Worse yet, GAO reports of the Treasury accounting systems both as to their reliability and control by private contractors are also disturbing. With little or no information sovereignty, the internal controls are insufficient to assure that cash balance reconciliation between an agency such as HUD and Treasury are accurate. When an agency can issue government guarantees and not record what they have issued correctly and then write checks that are not recorded correctly, then one or more of the players that handle the money, namely the U.
Treasury, the Federal Reserve Bank of New York, AMS and Lockheed, may be in a position to steal literally hundreds of billions of dollars with no one the wiser except those enjoying the fruits. Such a thought seemed far-fetched not that long ago. He was a serious engineering type who clearly worked hard and mastered the details of his business. He was distressed, he said. He had brought printouts of his database for me. He was sure. I assumed that the guy was crazy. If what he said were true, then the U. Treasury and the Federal Reserve would have to be complicit in significant fraud, including securities fraud.
This was inconceivable. To this day, I regret not accepting a copy of the printouts from his databases. I wonder if they might have illuminated what our [Community] Wizard and other portfolio tools were about to find. They might have helped explain why our efforts to distribute information on the HUD outstanding mortgage and defaulted mortgage portfolios inspired such opposition and distress. The indications are growing that Treasury and OMB are engaging in fraudulent transactions and that the key financing, accounting and payments systems are run by contractors who are either in on the deal or turn a blind eye.
Baby Step 6: Pay Off Your Home Early
What this means is that the financial disclosure provided by the federal government may be essentially meaningless. It does not take long to realize that in a world with no financial controls with the fox in control of the chicken coop anything is possible. Life in the federal government is an endless series of shortcuts under impossible political stress and risk. With no internal financial controls, things can go far off course with no way for reasonable people to stop it. There are several other issues regarding government contracts that present challenges to anyone wanting to reengineer the federal budgetary process.
Experts familiar with the defense procurement process believe that this has resulted in ballooning expenses, poor performance, and less innovation. Second, government contractors are rarely disqualified despite criminal behavior or corporate malfeasance or even criminal conviction. One of the more infamous cases concerned a government contractor that was sued on multiple occasions for sex slave trafficking, including by the project contract manager—accusations confirmed by defense department criminal investigators.
The contractor in question continued on as the largest contractor at the U. State Department, was protected by senior state officials, and then was awarded a sole-source contract to manage the criminal justice system in Iraq. Third, there is often no more carefully hoarded information within a federal agency than the agency contract budgets. If our government is going to be run by government contractors, then we need to know who they are, what they are responsible for, and how that relates to any financial reporting and accounting problems we are having.
Congress, while the U. One reporter with whom I was working was promised by Walker that he would publish the names of government contractors associated with these losses. This was after petitions under the Freedom of Information Act to the agencies failed to result in even basic disclosure of the relevant contractors and their contracts. Walker failed to ever honor that commitment. Today, with the names of those contractors still invisible, Mr. Walker serves as the CEO of the Pete Peterson Foundation, where he pontificates on fiscal accountability and the need for Americans to tighten their belts.
Fourth, perhaps the greatest risk of all is the outsourcing of our military capacity. Overall, federal employment has declined in recent decades. One reason for this is the increased dependency of the military on outside contractors. Given the importance of the U.
Fifth, private contractors often operate without legal liability, creating governmental and military operations for which no one is liable. No history of the s is complete without an understanding of the lawyers and legal mechanisms used to legitimize drug dealing and money laundering under the protection of National Security law. Presumably, this included the corporate contractors who, by executive order, were now allowed to handle sensitive intelligence and national security outsourcing.
United States fiscal cliff
With the DOJ-CIA Memorandum of Understanding, in effect from until rescinded in August , a crack cocaine epidemic ravaged the poorer communities of America and disenfranchised hundreds of thousands of poor people into prison who, now classified as felons, were safely off of the voting roles. Meantime, the U. Not surprisingly, the rich got richer as corporate power and the concentration of investment capital skyrocketed on the rich margins of state sanctioned criminal enterprise.
