Guess What They Are Not Cutting In The Fiscal Cliff...

Submitted by Simon Black of Sovereign Man blog,

In his farewell address to Congress yesterday, Ron Paul blasted the dangers of what he called 'Economic Ignorance':

"Economic ignorance is commonplace. . . Believers in military Keynesianism and domestic Keynesianism continue to desperately promote their failed policies, as the economy languishes in a deep slumber."
He's dead right. Around the world, economic ignorance abounds. And perhaps nowhere is this more obvious today than in the senseless prattling over the US 'Fiscal Cliff'.

Here's the deal: You may remember the Debt Ceiling debacle of 2011. At the time, the US government was about to breach its debt ceiling, and there was an embarrassing standoff between Congress and President Obama.

As part of their eventual compromise, the debt ceiling increased by $400 billion in August 2011... then again by another $500 billion five weeks later... and finally by another $1.2 TRILLION twenty weeks after that.

In return, President Obama signed into law the Budget Control Act of 2011. The law stipulates that, unless another compromise is reached, a series of tax increases and budget cuts will automatically take place on January 1, 2013, including the expiration of the Bush tax cuts and the temporary 2% payroll tax holiday, plus new taxes related to Obamacare.

They call this the 'Fiscal Cliff' because everyone is terrified that all the budget cuts and new taxes will bring the US economy to its knees once again.

I've spent days analyzing the bill... and frankly, it's a joke. You can read the 200+ pages yourself if you like, but here are the important points--

As we've discussed before, US government spending falls into three categories.

1. Discretionary spending is what we normally think of as 'government.' It funds everything from the military to Homeland Security to the national parks.

2. Mandatory spending covers all the major entitlement programs like Social Security and Medicare.

3. Then there's interest on the debt, which is so large they had to make it a special category.

The latter two categories are spent automatically, just like your mortgage payment that gets sucked out of the bank account before you have a chance to spend it. The only thing Congress has a say over is Discretionary Spending. Hence the name.

But here's the problem-- the US fiscal situation is so untenable that the government fails to collect enough tax revenue to cover mandatory spending and debt interest. In Fiscal Year 2011, for example, the US government spent $176 billion MORE on debt interest and mandatory spending than they generated in tax revenue.

In Fiscal Year 2012, which just ended 6 weeks ago, that shortfall increased to $251 billion. This means that they could cut the ENTIRE discretionary budget and still be in the hole by $251 billion.

This is why the Fiscal Cliff is irrelevant. The automatic cuts that are going to take place don't even begin to address the actual problem; they're cutting $110 billion from the discretionary budget... yet only $16.9 billion from the mandatory budget.

Given that the entire problem is with mandatory spending, slashing the discretionary budget is pointless. It's as if the US economy is a speeding train heading towards a ravine at 200 mph, and the conductors are arguing about whether they should slow down to 150 or 175.

Oh, and there's just one more problem.

The government thinks that they will collect a few hundred billion dollars more in tax revenue when all of these new taxes kick in. Again, wishful thinking.

In the six+ decades since the end of World War II, tax rates in the US have been all over the board. Yet during this time, the US government has only managed to collect roughly 17.7% of GDP in tax revenue.

Conclusion? Increasing taxes won't increase their total tax revenue. Politicians have tried this for decades. It doesn't work. The only way to increase tax revenue is for the economy to grow... and higher tax rates do not pave this path to prosperity.

Ron Paul was spot on. Economic ignorance abounds. And all the Talking Heads in the mainstream media blathering away about the Fiscal Cliff are only reinforcing his premise.

Bottom line-- the Fiscal Cliff doesn't matter. The US passed the point of no return a long time ago.

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11/14/2012 - Ron Paul's Farewell Speech To Congress

Extend And Pretend

Why Financial Repression Will Fail

I challenge the credibility of your source.

I challenge the credibility of your source. Originally Posted by Yssup Rider

I challenge your credibility, the MSM credibility and the credibility of the person in your ridiculous looking comical avatar...



>>>"You can read the 200+ pages yourself if you like..."<<<
http://www.whitehouse.gov/sites/defa...e4d6941d77eac9

Also, go back and read my posts... (if your able to comprehend them)
everything is coming to fruition.

WE PETITION THE OBAMA ADMINISTRATION TO:
We request that Obama be impeached for the following reasons.
We request that Barack Obama be impeached for the following reasons.

1. He proclaimed war in libya without getting congress approval first. Article I, Section 8- Only congress can approve to start war.

2. Obamacare is unconstitutional. Forcing US citizens to get health insurance whether they want it or not.

3. Obama disrespects our Constitution calling it flawed and trying to change it even after taking this oath:

"I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States,

and will to the best of my Ability, preserve, protect and defend the Constitution of the United States."

4. Appointing agency “czars” without Senate approval.

Created: Nov 11, 2012

its more like a fiscal curb

I will agree with you about the ignorance in the world, but sadly, general ignorance, not just financial ignorance has been with us for as long as the dawn of time.

The so called "Fiscal Cliff" is intentionally designed to be so onerous that all sides are compelled to find solutions before these measures kick in.

. . . I expect that some sort of solution will be found before we get to that point.

I will agree with you about the ignorance in the world, but sadly, general ignorance, not just financial ignorance has been with us for as long as the dawn of time.

The so called "Fiscal Cliff" is intentionally designed to be so onerous that all sides are compelled to find solutions before these measures kick in.

. . . I expect that some sort of solution will be found before we get to that point.


Originally Posted by Fast Gunn

ahh... Another unintelligible chart that SEE can't explain.

Baffle them with bullshit.

This is America. You are free to challenge what you will. You are encouraged to fight for the greater good.

Pissing and moaning, however, isn't going to change anything, except the relative humidity in your diaper.

so outside of a lunching, what are you going to urges your elected officials to do on your behalf?

Too bad Assup won't see this, but I think "lunching" with some elected officials would be a good thing. Give us a chance to talk.

<<<Assup // COG>>>

I challenge the credibility of your source. Originally Posted by Yssup Rider

So you challenge "Common Sense"...good luck with that. Keep suckling at the Okoolaid tits...suckem fucker...

English, motherfucker! ENGLISH!

ahh... Another unintelligible chart that SEE can't explain.

Baffle them with bullshit.

This is America. You are free to challenge what you will. You are encouraged to fight for the greater good.

Pissing and moaning, however, isn't going to change anything, except the relative humidity in your diaper.

so outside of a lunching, what are you going to urges your elected officials to do on your behalf? Originally Posted by Yssup Rider

No BS, it's what I do for a living. The chart... I was just responding to someone. It's the Neo-Keynesian model.
A John Maynard Keynes economic perversion. Pissing and moaning? No it's comprehending reality. Profits to be made... UP DOWN DOWN UP and preserving wealth... then Gold Bullion and Extravaganza.
But hey, don't trust the financial charts. Trust the TV you were raised on and love the government. Who loves you and who do you love! Ever had Guaro? Yummy!

Peace Man