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Wed Jan 2, 2013, 08:42 AM

 

America and American workers have just been thrown off the economic cliff by the politicians

A couple of the charts are not working on here.
See http://ian56.blogspot.co.uk/2013/01/america-and-american-workers-have-just.html for all of them


The 2% Payroll Tax break will expire in the Fiscal Cliff agreement. This will be a huge tax hike for poor and middle class taxpayers.

There is another huge tax hike coming for AMT and the expiry of other tax breaks for the middle classes.
It is now being reported that AMT (Alternative Minimum Tax) will be "resolved" in the fiscal cliff deal.
It is difficult to see how that can be true when AMT and the expiry of other middle tax breaks are double the revenues of the Payroll Tax hike. No details are available of what this supposed "resolution" might be.

The only real solution to the governments financial problems are to cut the massively bloated military budget and massive Corporate Welfare.
Corporate profits are at record levels, this is not the issue we face. It is everything else.
There are easy ANNUAL savings of $1 trillion plus that could be made in Corporate largesse and government waste. See 1.
These were not even put up for discussion.


There is a recession coming to America in 2013 from the fall out in Europe.
The whole of Europe has just gone into recession - it is going to get far worse in 2013.
Europe is America's largest export market.

The coming tax hikes on marginal and middle class tax payers are going to make the coming US recession far worse.
The politicians "solution" to the "Fiscal Cliff" is no solution at all.
In fact what the politicians have just done is to push American workers and America straight off the economic cliff into mass economic deprivation.
What the politicians should have done is to cut the massive military spending and Corporate Welfare and prevent tax hikes on the lower paid - e.g. by REDUCING income taxes on those earning less than $50,000 a year or by raising tax thresholds on lower incomes.




There hasn't been any real economic recovery in the US - it is just an illusion. Pumped up with another $2tn of Fed money printing. It is another bubble - just like the housing bubble.


Real Household Incomes and Real Median Wages have fallen for 4 straight years. See 2.
High paying jobs are being swapped for part time, low paid and minimum wage jobs.
The only age demographic which has seen any real increase in employment since mid 2009 is the over 55's. The reason for this is that people can no longer afford to retire early.
Increasing numbers are working past the official retirement age of 65 because their pensions are insufficient.

4 million more over 55's are now working since mid 2009.
There are 800,000 less of 18 to 55 year olds now in employment.



The employment participation rate continues to decline - it is now back to the levels of 1981.
http://www.businessinsider.com/labor-force-shrinks-by-367000--participation-rate-falls-to-its-lowest-level-in-31-years-2012-9

The Fed's balance sheet has increased by $2tn since the housing bubble burst in late 2007.
But the total money supply is lower now, than it was in 2007, despite this Fed pumping. The new money the Fed has printed has not gone into the real economy. See 3
It is being used by the big banks for speculation.
Part of the money supply decrease is due to loan defaults (mostly foreclosures).
The default rate on student loans has just had a huge jump in late 2012. Total student loan debt has just gone past $1 trillion. See 4.

The big banks are now sitting on $2tn of "excess reserves".
Either :-
the big banks cannot lend out this money because nobody wants to borrow it
Or :-
They are keeping large reserves in hand because they are worried about near term financial prospects and do not want to be reliant on short term lending.
Or :- They are not real reserves at all because they have over valued their assets
None of these reasons are good news for America.

Corporations are sitting on a $2tn cash pile - mostly held offshore due to the incentives of diverting US generated profits to offshore tax havens.
Nobody has suggested doing anything at all about this drain on America's wealth.


References and Appendices

1) It is VERY easy to cut $1 trillion plus ANNUALLY from the massively bloated military budget and Corporate Welfare
http://ian56.blogspot.co.uk/2012/11/it-is-very-easy-to-cut-1tn-from-federal.html
What the mainstream media and the politicians are NOT telling you about military spending.
http://ian56.blogspot.co.uk/2013/01/what-mainstream-media-and-politicians.html





2) America's lost decade. The real numbers behind the economic headlines.
http://ian56.blogspot.co.uk/2012/11/unemployment.html
The above also contains the solution to fix America's declining economy and standard of living.

U6 unemployment is at 15%, real unemployment is at 23%. Real inflation is at 10%. Household incomes and real wages continue to fall.

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http://2.bp.blogspot.com/-tVaV9k1aJXE/UG29L-kE92I/AAAAAAAAAP4/rx4tbsBm-Mk/s400/Real+Median+Household+income.jpg


3) Total Money Supply 1970 to 2012
The Fed is now pushing on a string.

http://4.bp.blogspot.com/-7VJ0V3c593s/UIbuq5ITZ3I/AAAAAAAAARo/-2kvNa8asv8/s640/Total+US+money+and+inflation.png

A look inside the Fed's balance sheet - WSJ
http://blogs.wsj.com/economics/2012/09/13/a-look-inside-the-feds-balance-sheet-15/

With the announcement of the QE3 bank bailout, the Fed will be buying $40bn of mortgage based assets from the big banks every month. They will be bought at more than their worth.
The Fed has also confirmed that it will continue it's Treasury buying operations at the rate of $45bn a month.
The Fed's balance sheet is set to expand to circa $4tn by the end of 2013.

