The entire facing page of our Opinion section today shows, by the numbers, what the “fiscal cliff” has in store for you if America is forced to leap over that cliff at the end of 2012.
The front page will help tell you how and why we got to the fiscal cliff — and what we should do to turn back.
Last February, Federal Reserve Chairman Ben Bernanke — addressing the House Financial Services Committee – described “a massive fiscal cliff of large spending cuts and tax increases” set to occur at the very start of 2013.
The temporary payroll tax cut? Poof. Gone. If it’s not extended, taxes go up by $95 billion.
The estate tax cap? Gone. You think a lot of people are hit by the death tax now? Over the fiscal cliff, 10 times as many people are going to feel it.
The patches on the Alternative Minimum Tax? Gone. You might as well call it the wealth tax. Four million people pay it now. Thirty million over-the-cliff taxpayers would have to fork over money in 2013.
The expanded tax credits? Gone.
The payroll tax holiday? Gone.
Lower income tax rates under President George W. Bush? Gone. And according to the Tax Policy Center, 90 percent of U.S. households are going to feel it.
Over the next 10 years, America is looking at $7 trillion worth of tax increases and spending cuts if we careen over the fiscal cliff.
And let’s talk about those cuts. They’re across the board — defense and non-defense programs. Do we really want to gut defense spending now? Ever? Certainly military spending can be executed more efficiently, but those decisions have to be made using the measured discipline of a surgeon’s scalpel, not the ham-fisted swing of an across-the-board meat ax.
How do you think Joint Base Elmendorf-Richardson, or Alaska’s indispensible U.S. Coast Guard facilities, would fare under that ax?
The fiscal cliff started getting excavated as far back as 1985 with the Gramm-Rudman-Hollings Deficit Reduction Act. It was designed to trigger automatic, across-the-board spending cuts if Congress’ budget spending exceeded its annual budget resolution.
But that trigger never has been pulled. Members of Congress, ever eager to bring home government pork, just kept raising the budget resolutions’ spending caps year after year.
Then there’s Obamacare — the White House’s “answer” to the health-care crisis. In 2013, Obamacare imposes a surtax on salaried income over $200,000 ($250,000 per couple); and a surtax on all investment income received by folks getting more than $200,000 per individual and $250,000 per couple. That includes capital gains and dividends income.
All of this amounts to some $500 billion — and it’s the largest tax hike in U.S. history.
People have compared this move toward the edge of the fiscal cliff as “kicking the can down the road.” That’s inaccurate. Playing kick-the-can actually is kind of fun.
What America is facing fiscally is a disaster.
This lack of certainty is sure to make the stock market more jittery. Skittish business owners — think retail, restaurant and industrial areas — will be more reluctant to hire. They might even let more people go.
All of this is not a revenue problem. Heaven knows the government is getting enough of our revenue. It’s a spending problem.
Consider: In the past few years, we’ve seen a needlessly lavish stimulus. We’ve seen bailouts. Eligibility requirements for social entitlements and unemployment benefits have been expanded.
According to Rick Manning of Americans for Limited Government, federal spending has gone up 30 percent. No wonder too many people in Washington, D.C., are clamoring for more of our money!
Joining in is billionaire Warren Buffett, who in recent days has been advocating a “minimum tax” on the super-wealthy “1 percent,” which he describes as fair. That top 1 percent, by the way, earns 16 percent of all U.S. income but pays 37 percent of all federal income taxes. How much more “fair” does Buffett want to be before the 1 percent go penniless?
The mainstream media’s drumbeat in their fiscal cliff coverage is for Republicans to cave in to tax hikes. They’re demonized and pestered about it seemingly from every reporter on the planet. So why aren’t these same reporters asking Democrats about changes to America’s bloated entitlement programs – Social Security, Medicare and Medicaid?
With entitlements including Obamacare, federal spending rises to 24 percent of America’s gross domestic product. It’s that stubborn adherence to big spending that’s powering the momentum toward the fiscal cliff.
And halting big spending is what’s going to stop it.
Comments (54)
Add commentWhat is with...
...these far right Empire editorials of late? Smells like they're are coming from the corporate masters in Georgia. Why looky here! A quick visit to other Morris newspapers yields the exact same editorial, with just a few tweaks (Elmendorf and Coast Guard) to make it seem like a genuine Alaskan editorial. Does this seem a bit dishonest to anyone else?