Sixth, there are numerous reports that government contractors are being allowed to use tax avoidance mechanisms that reduce their tax liability substantially. So, while taxpayers provide their revenues, these contractors avoid their fair share of taxes. Finally, while the government is becoming more dependent on corporate America, corporations are becoming more dependent on government subsidies, contracts, and purchases—thus radically increasing the dependency of the commodities, bond, mortgage, stock, and derivatives markets on the federal budget. Hence, it is not surprising that in the second Bush Administration, the National Security Council invented their right to exempt corporations that they specify from obligations to comply with SEC disclosure laws.
Very few investors are aware of this, let alone that their retirement savings and personal assets are deeply dependent on ever increasing government borrowings because the corporations and banks in which they or their pension funds are investing are primarily U. Assets, revenues, and expenses can be accounted for on-budget or off-budget, or simply not accounted for at all.
Decisions as to what is on- and off-budget are often crafted in a way that is not in the best interests of the citizenry. Rather, they are designed to benefit insiders at the expense of everyone else. Essentially, the U. This imbalance must be addressed to make the federal budget and finances economically viable. Currently, there is no political process to facilitate fiscal responsibility, short of war, wholesale tax revolt, or collapse. There are trillions of dollars missing from federal accounts, as documented by the federal government itself.
Barlett and James B. For a time, there were so many stories on monies disappearing from the U. Things seemed to be coming to a head on September 10, , when Donald Rumsfeld conceded in a press conference that DOD was missing trillions. However, that fact was not to attract much attention given events the following day. Rather, the tragedy was used to justify the loss of financial records at the Pentagon we are apparently to presume that the Pentagon is incapable of making or keeping backups and the inability of the Army to produce financial statements in One Tennessee congressman on the House Budget and Defense Appropriations Subcommittee confirmed to me that these billions were missing, but said that he was helpless to do anything about it, despite being a member of the budget committee and defense appropriations subcommittee.
See Letter to Congressman Van Hilleary. Or perhaps that is why the bubble was created in the first place—the military-industrial-intelligence complex needed the cash—and, as always, the banking system was there to accommodate for their cut of course. Ultimately, the federal budget is like a milk bucket with a hole in the bottom of the bucket. The folks who milk the cows are tired of hearing that the bucket is empty and there is not enough milk. They do not want to put more milk in the bucket until they understand where the milk has been going and they are persuaded that the hole has been repaired.
Now do you appreciate why the federal government is increasingly interested in deploying drones domestically and promoting gun control as they contemplate the fiscal cliff? The budget and the federal regulatory structure operate in accordance with a legacy industrial-based economic paradigm that is increasingly outmoded in the face of technological advances and globalization. Despite these trends, significant technologies continue to be suppressed. The world is changing.
Washington is often lobbied by a wide group of constituencies that want government to protect them from the risks and expense of that change. So, for example, as video on the Internet shifts market share away from Hollywood, the entertainment industry lobbies for greater control of the Internet. This often puts Washington on the wrong side of numerous highly sensitive technology questions—involving mistakes in both adaptation or suppression. For example, Washington is leading the charge in the U.
My guess is that the suppression of breakthrough energy technologies cannot last. As we move away from fossil fuel for which the U. This means that the general economy is paying for the U. Globalization has been engineered through international agreements that are then used to supersede national laws and national sovereignty. The result has been global devaluation of the value of labor relative to capital that has centralized wealth in a manner that has shrunk total wealth. Integration of new technology is expected to significantly increase middle class unemployment over the new decade.
As I write this, the latest Kiplinger Letter is warning of the danger of a significant squeeze on middle class incomes as a result of robotics and other automation trends. Expect this to put additional stress on the federal budget without a parallel effort to use technology to lower expenses and increase the productivity and self-sufficiency of individual households and small businesses. Federal laws and regulations encourage or require practices affecting nutrition, health, and pharmaceuticals that significantly and adversely impact the health and well-being of the general population, causing heath care costs to explode, resulting in economic stress and damage to households and small business.
