Great explanation. This video breaks this difficult topic down so everyone can understand it. The fiscal drag results from a series of expiring Bush-era tax cuts, as well as the entry into force of automatic cuts to defence and domestic spending programmes. Congress needs to act fast - otherwise it might trigger another recession.
Ok, so the fiscal cliff is a series of budget cuts and increases in taxes to try to reduce our debt. The video does a great job explaining what could happen. Congress and the White House need to make a new deal on taxes and the budget or else unemployment could increase to over 9%. If that happens, we could be in a recession, and possibly a depression. Regardless of who gets into office, their decisions and all the uncertainty will have a major impact on the economy. Since Obama won, he is going to try to address some of the tax cuts this year, then deal with the rest next year.
This is a very simple explanation. To me it means our GDP is currently higher than it would be naturally, without any government intervention. I don't want to go off telling my opinion about things, because i don't really like politics to begin with, and the more i learn about economics the more I am aware of how little I actually know. This is a good video, i have a better idea of what is going on.
The Congress has in some sense taken itself hostage with these sequestration cuts. even though the deficit problem is extremely important, it seems like the costs of these automatic cuts, if not shifted on programs that have less effects on the economy, greatly exceed their benefits. In my opinion, the best solution is to come up with some sort of new revenue program while safe netting the payroll taxes for a bit longer and simply kick the can down the road a little bit more with spending cuts. the country would be more ready for these cuts while the fiscal revenue programs are better in order.
Seriously? Ed O’Keefe acts like a clown. This report is not only amateur, it’s juvenile and fails miserably to address the real condition. Simply stated, a default action agreed to by Obama and congress for the combined tax increase/spending decrease of around $530 B will take effect 2Jan13 if some other measures are not taken to continue avoiding responsible action. This is the result of congress’ failure to pass a budget for FOUR YEARS! The budget proposed by Obama was rejected by every Democrat in congress.
O’Keefe’s descriptions of Obama’s and Romney’s plans to deal with the crisis were virtually identical albeit with a negative tone associated with Romney’s. Neither would have corrected the matter. Obama will attempt to exacerbate it. Did anyone pay any attention to Obama’s statements in ’08, or the amount of spending by his administration alone?
The Dow Jones fell 320 points Wednesday following election day indicating little confidence. The US credit grade is set up to be lowered again by S&P in the coming months/years. When our creditors want repayment, we don’t have it.
“What is the fiscal cliff?” is not even the most relevant question. Bad monetary policy brought us here and bad (irresponsible) monetary policy will compound the problem. Increasing inflation by printing ourselves out of debt (which is laughable) will raise the cost of living and devalue money earned/held.
A better question to consider is what lies beyond the cliff. Avoiding the cliff is simply another attempt to defer payment on debt owed and remain perpetually irresponsible with Other People’s Money.
Consider gold – trading over $1700 /oz. The value of gold does not change. The equivalent of what someone could purchase with gold 1000 years ago is what someone could purchase with gold today. The value of the dollar has been debased to such an extent that over 1700 are needed to purchase one ounce of gold today. The fiscal cliff is nothing but a deadline – a due date for our bills to be paid. The disagreement is just a matter of how much we can get away with not paying. But the dollars borrowed in years past must not only be repaid with interest, they are worth less. And we will continue to “kick the can” because sound fiscal policy doesn’t get people elected over and over again.
The fact that married couples would have to pay more taxes is a little ridiculous. They shouldn't be penalized for filing jointly. However, cutting the child tax credit is a good thing because then it takes the incentive away from having children just for tax credit purposes. I do think that the cuts should be extended because all that happening at once will stifle the economy and send investors into a fire sale. Obama has not made a clear plan on what he's doing and therefore the country will likely suffer as he sits in his nice office and waves to his fans.
This is a very simply explanation about the fiscal cliff. I am not that sure of what the fiscal cliff was but I feel that this video has given me a better understanding. The economy will be in a recession and possibly have unemployment increase to 9%. The government needs to make decisions on how to deal with this, well see what obama does on his second term.