Lots of other deception in here as well.
One example - the 'death tax':
"You think a lot of people are hit by the death tax now?"
Well, do you? How much do you think it is now, and how many Juneauites will be affected by it?
The first $5 million dollars is totally exempt from taxes ($10 million for married couples). That's it - zero, zilch, nada. How many people do you know who are in line to inherit over $5 million? Poor babies. On the other side of the cliff, the exemption is still $1 million, then a 55% tax after that, with a bunch of exemptions for small businesses. If I inherited a million bucks, I'd shut up and stop whining, since I had just become part of the 0.1%.
Here's another - the poor, beleaguered 1%ers:
"That top 1 percent, by the way, earns 16 percent of all U.S. income but pays 37 percent of all federal income taxes."
Note how careful they were to say 'federal income taxes'. That's because most of the pay the 1%ers take home is in the form of capital gains, which are only taxed at 15%. Only the little people draw an actual paycheck from actual work. And they also fail to note that the top 1% owns 42% of the wealth.
Here's a news flash for you, Morris Communications: Your own 'fiscal cliff' is approaching if you expect readers to actually pay for dishonest online rubbish such as this. This newspaper is in Juneau, not Amarillo. We can get free propaganda from Fox if we want to see this.
Who wrote this opinion?
Was an economist consulted? If so, is his/her full-time job a talk-show host?
How can anyone talk about the economy without delving into the meaning of the words consumer confidence and uncertainty? And what's the point of the Warren Buffet slam? The top 400 earners in this country control more wealth than the rest of the 185 million earning citizens combined.
This is pretty shallow writing on a complex subject. Blah.
Mike
A possible savings
I am not a devotee of Ron Paul, but in his campaign for President I agreed with him on one thing - reduction of our military bases in other nations could save us a lot of money and perhaps reduce some ill feelings towards the US.
Do we really need all the military bases we have around the world - in Europe, Okinawa, and other places. How many foreign nations have military bases in the US ? How would we feel if Germany, Indonesia or South Korea decided they needed to have military bases in the US? Reducing military bases in other nations would not impact jobs in the US, would bring our troops home and reduce spending.
Perfect editorial - no matter
Perfect editorial - no matter where it came from. It's about time most of these newspapers woke up to the facts. Now if the mainstream media will just get on board, maybe America stands a chance.
These numbers are encouraging - Fox ranked 2nd only to ESPN in November for cable channels.
"FNC was the only cable news channel in the top 10 for both Prime in Total Day in Total Viewers. In prime, MSNBC ranked 11th(1.284 million) and CNN ranked 17th (1.052 million). In Total Day, MSNBC was 12th (0.725 million)and CNN was 16th (0.652 million)"
And lat if you can't deal with the truth, climb back under your rock. It's probably safer there anyway!
Is anyone else tired of the class warfare rhetoric?
America is a world military
We defend countries that lend what I view as minimal support to our military efforts. We defend North Korea, Japan, Europe and Israel...all economies perfectly able to fund and build their own militaries. I feel irritated when I hear the french or germans condem Americas debt when it is the American taxpayer who is footing much of the bill for their defense. Even the new NAVY commercial touts our Navy as a world defender...what do these other countries bring to the table that is worth the debt load this puts on the taxpayers of this country?
Oh...I really don't think it's entitlements that are the problem...it's unchecked capitalisim that is responsible for the debt load we carry. Our defense contractors, the medical/pharma industries and all those that scream for privatization are the real freeloaders! They want to cut your safety nets so they can sell them to you at a profit!
**correction to Mama's post***
I meant South Korea...not North Korea...sorry...Sunday Mode
Cut Defense? Absolutely
Deep cuts, and the sooner the better. "Going over the cliff" would be a bitter pill, but maybe not such a bad thing because everyone would be sharing in the pain. Health care, tax and financial industry reform are desperately needed for long term solvency, but there seems to be little chance of action on these fronts from a Congress bought and paid for by big monied special interests.
Duplicity at it's best
I'm sitting in the coffee shop and picked up a cop of the paper someone left behind.