These issues, along with an aging baby boomer generation, are at the heart of the politics surrounding Social Security and Medicare. If you want to understand the fundamental problem with the American health system, watch my favorite food documentary, Fat, Sick and Nearly Dead. Australian Joe Cross heals himself of an autoimmune disease on a juice fast as he drives across America, engaging with the people he meets about diet and nutrition.
At a truck stop in Arizona, he meets Phil Staples, an Iowa trucker with the same autoimmune disease. Persuaded by Joe, Phil starts a juicing regimen and within six months is also healed, along with losing half his body weight and transforming into the picture of vibrant health. He sits and describes his pile of pharmaceuticals to Phil. It is relatively easy to add up the dramatic difference in health care costs between Phil and his brother resulting from their vastly different diet and lifestyle choices.
The deterioration in the quality of the food and water supply is a driving force in exploding health care costs, particularly as the baby boomers age. Robert Lustig. One of the most important factors is the increase of GMOs in the seed and food supply. This is exacerbated by the deterioration of household purchasing power, forcing a significant number of people onto food stamp subsidies, where dependency on highly processed foods to achieve the necessary caloric intake within a limited budget is typical.
The number of food stamp beneficiaries grew from 33,, in fiscal to 46,, in fiscal Over the same time period, according to the U. This development is not unrelated to increases in regulatory and compliance pressures on small farmers, which in turn helps to consolidate agricultural profits into large corporations. To the extent that these factors are reducing the life expectancy of older Americans, they also may be reducing some of the stress on the budget.
A recent study shows that the life expectancy of the least educated Americans has fallen five years among women and three years among men since The issue of life expectancy is a critical issue for the federal budget. For many years, the baby boomer generation has been paying funds into the Social Security Trust Fund. Those funds have been used to purchase Treasury securities that have financed government operations yes, the Social Security Trust Fund has been spent.
Now that the boomers are retiring or need Social Security payments to fund living expenses in the face of declining incomes, those cash flows are turning negative. This presents a serious problem. The government needs an inflow of the next dollar. Instead of getting that inflow, it is getting a request for a dollar. Where is it going to raise sufficient capital to finance the replacement of the inflow and to fund the outflow? The pressure to implement higher retirement ages and to access private and public pension funds, including k s and IRAs, is growing.
The black budget has numerous sources. Second, there are funds clawed from other agency appropriations. Third, there is an endless series of other sources of funding, including seizures of assets, proceeds from the marketing of hard narcotics, and engineering of mortgage and other financial fraud in your community and from many other illicit businesses operated globally by the intelligence cartel. Finally, I suspect one of the largest sources and uses has become market manipulations through the Exchange Stabilization Fund.
Such work could be funded through the non-transparent financial mechanisms available through the National Security Act of , and the CIA Act of This was a secret source of money for funding powerful new weaponry and surveillance technology and operations owned, operated or controlled by private corporations. The federal mortgage funds have long been subject to significant fraud with the full help and support of the U. I believe that this fraud has been used to finance the black budget.
He was a serious engineering type who clearly worked hard and had mastered the details of his business. The opportunities for financial abuses and the impact on the general economy are beyond significant. Given the amounts involved, very advanced technologies undoubtedly have been developed, mostly to the benefit of the private contractors who have been paid to develop them. The value is literally in the trillions of dollars.
This is a significant topic that is well worth exploring. Much of global geopolitics is driven by what the U. Currency debasement is an especially sensitive issue as Congress approaches the fiscal cliff. Managed inflation has produced profits and increased asset valuations that do not reflect an increase in real wealth. Hence, paying an increased capital gains tax to the government on what is in effect a nominal increase but really a decrease in the purchasing value of real assets engineered by the government is quite frustrating.
