The Fiscal Cliff "deal" cooked up behind closed doors by Barack Obama, Harry Reid, Mitch McConnell and John Boehner has led directly to this latest debt crisis.
As per this latest crisis it was a last minute deal and supposedly a game of brinkmanship between the two parties.
This "deal" was an absolute and utter disaster for the economy and the American people.
It was presented to Congress with insufficient time before the vote for Congressmen to even be able to read it.
The Fiscal Cliff deal handed the middle class and below a massive $200bn a year tax hike, while keeping all of the over $1.3tn a year of Corporate Welfare.
The Fiscal Cliff bill itself was stuffed full of over $60bn in new or extended forms of Corporate Welfare.
E.G. the extension of the subsidies for offshore loans by the big banks, worth $9.6bn a year.
It is not surprising that if you raise taxes on the middle class by $200bn a year in a struggling economy, the economy will continue to struggle.
Which is what we have seen throughout 2013, with extremely poor jobs creation and a faltering economy.
Fiscal Cliff Deal. Why Goldman Sachs Won and America Lost.
http://ian56.blogspot.com/2013/01/fiscal-cliff-deal-why-goldman-sachs-won.html
Fiscal Cliff deal - a financial analysis. Obama's Corporate sell out. Tax hikes on the rich are a myth.
http://ian56.blogspot.com/2013/01/fiscal-cliff-deal-obamas-corporate-sell.html
I advocated during the Fiscal Cliff negotiations that all of the over $1.3tn of annual Corporate Welfare should be cut and that this money should be used to massively cut taxes on middle earners and below, in order to generate a massive boost to the economy.
I advocate an initial CUT of personal taxes of $600bn a year.
This would be done by :-
Raising the income tax thresh hold from $8,500 to $45,000 a year, costing $500bn.
Reversing the payroll tax hike, costing $108bn a year.
Government policy (by both parties) is massively skewed towards multinationals and large Corporations and against small and medium sized businesses in all sorts of ways.
We now have the situation where large Corporations pay almost nothing in Corporation taxes, while small and medium sized businesses are paying about 30% (after taking their tax breaks from the official 35% rate).
I advocate that a level playing field be set up.
All companies, irrespective of size, should pay the same rate of Corporation Tax.
There should be no special tax breaks or loopholes whatsoever.
Reducing the Corporation Tax rate from 35% to 25%, while removing all loopholes, would be revenue neutral.
I then advocate that the first $100,000 of profits be made tax free, as Singapore does.
This will provide a boost to small and medium businesses, it will cost about $100bn a year.
Unlike America today, Singapore is wealthy and has a thriving small business environment.
The question then remains of what to do with the rest of the over $600bn a year just saved.
It can be used for a mixture of :-
further tax cuts on the lower paid and small businesses
deficit reduction
a relatively small amount could be used for small infrastructure projects - like repairing bridges
These measures of tax cuts for the lower paid and for small businesses, taken together, would get bottom up spending and recruitment going again.
It is small and medium sized businesses that are the major job creators in the economy - not large Corporations.
Large Corporations frequently outsource jobs abroad, so why is the government unfairly subsidizing them?
It is bottom up spending that will get the economy going again.
The middle class and the poor spend their money in America.
Extra money given to the rich frequently goes to offshore investments or tax shelters, or is used to buy foreign made luxury goods like yachts, cars or upmarket jewelry and clothes.
The over $1.3tn a year of Corporate Welfare and blatant government waste that should immediately be cut.
http://ian56.blogspot.com/2012/11/it-is-very-easy-to-cut-1tn-from-federal.html
E.G. to break up the big banks in the financial sector and to break up the other cartels that now operate in each major industry.
http://ian56.blogspot.com/2013/05/how-to-fix-americas-economy-create-jobs.html
Obamacare should also be completely scrapped, it is going to cost 800,000 American jobs, wreck the economy and wipe out the middle class.
Obamacare is the worst possible system yet devised for broadening Healthcare coverage.
There are many much better ways of improving Healthcare.
http://ian56.blogspot.com/2013/11/obamacare-is-worst-scheme-that-anyone.html
America has also recently seen a dramatic reduction in new business start ups and the average number of people employed in those start ups.
In order to create the thriving businesses of the future, this situation needs to be reversed - and fast.
Part of the reason is the skewed tax structure and government subsidies which give unfair advantage to Large Corporations.
The other major reason is the massive number of petty rules and regulations that make it so difficult and costly for someone to start their own business.
The government added over 40,000 new regulations in 2012.
The government needs to start CUTTING 40,000 regulations a year and make it much easier for new businesses to start up.
Current policies are strangling America's future growth.
http://ian56.blogspot.com/2013/05/business-start-ups-bls-birthdeath-model.html
Second Stage
The second stage of fixing America's economy and to stop the current increasing impoverishment of all but the very rich is to cut a further $500bn of annual government waste.
Unlike stage 1, this would mean significant cuts to the numbers of Federal employees and government contractors, so it needs to be done after we have started turning America's economy around and these people can get jobs in the now growing private sector.
Third Stage
The third stage of fixing America's financial position is to tackle the current enormous unfunded liabilities and the massive growth in future welfare payments (and some further reductions in government waste).
Large numbers of baby boomers are now reaching retirement age which will continue for another 20 years.
Social Security and Medicare payments are both budgetted by the CBO to increase by $400bn a year by 2020 ($800bn total).
Current unfunded liabilities are between $80tn and $220tn (depending how far you look into the future).
This can be fixed.
Medicare can start to be fixed by reducing the massive overcharging for prescription drugs by the large drug companies. $50bn a year can be saved now and it will be more in the future.
It also needs to be fixed by reducing the massive over prescription and fraud - currently another $100bn a year.
Social Security needs to be fixed by gradually raising the retirement age.
It is a simple fact of life that people now live longer than they did in the 1930's.
The situation of unfunded liabilities has got so out of hand that the retirement age will have to be raised to 70+ over the next several years.
Other more minor fixes will also be needed.
How Rome went bust and how the US is following EXACTLY the same path
http://ian56.blogspot.com/2012/10/the-fall-of-rome-was-due-to-unfunded.html
Chained CPI
Barack Obama has proposed that Social Security, Medicare, unemployment, disability and other benefits should be linked to chained cpi, which will render them worthless in 10 or 20 years time.
This is exactly the wrong thing to do.
http://ian56.blogspot.com/2012/12/chained-cpi-another-backdoor-method-to.html
The Republicans (Paul Ryan plan) have their own policies to try and tackle the massively rising cost of benefit payments due to the steep increase in the number of people of 65 plus.
As usual the policies of the current Republican leaders are directly opposite to those required for America's future prosperity.
The current policies of both the Republican and Democrat leaderships are purely designed to help the top 0.1% at the expense of the rest.
Even the top 0.1% are going to suffer eventually.
How are American Corporations going to make any money when everybody except the top 1% is flat broke and in debt?
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