Reading the Editorial, the Editor recommends cuts and then whines about military cuts in Alaska. If the Air Force wants to move F-16s from Eielson and can save 2 million why not let them?
Judging by the logic and rhetoric in this editorial I am 100% confident the writer is in no way competent to comment on the efficacy of moving the aircraft, on a defense or cost saving basis.
I do recommend everyone take his advice about cutting spending on needless things and cancel their subscription to the Empire.
facts do matter
Let's see. Increasing government spending saved this country from the great depression.
Lower and middle class government programs have already been reduced by $1 trillion dollars in the last decade.
Tax breaks, corporate welfare, lax regulation and tax loopholes contributed to the current mess.
Cutting government programs has been disastrous in Europe.
When the tax rate for corporations and the 1% was the highest the economy soared and the government had a surplus.
Middle class effective tax rate is around 28% but millionaires and trillionaires is less than 15%.
Therefore, (drum-roll please) let's reduce government spending on the 99%. Can't wait to see how that works out.
I don't have all the facts
I know that I don't have a lot of "facts" readily available in my memory, but I do recall that a year or so ago, there was a news item that General Electric (and perhaps some other corporations) had profits in the billions of dollars. But, they did not pay any corporate taxes.
Their attorneys had found the loopholes, deductions and exemptions in our huge tax code (which I understand is now several thousand pages in length) so they did not have to pay anything.
If that is true, and those are the facts, then a thorough house cleaning of the tax code may be an answer to some of our financial problems.
But with our current practices in political campaign financing, those elected to represent us won't agree to eliminate the loopholes that benefit their contributors - they want to get funding for re-election.
The possible solution for our fiscal problems may not be just reducing spending, it may require honesty, justice, fairness and equality in our tax codes.... or is that just a Christmas wish that will never happen - Like "Peace on Earth, Good will towards all" ??
bring on the cliff!
There will be no tax reform, no cuts in spending, no increases in taxation of anyone, no reduction of spending until and only until we are desperate. We as a nation have not felt the pinch, the sting of true poverty, of real needs going unmet.
We are the fattest, wealthiest nation and yet we scream of how poor our poor are. Bah! Our poor live in the most comfort of all poor, worldwide. Granted there are lots of folks in this country, even here in Juneau who are hurting this season and who have been for a while, and who will be in the future, but when luxuries like cable and satellite TV are still being connected and subsribed to every day, increasingly so in the last four years, you can't tell me there is a crisis.
When there are pictures of homeless people taking other pictures with their smartphones of Michelle Obama in a soup kitchen, what is wrong with all of those pictures?
When people are still getting their hair and nails done, still buying alcohol and cigarettes, still taking vacations, still filling their tanks, where is the crisis? Where is the problem?
My grandma was 93 when she died. She lived through the REAL Depression. She was old enough to remember a time of relative prosperity and then the ensuing hard times when they had no shoes, no money, ate homemade flour noodles with tomato soup every single day for months. She and her 12 siblings survived with NO MEAT for years. They lived in the country where they luckily had a garden and a few chickens for their eggs. They kept a cow for milk, because their need for meat was trumped by their need for milk. Can you imagine anyone today, even the poorest of the poor having to choose between milk or meat for years?
Anyway, when we cleaned out her house, we found plastic bags so old they turned to flakes when you touched them. All folded nice as you please in a big stack, right next to every single rubber band she had ever come in contact with; those also turned to dust when moved. She also saved glass bottles and paper bags. She also saved her money. She didn't get new furniture every other year. She paid cash for everything and didn't believe in credit. This is called thrift.
Until our current residents learn thrift and savings out of necessity, we will never have the change that we need in our economy, no matter who owns the local paper. So bring on the cliff! It may save us from ourselves.
Not written in Alaska
I don't typically comment on articles, but this one smelled very bad. This article was not written in Juneau, by anyone at the Juneau Empire, or for the Juneau Empire market.
Seriously, do you think we can't use Google? Snip out a section of this article and paste it into Google's search box and you will find the exact same article by the Augusta Chronicle Editorial staff, with "How do you think Fort Gordon would fare under that ax?" in place of "How do you think Joint Base Elmendorf-Richardson, or Alaska’s indispensible U.S. Coast Guard facilities, would fare under that ax?" This editorial came from Augusta, Georgia.