Since the end of the Cold War, the deployment of military, intelligence, and special forces assets globally has increased significantly, as have related expenditures. This has shifted expenditures from domestic economic activity to global activity as the Army, contractors, and support functions move abroad. This is compounded by the fact that the most recent U. Congress is now in the position of trying to rein back an insatiable security state—a dangerous thing to do.
The vast majority of the people lobbying the federal government are focused on what is in the specific interest of those who are paying their way, as opposed to what makes the pie bigger for everyone. The Housing Bill that nationalized Fannie Mae and Freddie Mac in was a perfect example of the political allocation of federal resources with complete indifference to the economic health of the country.
The Peter G. Peterson Foundation is now marketing a new documentary called I. I have only seen the trailer. If the national debt was almost ten trillion dollars before the housing bill and, if my estimate is right, approximately ten trillion dollars has been stolen since , then do we have a debt problem or do we have an aristocracy problem? One of the beauties of I. They did not. The implication is that the American people are slobs who are irresponsible and wrecked the place while the leaders who ran the country were helpless to do a thing about it.
I once had a wonderful employee when I was the Assistant Secretary of Housing. He told me that the way to clean up a big mortgage mess was to view the problem as the solution. America does not have a debt problem. We have a political problem. We have created a system where secret governments can steal and have Congress, the U.
Treasury, and the Federal Reserve replace whatever they stole. The theory is that the end of the world will come unless we bail them out. That is not true, for all the reasons you learned in kindergarten about letting bullies have their way. The implication of the trailer for I. But if they were truly leading, how did we get in this mess in the first place? How did billions of fraudulent securities get sold around the world? Why were several generations of Americans fraudulently induced to take on student debt and mortgage debt they could not afford?
Federal enforcement is focused on centralizing political control and generating revenues for itself, increasingly placing those revenues into profit-sharing arrangements with successful managers of money laundering, financial fraud, and organized crime. This required a fundamentally different approach and philosophy. One model proposed helping the people in a place improve.
The other proposed rounding them up and pushing them out so that new people could be moved in. If the loans were sold, it would be better for the FHA fund and for building residents and the surrounding communities. The IG and General Counsel staff were apparently indifferent to overall best interests of the government on a government-wide basis let alone taxpayers and communities. Her attitude suggested that this was not an important piece of information.
Which suggests that she found something that had billions of dollars of impact on the FHA Funds each year to be of no interest. The focus in federal enforcement was on activities that made money and garnered funding support and headlines directly for the enforcement teams. The implosion of the latest housing bubble in recent years has focused many Americans on the complete absence of any prosecution of the extensive financial fraud involved. Meanwhile, 1. How does the U. Have we crossed the line between a sovereign government and a racketeering operation?
The U. Government contracts and purchases set the income for an endless series of corporations with stocks and bonds trading in those markets. The federal credit insures directly or indirectly most U. In one sense, the capital markets have become a securitization of the U. This situation is further complicated by the fact that all the major markets have become significantly dependent on interest rate derivatives to help engineer a low cost of capital across many markets. Consequently, reengineering the federal budget means having to reengineer the capital markets and a highly unregulated, complex derivatives book of many trillions of outstanding derivatives, much of which the U.
These risks inspire advocacy for continued market management by the federal government and global central banks and tight coordination between that management of markets and the management of the federal budget. In , with the collapse of AIG, the U. Treasury had to confront the risk of not bailing out a company that was intimately involved in the black budget, mortgage fraud, and the derivatives market. Managed markets misallocate capital, create perverse incentives, and break down trust. Bottom line: think of a tornado of financial paper and derivatives full of collateral fraud that is sucking up all of the federal cash flows and an increasing amount of all other assets and income flows in a drive toward securitization to keep the ball rolling and to prevent global financial markets from imploding—and, in the process, destroying the fundamental conditions of real wealth.
How, exactly, does Congress address this inherent conflict between the centralization of wealth into the securitized tornado and the creation of conditions for a healthy, decentralized economy? Derivatives dependency and blackmail are at the heart of the Congressional fiscal cliff conundrum.
