Corporations are to share NONE of the pain.
Marginal and middle class tax payers are to get a large tax hike.
2% Payroll Tax break will expire in the Fiscal Cliff agreement. This will be a huge tax hike for poor and middle class taxpayers.
N.B. The payroll tax break should expire to protect Social Security. There should be an EQUIVALENT income tax cut for lower paid workers so they don't get a huge tax hike.
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 class 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.
If this was France :-
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.
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 because they cannot afford to retire.
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.
Above chart from Business Insider 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".
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.
3) Total Money Supply 1970 to 2012
The Fed is now pushing on a string.
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
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
Updates 01/02
Some of the Corporate goodies injected into the Fiscal Cliff deal
"Sec. 328 extends “tax exempt financing for York Liberty Zone,” which was a program to provide post-9/11 recovery funds. Rather than going to small businesses affected, however, this was, according to Bloomberg, “little more than a subsidy for fancy Manhattan apartments and office towers for Goldman Sachs and Bank of America Corp.” Michael Bloomberg himself actually thought the program was excessive, so that’s saying something. According to David Cay Johnston’s The Fine Print, Goldman got $1.6 billion in tax free financing for its new massive headquarters through Liberty Bonds.
$9B Off-shore financing loophole for banks – Sec. 322 is an “Extension of the Active Financing Exception to Subpart F.” Very few tax loopholes have a trade association, but this one does. This strangely worded provision basically allows American corporations such as banks and manufactures to engage in certain lending practices and not pay taxes on income earned from it. According to this Washington Post piece, supporters of the bill include GE, Caterpillar, and JP Morgan. Steve Elmendorf, super-lobbyist, has been paid $80,000 in 2012 alone to lobby on the “Active Financing Working Group.”
Tax credits for foreign subsidiaries – Sec. 323 is an extension of the “Look-through treatment of payments between related CFCs under foreign personal holding company income rules.” This gibberish sounding provision cost $1.5 billion from 2010 and 2011, and the US Chamber loves it. It’s a provision that allows US multinationals to not pay taxes on income earned by companies they own abroad.
Bonus Depreciation, R&D Tax Credit – These are well-known corporate boondoggles. The research tax credit was projected to cost $8B for 2010 and 2011, and the depreciation provisions were projected to cost about $110B for those two years, with some of that made up in later years. "
The 99% get a 2% increase in taxes while these corporate pigs go oink, oink, oink.
From NASCAR to rum, the 10 weirdest parts of the Pork Laden #FiscalCliff bill
http://wapo.st/W1iM4j
Senators got 3 minutes to read the 154 page bill before voting on it.
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