The Empire Editorial staff should be ashamed by their decision to represent this article as an "Empire Editorial". Failure to cite the editorial as being from another publication, albeit one owned by the same publishing company, is a real low for the Empire.
http://m.chronicle.augusta.com/opinion/editorials/2012-12-02/cliffhanger...
Well stated, Aaron
I'd like to hear an explanation of this from Abby Lowell. Or more appropriately, John Moses.
Do they believe that this practice is not deceptive, or at the very least, disingenuous?
I think we readers are owed an explanation.
How about it Empire?
I agree with Lat58. This article was deceptive at best and plagiarism at worst. Are you going to own up Empire?
Doom
I hate to be the bearer of bad tidings, but folks simply don't grasp the magnitude of the problem.
Mandatory spending and interest on the debt already far exceed revenue. In other words, the entire government except much of that devoted to mandatory programs like SS and Medicare (plus interest payments) is being run on borrowed and printed money - Congress, Presidential vacations, UN dues, military, parks, arts, programs to promote condom use, research, etc. We could quadruple everyone's taxes and barely touch the problem. Without breathtaking cuts to programs (and not just "Washington" cuts where the rate of growth is reduced a tad), elimination of entire agencies and a sea-change in the bureaucratic mindset that tosses around six, seven, eight-figure expenses like they're confetti, we're doomed. We did not "stimulate" our way out of the last depression; it dragged on right up to WWII, a not-very-pleasant solution.
Our national government was given a few defined tasks. It has, for base political reasons, expanded its brief until now, nothing is beyond its influence, not a good thing in a supposedly free country. Until we get get our collective heads out of the sand, this will not have a happy resolution. Seems unlikely given our relatively comfortable existence, but that attitude has allowed this situation to develop.
That comfortable existence is about to be tested.
Good luck, folks. You're going to need it.
Lou
Our Nation's economic crisis has been compared to the
Great Depression only because our Nation has not seen anything like the numbers we have been going through since the GD, relatively speaking.
Entering the third decade of the 20th Century our Nation was much more agrarian supporting a country much less populated and much more self-reliant not to mention more independent from the world's economies. Our country's farmlands and manufacturing plants supported our needs, and our smaller tight-knit communities and families were the only safety nets.
It was termed the 'great' depression because there were no safety nets in place to cope with those who had chosen to move away from rural America and live in the city. Of course with the banks closed, plants shut down and homes repossessed this 'transient' population had no place to return to and nothing to fall back on. Tent cities such as "Hooverville" became the norm without benefit of 'housing projects'. Kids were shipped to grandparents in rural America much like Britain did during the war.
It was the Great Depression because as time went on, and on, the people started losing their last vestige of hope. The "New Deal" Roosevelt wrestled out of Congress (and the Supreme Court) reinvigorated that hope. For the first time in a long time husbands and fathers, sons and daughters reported for work, even if it was just digging dirt, often with an empty lunch pail.
The world we live in today is much different. The vast majority of the population has relocated to the mega cities with high rises of capitalism and sprawling acres of commercialism. We have been sold a bill of goods called the American Dream while at the same time allowing the cornerstone of the blue-collar middle class, manufacturing and retail, to either be shipped overseas or supplied by oversea workers. Our national 'growth' is essential to maintaining our economy yet we measure the perception of 'growth' by the volume of annual purchases on credit, not actual growth. Our nation's economic health hinges upon buying so much that even following the worst terrorist strike in our history our leaders begged us to continue spending as usual. Our country resembles ourselves: one payday away from homelessness.
Our Nation may have messed up in recent years past. Greed, deregulation, entitlements, the list goes on. But we are just now seeing daylight after several years of darkness. This is not the time to drive over that cliff, particularly just to wake up the general population. Some of us are just too fragile still and may not make it back this time.
Call it kicking the can if you wish...but I would prefer to see a finger in the dike now and less draconian actions than a complete refit.
Let us do it responsibly. Self-reliance, ingenuity, work ethics are great American values but these values do not exist in a vacuum, nor should every American be working for the box chains of capitalism servicing the consumer.
I prefer the dialogue be about how we bring America's middle class jobs back home.