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Federal finances depend on the U. This is made possible by the tactical threat and use of force. These dependencies of the central banks on the military—and of the military on the central banks—make it extremely difficult for the central banks and the military to hold each other to standards of efficient and accountable use of resources. This makes reengineering defense appropriations a very necessary yet delicate task. The use of the federal budget to centralize political and economic control has had devastating consequences for small businesses and farms, resulting in significant decreases in employment, income, and household wealth—and, therefore, tax revenues.
Government regulation and enforcement including antitrust policy, health care, food safety rules, and Agenda 21 , as well as policies that impact the allocation of capital, are designed to benefit the government, large agribusiness, and corporations at the cost of small business. This is not unrelated to the fact that the greatest source of political contributions comes from capital gains—profits on corporate stocks and bonds, on securities and financial assets, and on real estate. Consequently, facilitating large corporate access to federal largesse or promoting policies that allow corporations to increase local market share results in corporate profits that generate campaign contributions.
Not surprisingly, one recent study, based on data compiled by the Organisation for Economic Co-operation and Development OECD , placed the United States second to last out of 22 rich nations in the percentage of workers who run their own businesses. The growth of student loan debt is related to this phenomenon, leaving graduates in a position where they feel pressured to work for the military or large banks and corporations instead of taking entrepreneurial risks and starting or joining small businesses.
While benefits and contracts to private corporations from the federal budget have risen, the corporate portion of U.
However, the political process has become so dependent on corporate contributions and in turn on serving corporate interests that there is barely a mention of increasing corporate taxes or of making sure that corporate behavior is not shrinking the health of the pie from which taxes are drawn. The dependence of the U. Here are four excerpts:. My company served as lead financial advisor to the Federal Housing Administration between and I watched both the Administration and the Federal Reserve aggressively implement the policies that engineered the housing bubble.
Even in , I could see that these plans would create unserviceable debt loads in communities struggling with the falling incomes expected from globalization. Homeowners would default on mortgages while losses on mortgage-backed securities would drain retirement savings from k s and pension plans. Taxpayers would ultimately be hit with a large bill. I looked at the official and said that the Administration was planning on issuing more mortgages than there were houses or residents.
One of the dirty little secrets behind the housing bubble is the long standing partnership of narcotics trafficking and mortgage fraud and the use of the two in combination to target and destroy minority and poor communities with highly profitable economic warfare. This model is global. It is operating in counties throughout the world as well as in U.
Washington, D. Alan Greenspan is a liar. The Federal Reserve and its long standing partner, the U. Our bankruptcy was not an accident. It was engineered at the highest levels. The power of the killing machine rests in part in the broad based popular support it receives through the investment system and the financial markets.
How are we to plead ignorance if the profits and growth in our k plans and investment portfolios have been enriched from prison stocks and the securities of the banks, homebuilders, property managers, mortgage bankers and other groups who managed this process of ethnic and economic cleansing and the gentrification it made possible?
What can all those who benefited financially in the stock market, or from cheap mortgage and consumer loans, or reduced ATM and checking fees say? We disassociated the source of our financial benefits from what we saw happening around us that we knew was wrong. In the summer of , I asked a group of people at a conference of spiritually committed people who would push a red button if it would immediately stop all narcotics trafficking in their neighborhood, city, state and country. Out of people, 99 said they would not push such red button.
When surveyed, they said they did not want their mutual funds to go down if the U. They did not want their government checks jeopardized or their taxes raised because of resulting problems financing the federal government deficit. Our financial profiteering and complicity is not limited to aristocrats and the elites who do their bidding. Our financial dependency on unsustainable economics is broad, ingrained and deep.
When my staff approached me with a proposal to bail out a mortgage company so they could continue to lose money for us, I asked why we should spend money to lose more money in a way that would harm communities. After a long silence during which 30 staff members intently studied their feet, one brave soul explained to me that the mortgage bank was owned and run by a major Republican donor.
