What They’re NOT Cutting in the Fiscal Cliff…
by Simon Black: 'Renounce
Citizenship' Is Now One of the Fastest-Growing Search Terms in Google
farewell address to Congress this week, Ron Paul blasted the
dangers of what he called Economic Ignorance:
ignorance is commonplace. . . Believers in military Keynesianism
and domestic Keynesianism continue to desperately promote their
failed policies, as the economy languishes in a deep slumber.
right. Around the world, economic ignorance abounds. And perhaps
nowhere is this more obvious today than in the senseless prattling
over the US Fiscal Cliff.
the deal: You may remember the Debt Ceiling debacle of 2011. At
the time, the US government was about to breach its debt ceiling,
and there was an embarrassing standoff between Congress and President
As part of
their eventual compromise, the debt ceiling increased by $400 billion
in August 2011
then again by another $500 billion five weeks
and finally by another $1.2 TRILLION twenty weeks after
President Obama signed into law the Budget Control Act of 2011.
The law stipulates that, unless another compromise is reached, a
series of tax increases and budget cuts will automatically take
place on January 1, 2013, including the expiration of the Bush tax
cuts and the temporary 2% payroll tax holiday, plus new taxes related
They call this
the Fiscal Cliff because everyone is terrified that
all the budget cuts and new taxes will bring the US economy to its
knees once again.
days analyzing the bill
and frankly, its a joke. You
can read the 200+
pages yourself if you like, but here are the important points
discussed before, US government spending falls into three categories.
spending is what we normally think of as government.
It funds everything from the military to Homeland Security to the
covers all the major entitlement programs like Social Security and
interest on the debt, which is so large they had to make it a special
two categories are spent automatically, just like your mortgage
payment that gets sucked out of the bank account before you have
a chance to spend it. The only thing Congress has a say over is
Discretionary Spending. Hence the name.
the problem the US fiscal situation is so untenable that
the government fails to collect enough tax revenue to cover mandatory
spending and debt interest. In Fiscal Year 2011, for example, the
US government spent $176 billion MORE on debt interest and mandatory
spending than they generated in tax revenue.
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© 2012 Sovereign Man
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