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Sun Dec 2, 2012, 03:30 PM

It is better to have a recession in 2013 than in 2016 -- so go over the fiscal cliff

A key consideration for the Democrats is when to have a recession. It is unlikely that a recession can be avoided until 2017, since that would be an 8 year period of expansion. The risk is very high that a deep recession would start sooner than that in 2015 or 2016, since the economy is unlikely to remain inflated by loose fiscal policy beyond those years.

Thus, instead of a deep recession just as Obama's second term is ending, it is far better to bring on a shallow recession in 2013, so that the recovery can be strongly under way by 2016.

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Response to FarCenter (Original post)

Sun Dec 2, 2012, 03:32 PM

1. we should get out of our current recession

i'm not talking about the technical definition, I'm talking about the extremely high unemployment rate.

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Response to Enrique (Reply #1)

Sun Dec 2, 2012, 03:41 PM

2. Due to productivity improvements, unemployment will remain high

It will take some time for the economy to restructure and absorb the unemployed.

Finance and health care are two sectors where significant improvements in productivity will continue to increase unemployment.

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Response to FarCenter (Original post)

Sun Dec 2, 2012, 03:42 PM

3. that's a difficult and cynical game to play. more importantly, who exactly do you advise?

we don't have a system where one master democrat controls all the players in the party and who eagerly do what's best for the party as a whole in the long run.

we have a collection of individual politicians and races. one thing they have in common is that they all benefit from a backdrop that's good for the party over all. but at the end of the day these are individual politicians with individual political situations.


in particular in this case, all the house and a good number of senators are up for re-election in 2014. so embarking on a strategy that doesn't look good in 2013/2014 isn't going to have much of an appeal to them.

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Response to unblock (Reply #3)

Sun Dec 2, 2012, 03:52 PM

7. Obama and his advisors can pull it off themselves.

All they have to do is refuse to compromise with the House Republicans. Obama might need Harry Reid's help, but I doubt it.

It's not clear whether there is even any possible compromise that would get a majority in the House and 60% in the Senate. If Boehner shifts the legislation towards the center in order to get something that would get 60% in the Senate, he probable loses more Republicans in the House than he picks up Democrats.

Stalemate should be relatively easy for Obama to achieve, while compromise is nearly impossible given the split in House and Senate control. Plus, it looks like he should be able to blame the Republicans so as not to jeopardize the mid-term elections.

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Response to FarCenter (Original post)


Response to FarCenter (Original post)

Sun Dec 2, 2012, 03:44 PM

5. Thank you Joe Stalin jr.

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Response to FarCenter (Original post)

Sun Dec 2, 2012, 03:51 PM

6. Repugs probably don't have to worry ... the normal "economic uncertainty" which slows the

economy to a crawl DURING A PRESIDENTIAL ELECTION YEAR will be painted by the "liberally-biased media" as a DIRECT RESULT of the Democrat's potential for being elected Pres ...

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Response to FarCenter (Original post)

Sun Dec 2, 2012, 04:03 PM

8. i think the reality is that we're likely to have an agreement, but not until january

the fiscal cliff chatter horrendously exaggerates the deadline aspect of this whole thing.

yes, the new tax rates and spending cuts take effect january 1st, but that doesn't mean we have instant recession or anything like that. obama can instruct the federal government to essentially act as if they have normal budgets and so on for a short period of time, so january at least would be pretty normal. it's only if we STAY at those levels for an extended period of time that there's any real implication.

in any event, the pressure and hype that will only be amped up in january makes the political pressure for a compromise huge, so it's likely to happen within a few weeks of the new congress, i think.

i think the politics for obama do favor waiting until the new congress is in. better numbers in the new congress and more political pressure to get something done.

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Response to unblock (Reply #8)

Sun Dec 2, 2012, 05:56 PM

10. Some things, like the 2012 AMT fix, the Medicare doctor reimbursement fix, etc. will be hard

The IRS has to move on getting out 2012 tax forms, for one thing.

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Response to FarCenter (Reply #10)

Sun Dec 2, 2012, 06:22 PM

11. it's a hassle but mostly just that, a hassle.

the irs has coped with changes very late in the game, i think even at times december or even january of the following year for at least some things. i suspect that the lower rate for qualified dividends originally came about like this because it's presented on the forms very much like an afterthought.

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Response to FarCenter (Original post)

Sun Dec 2, 2012, 04:03 PM

9. I agree. We should trade two quarters of contraction for permanent fiscal responsibility. nt

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Response to FarCenter (Original post)

Sun Dec 2, 2012, 06:42 PM

12. Get it over with, IMO, and make sure people know

just who is dragging their feet on tax cuts for low wage earners and higher taxes on plutocrats who have enough for ten thousand lifetimes.

Do it now and hope Obama has a few press conferences (I know he hates them but they're necessary) to educate the public on what Republicans in Congress are doing.

Do it now and hope people are disgusted enough with the clowns in Congress that they are motivated to vote in 2014 and throw the bastards out.

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