Shocked, I said. You get cuff links. Within minutes, a screaming [Secretary of HUD] Jack Kemp, furious that I had not provided illegal subsidy to keep the mortgage banking company going despite his orders to stop anything corrupt or illegal , called me on the carpet. Part of the push for global empire reflects a use of force to expropriate global assets, ensure access to cheap natural resources and to markets, as well as force global institutions to pay a global tax through the debasement of the U. As the U. The political process has devolved into a competition between people who are above the law and have the ability to kill with impunity, and those who respect the rule of law and the sanctity of life.
Money is being allocated based on brute force as opposed to competition between constituencies who respect and subscribe to the rule of law and ethical behavior. Because it is difficult for many people to understand the extent to which politics have become legally, financially, and physically invasive and violent in the United States, I have made an effort to expose this problem on The Solari Report—both on our weekly interviews and on our blog.
If I can listen to your board meetings with Echelon, hack your bank and government accounts with PROMIS type software, trigger an earthquake in your town with my electromagnetic weapons, zap you or your family from my surveillance satellite and arrange sex slave benefits and big bucks for you if you do what I want all without having to assume criminal and civil liability as a practical matter , then the structural governance of assets by trusts matters not a bit—the trustees of whatever it is will do whatever I want them to do.
So we need to step back and determine how can the rule of law be enforced given the current state of advanced, invisible weaponry and surveillance technology. Indeed there are ways, but they are not obvious until we start dealing with the practical aspects of economic and political warfare as they are currently practiced. I highly recommend reading my blog post on control files and the related interview on The Solari Report with Nick Bryant, author of The Franklin Scandal: A Story of Powerbrokers, Child Abuse and Betrayals , which touches on the use of pedophilia to create control files on politicians.
Remember J. Is it public knowledge that casinos pump out oxygen to increase gambling? Have you ever heard that? Adam: Oh yes. There are all kinds of things casinos do. You can go in with a high resolution digital recorder, take it someplace where somebody knows how to see a signal and just look for repeating wave forms and look for them in the alpha range, look for them in the stimulation pleasure areas of the brain.
Catherine: Let me move on to another kind of financial fraud issue. We must spend less and save more. This step by step guide, investment strategy and model will protect you financially from the impact of the Fiscal Cliff. The good news about the Fiscal Cliff is that you can decide what the outcome will be on a personal level.
You may not be able to control decisions made about increased taxes or decreased government spending on programs like Medicare and Social Security but you can control what you will do in your personal life to protect yourself from the impact of these decisions. You just must learn from the poor behaviour of the government and not make the same mistakes.
Changing your behaviour of just 'living for today' and spending what you earn does not take magic or genius. It is just a matter of realizing that you must begin to take saving and planning for your future more seriously than you ever have because there will be no one to bail you out in the end. Based on many years of research into investment analysis, business finance, economics, markets and portfolio management, this book will guide you through the steps you need to take to protect yourself from the impact of the Fiscal Cliff.
You will have the tools you need to be sure that you and your financial future are protected. After following the steps and advice in this book you will have the confidence that your retirement will be stress free. Lee Adler - an investor of 31 years and author -gives you an easy to follow, step by step approach to show you how to: Start saving; Get your personal finances in order so that you can start investing; Benefit from the Magic of Compound Interest; Research and hire a Financial Advisor; Decide what type of Investor you are; Determine whether your Investments are making as much profit as they should; Question the management style of your Financial Advisor to ensure that you are making the greatest amount of profit possible at all times no matter what the economic climate; Lee Adler also shares with you the results of many years of research which culminated in his development of the All Climate Investment Strategy.
This is a strategy that is based on the philosophy that every stage of the economy has within it investments that are making profit.
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Future deficits would be reduced from an estimated 8. This would mean a high probability of recession a 1. Alternative fiscal scenario. If Congress had "avoided" the "fiscal cliff" by continuing its existing policies, the future would have more closely resembled the CBO's "alternative fiscal scenario". This scenario involved extending the Bush tax cuts, repealing the automatic spending cuts, restricting the reach of the AMT, and keeping Medicare reimbursement rates at existing levels the so-called " doc fix ", versus declining by one-third.