4) Student loan debt






The needless tragedy of Student Loan defaults
http://www.businessweek.com/articles/2012-11-28/the-needless-tragedy-of-student-loan-defaults

5) More Fiscal Cliff cartoons
The politicians are protecting Corporate interests and throwing America and American workers off the economic cliff.
http://groups.yahoo.com/group/the_iraqi/message/11660



6) The Fiscal Cliff as it stood



7) Dennis Kucinich speaks truth to Congress during the Fiscal Cliff debate 1/1/2013
America and Americans are being thrown off the cliff.

http://ian56.blogspot.co.uk/2013/01/dennis-kucinich-accuses-us-government.html

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Reply America and American workers have just been thrown off the economic cliff by the politicians (Original post)
Ian62 Jan 2013 OP
Zen Democrat Jan 2013 #1
Ian62 Jan 2013 #3
lunatica Jan 2013 #2
October Jan 2013 #4
Ian62 Jan 2013 #5
Savannahmann Jan 2013 #6

Response to Ian62 (Original post)

Wed Jan 2, 2013, 08:54 AM

1. I remember when Obama started the temporary payroll tax cuts, or "holiday".

A holiday doesn't mean forever. Actually when this was instituted by Obama there was a hue and cry from the left that this was robbing the Social Security fund and was, in fact, a move to bankrupt SS. Anyone remember that? Everything seems to be damned if you do, damned if you don't these days. Sigh.

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Response to Zen Democrat (Reply #1)

Wed Jan 2, 2013, 09:03 AM

3. The payroll tax cut should expire

 

to maintain the security of Social Security

An EQUIVALENT tax cut should be made for the lower paid so they are not subject to a HUGE tax hike.
Someone who is earning $50k a year is going to pay $1,000 more in taxes a year if nothing is done.

The AMT and expiry of middle class tax breaks are DOUBLE those of the payroll tax hike.
So if nothing is done the people in the range of circa $40,000 to $70,000 are going to see a tax hike of another $2,000 a year.

How do you think the economy is going to fare if people on $50,000 have to pay an extra $3,000 in taxes?
That's about where we stand.

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Response to Ian62 (Original post)

Wed Jan 2, 2013, 09:01 AM

2. They do need to cut military spending and corporate welfare

Absolutely. But with this hard won battle over much less I can't imagine that this Congress would ever budge on military and corporate spending.

Maybe in 2014 we can see a glimmer of hope in that direction. Maybe in the new Congress this year. I'll be keeping my ears tuned to hear the words concerning this and climate change.

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Response to Ian62 (Original post)

Wed Jan 2, 2013, 09:08 AM

4. You think THIS Congress is going to budge???

We barely got this deal.

Their kind keep getting elected.

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Response to October (Reply #4)

Wed Jan 2, 2013, 09:31 AM

5. If this was France

 

Last edited Thu Jan 3, 2013, 07:03 AM - Edit history (1)

There would now be a million+ strong protest outside of Capitol Hill.
Another million strong protest on the streets in each of NY, LA and Chicago.

There would be blockades by truck drivers on the main highways.

Politicians would be subject to mass abuse.
They would be pelted with eggs.

But Americans have become wussies.
Or sheep - lining up to get fleeced.

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Response to Ian62 (Original post)

Wed Jan 2, 2013, 09:41 AM

6. I couldn't agree more.

We bought billions of dollars worth of F-22 to replace the F-15 despite the fact that the F-15 is still the dominant air superiority fighter, and has never once been shot down in combat. Sure, they've crashed due to mechanical, or pilot error. But they've never been shot down, and the F-22 has already crashed too.

We're buying billions in F-35's, for the same reasons. We must have stealth, to prove that we are buying stealth destroyers. I can't wait to hear about a Steath desk for the Generals at the Pentagon.

We spend billions of dollars on all this awesome technology, and then fight our wars with drones, which are also stealth. We spent tens of billions on the Osprey, which replaced Helicopters, which are so last century aren't they?

Whatever crazy idea our military has, we run at with tons of money because we don't dare not do it. I mean, we wouldn't want a stealth osprey gap would we?

At least Sequestration would have cut this bloated nonsense from our budget. But no, we can't afford to do that, like letting AIG fail, we couldn't afford that. The Military is too big to fail.

We could have cut it, we should have cut it. We keep throwing money at the defense industry, and that is the greatest insult to America.

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