The Fiscal Cliff

This is a great explanation of the so-called “fiscal cliff,” courtesy of The Wall Street Journal.  (The film was produced in late October, so you can ignore the talk about what would happen in Romney wins.  He didn’t.)  It really is an explanation of the components of the federal budget, in a good amount of detail.  Don’t worry TOO much about the details – we’ll spend more time on those in March.  But watch the video, and come up with a solution.


11 responses to “The Fiscal Cliff”

  1. Adam7 says :

    My take: close military bases in places like Bulgaria and Italy, mothball a few of our aircraft carriers, raise the Social Security and Medicare retirement age to 70, withhold benefits for people with a net worth over $_____ (TBD), discontinue Medicare coverage for some of the most expensive end-of-life procedures, raise the capital gains tax by 5% across the board, eliminate the majority (if not all) of the farm subsidies, and let the Bush-era tax cuts for the wealthy expire.

    Lastly, and perhaps most importantly, no more expensive wars of occupation.

  2. Kunaal7 says :

    We need to think about how to balance our budget. The country needs a “balanced” approach to reducing the deficit by mixing spending cuts and tax increases. I have five-point solution to avoid fiscal cliff.
    1. Expire the Bush-era tax cuts; Capital gains taxes and estate taxes should be increase and dividends should be taxed. Introduce a cap on deductions as Mitt Romney suggested.
    2. Reform the tax code in a way that asks the most wealthy to contribute their fair share, and closes corporate loopholes for companies that ship American jobs overseas.
    3. Change the Medicare System by increasing the age for beneficiaries and reducing their benefits.
    4. Add a carbon tax as a source of new revenue, and reduce income tax rates by one dollar for every two dollars raised.
    5. Add smart cuts to defense spending; without compromising our national security and invest in job creation in the near-term.

  3. Jonas1 says :

    Here are my thoughts:
    – Cut military spending drastically
    – End the war on drugs and tax them
    – End all agricultural subsidies
    – Reduce foreign aid
    – Tax capital gains as income
    – Tax overseas income for corporations
    – Let the Bush-era tax cuts expire

  4. marytravers4 says :

    I agree with Alice Rivlin that we need to do something, and soon. We’re not going to have one answer that solves the whole problem. As Adam, Kunaal, and Jonas all showed there will inevitably be multiple steps to getting our fiscal affairs in order. I think the impact of falling off the fiscal cliff would be devastating for our country. We need bipartisanship in Congress to divert part and help part recover quickly. Some Republicans have already said they would be ok with raising some taxes if entitlement reform could be on the table as well. Lets get going on it!

  5. eddiemeyercord4 says :

    Adam, Kunaal, and Jonas all proposed a lot of possible reforms that I think are certainly rational and could help to reduce the deficit significantly. That being said, the likelihood of most of these reforms being passed is slim at the moment. As most of us remember, due to unprecedented increases in the national debt America faced a debt-ceiling crisis this past summer. The way it was handled and difficulty of attaining cooperation between the Obama administration, Democratic Senate, and Republican Congress does not leave me with much confidence that compromise sufficient to solve the fiscal cliff issue will be somehow achieved this time around.

  6. thetuck1 says :

    Undoubtedly, a place where a lot of spending can be cut is in defense. I certainly believe that it is important, for the sake of security and safety, for America to spend a lot on defense and for us to make sure we can be prepared for the worst (as it was put in that Reagan commercial we watched in class). But the fact that we spend more than the next 17 countries combined suggests that our defense is probably strong enough. There must be a line between sensible and useful defense spending and spending with no real effect, and if we could figure out how to cut spending in defense, that could lead to significant change.

  7. Ryan4 says :

    As others have said, the most staggering fact I recognized was the hundreds of billions spent on the military and defense. It should definitely be our priority to cut this number first. I would also change the age of the medicare system to include fewer people, only those who are above, say, 65 – 70. Naturally, the Bush Era tax cuts will expire, and with more income to the government flowing, we should make a solid effort to pay back our debts and reduce the deficit instead of trying to put it off.

  8. Chad4 says :

    I think the solution to the “Fiscal Cliff’ should be a cut in government spending on Medicare (provide a premium support program for seniors to opt for a private insurance plan if wanted), cut Military spending by a reasonable amount (definitely end occupations in the Middle East), extend the Bush tax cuts for all income brackets (do not raise the capital gains tax), and encourage small businesses.

  9. mattgiannottione says :

    I believe the enormous spending on the United States military shows an unadaptive nation throwing money blindly towards the armed forces and many other programs that can bear the weight of a tightened belt but do need to currently. I believe it is the military’s job to decide what needs to be cut and what they can afford to lose without compromising our safety. The best solution to the military spending quandary is have the people who know best dictate the defense spending cuts. In a time of financial restrictions that the country must suffer through, we must all find ways to live more cost effectively. I believe that the fiscal cliff should be postponed another year because plunging this country through another recession with higher taxes and less income will not help fix this economy. The only way we can avoid plunging into crisis is to compromise and be willing to settle for the sake of the people’s wellbeing and not sticking to your guns on political platforms.

  10. nyle4 says :

    I feel there has been too much emphasis on the significance of the “fiscal cliff”. Politicians and the media have been projected that if the deadline is not reached then the American economy would collapse indefinitely and send us into an even more massive recession. It has almost been used as a scare tactic and has the american public riled up on this “fiscal cliff” and speaking how important it is when they actually have no idea what it is and the wide range of effects it could have on the economy.

  11. AkhilP7 says :

    Clearly there are a large number of issues that need to be adressed. Tax reform is certainly one of the most important. Capital gains taxes need to be increased, corporate loopholes need to be closed, deductions need to be adressed (Romney can still claim them from charitable contributions). There should be lower taxes on small businesses and lower overall income taxes. Military spending cuts, agricultural reform, reducing subsidies, not allowing pharmaceutical corporations to control prices, etc. are all things that must be addressed after that.

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