This scenario has considerably higher debt and interest payments than the baseline projection, but the short-term impact on the economy would have been avoided. The Congressional Budget Office estimates that allowing certain laws on the books during to expire or take effect in the baseline scenario would cut the deficit approximately in half and significantly reduce the trajectory of future deficits and debt increases for the next decade and beyond.
However, the deficit reduction would adversely impact the economy in the short-run. On the other hand, if Congress acts to extend current policies the alternative scenario , deficits and debt will rise rapidly over the next decade and beyond, slowing the economy over the long run and dramatically increasing interest costs. The CBO has identified the following metrics for its baseline and alternative scenarios for the period starting January .
Consideration of these scenarios and other options [note 2] leads to what the CBO calls "a broad spectrum of fiscal policy choices. Therefore, since the total U. The pie chart to the right contains a breakdown of the currently authorized reductions to the FY deficit. Reduced taxes and increased spending, due to the 1. The CBO reported in November the economic and employment effects of various policy options related to the cliff.
Each option has a different GDP and employment impact per dollar of deficit impact. In other words, some choices are economically more efficient. CBO explained why spending cuts have a more significant adverse impact on the economy than tax increases per dollar of deficit reduction: "The larger 'bang for the buck' next year of the spending policies under the alternative fiscal scenario occurs because, CBO expects, a significant part of the decrease in taxes relative to those under current law would be saved rather than spent.
On July 25, , the Democratic-controlled U. The Senate also rejected the Republican proposal of extending the tax cuts for all by 45— House of Representatives rejected, —, the President's tax proposal on August 1, Senior White House officials recommended a veto of any bill that: 1 averts defense cuts while leaving intact non-defense cuts; or 2 excludes an increase in tax rates for top earners. Congressional Republicans have proposed that the Bush tax cuts be extended in their entirety. Revenue would be generated mainly by reducing tax expenditures exemptions and deductions rather than increasing income tax rates.
Further, it included raising the Medicare eligibility age from 65 to 67 and slowing increases in Social Security costs by reducing cost-of-living adjustments. The "Gang of Eight" referred to a group of eight leaders of each of the two parties from both the United States Senate and United States House of Representatives that formed in November in hopes of forging a bipartisan compromise on the Fiscal Cliff crisis that arose that year. They had been working since but "[have] so far failed to reach an agreement after more than a year of talks.
Congressional rules allow bills to skip committee hearings, but the group lacks the clout to "push its plan through Congress outside the regular order of business. The patch prevents the AMT from affecting many more taxpayers. This is similar to what Congress has done in previous years. On December 12, , the Federal Reserve announced it would keep short-term interest rates near zero percent in an effort to lower unemployment to 6.
The US debt ceiling became involved in the fiscal cliff debate when Treasury Secretary Timothy Geithner introduced the President's authority to raise the country's borrowing limit as a part of his first formal proposal. On December 26, , Geithner announced that the federal government would exceed the current debt ceiling on December 31, Therefore, a number of measures would be put into place to delay this from happening, starting with suspending issuance of State and Local bonds on December 28 and investing in two government pension plans. These and other measures would normally delay reaching the debt ceiling for about two months but, because of debate over the fiscal cliff, this might be extended if there is no change in the current laws.
According to former Secretary of Defense Robert Gates, the deep across-the-board cuts in defense spending required by the Budget Control Act will threaten military-dependent local economies and "do great damage" to American military strength and homeland security. Many experts have argued that the U. He recommended the adoption of ideas from deficit panels such as Domenici-Rivlin and Bowles-Simpson that accomplish these two goals. Other experts at the Center on Budget and Policy Priorities and the Carlyle Group have argued that allowing the tax increases and spending cuts to occur under current law may be necessary to create the "grand bargain" required to get the U.
