advice of his own commission.  Besides....the money from the sequestration cuts can just be poured down another rat hole.

 


joey125
by Silver Member on Jan. 2, 2013 at 6:26 PM
1 mom liked this

I'd like to know what cuts Republicans want , the President has made cuts , all I hear from the GOP is cut entitlements , which are SS, Medicare, Medicaid,   Both parties know these are not popular , how about defense cuts, corporate welfare cuts.  The Republicans are really pathetic if they plan to use the debt ceiling as leverage, the debt ceiling should be raised without question since its money they have already spent.   Its like going out and buying goods. putting them on your credit card .then decide not to pay the bill.

cammibear
by Gold Member on Jan. 2, 2013 at 7:11 PM
Now, we get more serious about being frugal, getting out of debt, and saving money. When more people are out of work, and cost of everything goes up to compensate for Obamacare and higher taxes...we are just going to be hit in other areas.
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blues_pagan
by on Jan. 2, 2013 at 7:12 PM
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They didn't do anything.  At all.  Honestly I think that if they keep avoiding the inevitable we need to just fire them and have a new election this year.  Screw waiting while they run this country into the ground.

cammibear
by Gold Member on Jan. 2, 2013 at 7:39 PM
What authority did they have to put anything on a credit card? Their grown adults that can't handle money. They created debt with other people's money and expect other people to take care of it. Every last stinking one of them should have to give over 100% of their salaries before they ask one more dime from ant American citizen. Instead, they steal from Americans and vote themselves a pay raise. They are crooked to the core. And they are the ones we the idiots keep voting into power. Grrrr...rant over.


Quoting joey125:

I'd like to know what cuts Republicans want , the President has made cuts , all I hear from the GOP is cut entitlements , which are SS, Medicare, Medicaid,   Both parties know these are not popular , how about defense cuts, corporate welfare cuts.  The Republicans are really pathetic if they plan to use the debt ceiling as leverage, the debt ceiling should be raised without question since its money they have already spent.   Its like going out and buying goods. putting them on your credit card .then decide not to pay the bill.


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eema.gray
by on Jan. 2, 2013 at 7:42 PM
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Now we wait two months, then federal employees get hit with involuntary separations and the backbone of the military, career nco's gets gutted so the generals can keep their pet projects and gs 10's and above can keep their cush gigs. Anybody who thinks 'defense spending' means cutting actual expensive projects is delusional.
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