Doom II
Ken, "responsibility," at least insofar as relates to the health of the nation in terms of economic and personal freedom (founding principles), is not in the lexicon of the national government. The current impasse, "No cuts without tax increases!" is an indication of its unseriousness, especially since historically we all know the "cuts" side of the equation never happens in a meaningful way. The tax rate for "the rich" is a red herring, a diversion to keep us entertained while officials pursue their own goals.
As evidence, tax revenues against GDP have been relatively constant over the last century, this regardless of the tax rates. What has significantly changed is the government spending, that is, promises made by politicos to individuals, groups, corporations, foreign entities, etc., that end up costing us money. Many of those promises are completely self-serving.
While the nation was booming, this wasn't such a problem, but now that it's not, the problems are very obvious.
Washington will manage to not see them, trust me.
Greed and an entitlement attitude are human failings. They won't be going away but they do have to be accounted for in policy - for a change. Since deregulation began, say in trucking or the airlines, the national government has managed to fill a room with new regulations so I suspect deregulation may not really be the problem. The reason all that money the fed pumped into the system isn't creating jobs is because of the present and future (largely unknown) regulatory climate. Ask any small businessperson. It's really pretty bleak.
What you're experiencing is not daylight but the headlight of the approaching train.
Lou
PS: Source for my earlier comment: http://tinyurl.com/aqt5h8e
Well John Moses?
Still waiting for your explanation on this.
How do you justify posting a Morris Communications piece as an "Empire Editorial" without acknowledging its source? This appears to be dishonest and deceptive.
But it appears that you're not alone - every Morris newspaper across the country posted the same article, making small changes to 'localize' the message, with no hint that it came from the corporate masters in Georgia.
Perhaps Morris Communications needs explain their actions.
What's it like to be a puppet editor anyway? Does the pay make up for the loss of self respect?
Lat,Regarding the Estate
Lat,
Regarding the Estate Transfer Tax/Death tax.
So let’s assume you worked for thirty years and own a home, a rental properties in Juneau, some Apple computer stock, two cars, some furniture and a two decent art pieces . The value of all of these assets combined, equal 1 million dollars….you die and leave those assets to your kid. Your kid now owns the assets but also owes the government 55% of 1 million dollars….550,000 dollars…cash, and is required to pay in 9 months. Your kid is 28 years old and has 500$ in the bank. They now have to sell off most of what was inherited just to pay the tax.
Why do you believe that the government deserves more from your life efforts than your kid?
P.S You were right about the election…hats off
Incorrect, Noroad
If the value of the property is $1 million, the kid OWES NOTHING. Even after the fiscal cliff, the exemption is zero taxes for the first million.
If he's inheriting more than a million, he has my deepest condolences (over the loss of his father), now pay up. He's 25 years old with over $1 million in the bank. Isn't that enough of a head start? Can't he make his own way after that?
If your estate is in the multi-millions, then set up a trust for your heirs, like all the rich people do to evade estate taxes.
And regarding the election, yup, I was right. We avoided Romney...but we're stuck with Obama. Hooray, I guess.
Additionally
If you had real estate, Apple stock and art pieces, they had probably appreciated handsomely since you bought them. Since you still owned them, you had paid no capital gains taxes on that appreciation.
So your kid inherits these assets tax-free - the government doesn't even get a 15% cut of the capital gains.
Someone needs to pay for all these government services we demand like federal prisons and border fences and a giant military... Why not dead people? Better them than you or me.
LAT,Your wrong about the
LAT,
Your wrong about the assets…all your assets..counting furniture, art, stocks (at current value, COUNTING APPRECIATION) cars, jewelry, all counts to getting to the 1 million.
Also
My kid doesn’t have 1 million in the bank…he has property valued at 1 million. There is a huge difference…the 1 million isn’t cash but he now has a tax debt of 550,000$ cash. So if he sold everything and actually got 1 million he only gets 450,000 and the government gets 550,000,
It’s not OK that the government profits more from my hard work than my kids.
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estate-Tax
The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death (Refer to Form 706 (PDF)). The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your "Gross Estate." The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.
Hey Lat, let the moochers pay
Hey Lat, let the moochers pay for the programs they whine for.
When it comes to our budget problems, "It's the spending stupid"!