In other words, allowing current law to take effect would create conditions under which legislators might be forced to enact better designed deficit reduction approaches of similar or greater magnitude. Patrick Knudsen, a Heritage Foundation fellow, argued that lawmakers should seek long-term stability by rejecting short-term fixes and "grand bargains. This table   contains a comparison of the official proposals and counter-proposals from President Obama and Speaker Boehner, as of December 18, It does not include leaked or partial information about one specific aspect of an offer nor does it include partisan votes in the House or the Senate.
The bill faced uncertain prospects in the House of Representatives as Eric Cantor , the House Majority Leader , said on January 1 that he did not support it.
Fiscal Cliff Explanation and Causes
The act contains the following provisions:  . This would be the first year-to-year income-tax rate increase since The new rates for income, capital gains, estates, and the alternative minimum tax would be made permanent. The passage of the bill came after days of negotiations between Senate leaders and the Obama administration, with the final agreement being attributed to talks between Vice President Joe Biden and Senate Minority Leader Mitch McConnell. Some Democrats criticized the bill for not raising taxes on the wealthy more, while Republicans criticized it for raising tax rates while not providing explicit spending cuts.
While ATRA would reduce short-term economic impact due to the cliff, it would slow long-term growth relative to the lower deficit Baseline scenario. The table below shows the estimated impact on taxpayers from the tax increases that occurred with the expiration of the Obama payroll tax cut and partial expiration of the Bush income tax cuts. The estimated impact is given as an average for the different income levels. The baseline that is used is if the payroll tax cut had been extended, new health care tax not implemented, and Bush income tax cuts fully extended.
Average federal taxes include individual income taxes, corporate income taxes, payroll taxes, and estate taxes as a percentage of average cash income. The sequestration fight was then expected to occur during negotiations over a debt limit increase that was expected to be needed sometime in February. The bill did not include any offsetting budget cuts, as Republicans had previously stated as a precondition for raising the debt limit.
The move was seen as an attempt to delay a showdown on the debt limit given their experience with the debt-ceiling crisis , as well as the recent Democratic gains in the elections. On January 31, , the Senate approved and the House passed debt limit bill H. The May 18 deadline is after the March 1 deadline for the sequestration, and the March 27 expiration of the continuing resolution funding the federal government.
The bill also included a provision that would delay the salaries of Congressmen of any house that had not passed a resolution on the FY budget by April 15, From Wikipedia, the free encyclopedia. This is the latest accepted revision , reviewed on 26 September This article is part of a series on the Budget and debt in the United States of America Major dimensions. Medicare Social programs Social Security. Contemporary issues. Bowles—Simpson Commission. Financial crisis of — Debt-ceiling crisis of Budget sequestration in Government shutdowns : , , — Jan — Balance of payments Inflation Continuing resolution.
Main article: American Taxpayer Relief Act of Further information: United States debt-ceiling crisis of This is as opposed to mandatory spending: those "self-funded" programs such as Medicare and federal crop insurance that have had their expenditures written into their "enabling acts"; that is, the acts that created them. Slightly more than half of the discretionary money went for defense.
The rest of the discretionary spending funded a wide variety of government programs and activities, including education, veterans' benefits, public health and the administration of justice. Both would have implemented the original caps on discretionary appropriations contained in 's Budget Control Act and allowed the new taxes for the Affordable Care Act to come into effect.
They act against the primary purpose of avoiding the fiscal cliff, either increasing spending or decreasing taxes. Congressional Budget Office. Retrieved February 25, The New York Times. Retrieved January 1, The Wall Street Journal. Washington Post. Retrieved November 6, ABC News.
January 1, The bill was not posted online 24 hours ago. But perhaps he can be forgiven since the U. Great West Financial Retirement Services. January 4, Although the U. Fox News. BBC News. New York Times. Retrieved August 13, Tax Foundation. CNN Money. CNBC via Yahoo! Retrieved October 9, Lots of Names for Year-End Event". National Journal. Archived from the original on January 15, Retrieved December 13, Accounting Today.
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