Read your link, Noroad
"An estate tax return must be filed if the gross estate, plus any adjusted taxable gifts and specific gift tax exemption, is more than the basic exclusion amount. Beginning in 2010, the basic exclusion amount is $5,000,000; it will be indexed for inflation starting in 2012. The basic exclusion amount is generally equal to the filing requirement."
Get it? Right now, over $5 million is excluded from the estate tax. If we go over the cliff, that exclusion drops to $1 million.
No taxes on it whatsoever. And if your kid has to sell some assets to pay taxes on the portion over $1 million, well cry me a river.
Now let's look at those assets. Say they're stocks or real estate that have appreciated. You never paid cap gains taxes on that appreciation, because you hadn't sold them yet. And neither will your kid, since it's excluded from taxes. So the government loses even more revenue.
But I take your point about the government profiting more than your kids (though 'profit' is the incorrect term). So let's drop the exemption to $1 million, but drop the rate to...oh, how about 47%?
louskannen: For the most part I agree. But governmental
spending and revenue are just two legs holding up a three legged stool. The cornerstone is meaningful employment. By that I mean blue-collar positions with security.
Security's definitions are as diverse as the American Dream. It used to mean Dad or Mom could see themselves working for the same company, be it the assembly line or service industry, their entire adult life. This sense of security bolstered meaningful family planning. Raise the kids, take some vacations, college funds, pay off the mortgage and set up retirement.
These "founding principles" of security have been supplanted, not so much by government but by ourselves, through retirement packages and health benefits heaped upon the companies employing us, benefits which were introduced following WWII to compete with the glut of a returning workforce and have become entitlements. This trend relieved the masses from a great deal of planning.
Add the move towards a global economy. Treatises were signed, alliances built, obligations were made. The road for America's manufacturing might to relocate was paved with the best intentions and returns for the stock investors, us.
Throw in the credit card factor. Plastic becomes the coin of the realm further loosening the need for planning. That was, and is, us.
Then we hit a tipping of the scale. We jumped at the chance for the ultimate American Dream: to own our own home. But our choices surpassed our means. When the bubble burst did we look in the mirror?
In our rush for the American Dream no one was looking in the rearview mirror. The country's principle economic engine had taken a different road.
Greed is a human failing, yes, but it is much easier to hang it on the other fellow.
70 % rate
We need to return to the maximum income tax rate of 70% for all income over $250,000, regardless of whether it's salary or investment income. We had that rate in the 1950s and 1960s and the economy was doing better than it is now. The wealthy like Mitt Romney who makes $20 million a year and pay only 13% will still have more money than they can spend. The budget will be balanced in a way that harms neither the rich nor the poor.
Humanbeing, You do know that
Humanbeing,
You do know that you don’t need to leverage the government to help others. You can do it all by yourself...and maybe if you paid less tax you could help even more...
Let them have it
I say let the dems have their way. Give them what they want as far as taxing and entitlement programs and lets see where we are in 2014. This way the dems will have no one to blame but themselves when the economy tanks even further. I believe that we will see a dramatic swing in who will run the House and Senate in 2014.
Let's place the estate tax of the deceased on the same scales as
the death benefits the government has valued us at. $250.00
Complete right-wing garbage.
Wow Empire, what a stinker! Bad form, as well as low-class. It's pieces like this that cause some folks to deride the Empire as a petty partisan local rag. Someone should pay for this journalistic infraction...or perhaps it's your policy to recycle and post blatant right-wing opinion pieces from your parent company after cutting and pasting erroneous local references. Kudos to Aaron Brakel for outing your Shoddy and inexcusably lazy work recycling a editiorial out of Georgia! A remarkable failure. On top of all that, the piece is complete bull-puckey. Apparently the Empire is in the same predicament as many of the right-wing extremists whose policies caused the Republicans to lose dramatically. Now, they're all having a dickens of a time reconciling the fact that the American electorate voted for Obama's policies, rather than the tired, same-'ol same-'ol policies of the Republicans that drove our economy into the ditch in the first place. Duh! In an amazingly delightful turn of events, the Republicans are doubling down on their aggressive folly, ensuring many future Democratic Party victories to come. The R party is in complete, chaotic, disarray. Their tent is now about the size of a pup tent!