Excellent article, and well explained video. Thanks getting something out there everyone can understand. From reading your article you make it sound like just taxing the rich is going to solve our problems. I can only hope that there will come a day when the idea of raising taxes and again and again comes to a stop. The possibility of taxes going down for all, is a lot less realistic as the need for higher taxes over time. All this will do is take money out of the economy.
Great video providing a simple explanation of what is the fiscal cliff. But I advice everyone to get more information about the fiscal cliff than just from a 2:30 min video, lets get the facts people.
This is what is going to happen if the president doesn't resolve the expiration of the bush tax cuts, if he fails to resolve this problem this could send the U.S. economy into a severe contraction as money is sucked out of our pockets due to a rise in the'' tax payments that will be required of the average american family at the very same time less money will be flowing into our pockets due to dramatic cuts in government spending''.(Forbes) So I recommend everyone to educate themselves in this topic, because its going to affect us all beginning next year!! It can all be avoided if our president and politicians worked together for the well-being of our nation, however that's not the reality, everybody now only cares about themselves. Survival of the fittest people, may God help us all.
This video a very effective way to describe the fiscal cliff. It brings to attention very import issues that must be resolved very soon. The threat of another recession is a very serious matter with which all Americans should be concerned.
This video provides a fundamental overview of the looming "taxmageddon" situation. President Obama has assured the public that if a course of action cannot be decided upon and we fall off the proverbial cliff, the government will be unable to guarantee social security checks. Does anyone else find it odd that each time our officials attempt to trim the budget, the first things to be cut are social security and military spending? Why is it so unthinkable for them to take a personal pay cut or suspend their pay altogether until a course of action is determined?
I have been confused on what the fiscal cliff meant but now i have a better understanding. Hopefully the economy will turn out good whichever president is selected and the fiscal cliff wont be much of a problem
This is a very good explanation of what the "fiscal cliff" really is. I have heard it a lot in the news recently and now know what it means. It is a scary concept because if our elected officials don't try and fix it, then we might fall into another recession. That is obviously the exact opposite of what we need right now and I don't know if the US economy is strong enough to withstand another one.
This video had a clear explanation over the fiscal cliff, and what would be the likely outcomes when this occurs sometime in the New Year. What I found interesting though, is how similar both presidential candidates tactics were when it came to this issue. President Obama’s plan is to urge Congress to sort out some of the increases before they happen, and then revisit this issue in a year. Governor Romney’s plan was to file temporary extensions, then visit it again in 2013. Both candidates seem to understand the severity of this issue, but neither has a solid plan to get our economy back to stable.
Apparently this video is on the lower side of decent. Although, It does explain what is most likely going to happen now that Obama got re-elected. Higher budget cuts and higher taxes to reduce our debt. The economy has a chance to suffer if this were to happen. So, now that Obama is in office for another term he is going to probably try and address congress to some of the tax cuts before this next year begins, and introduce the rest next year.
This is a pretty scary video to think about. With budget decreases and tax increases we are headed to perhaps another economic recession. Estate taxes are rising and so are marriage taxes. Within the Obama presidency we have had to increase our budget a trillion dollars further putting our economy at a "tense" state as far as our economy is concerned. With his recent win in the election perhaps he will be able to work out a new plan to help address this issue. However, I feel that addressing some of the problems before the new year would be most beneficial to the American economy rather than allowing extended time on tax cuts like Romney suggested.
It seems pretty obvious, the white house needs to keep this "fiscal cliff" from a cliff to a small hill. Little by little extending these end dates on these tax cuts, so they all don't fall on everyone at once. Causing a shock on the economy that could put us back in a recession. The taxes are on the rise while the budget is being cut, that reduces our potential to create jobs.
Very short video and it leaves a lot of questions lingering. I believe a crash of the fiat system is inevitable and require temporary pain until we eventually move back to a stable currency. Because of this fiat currency that is controlled by the Federal Government economy, we have lost our industrial base, the middle class is being eroded, and we survive only because of debt-financed consumption.
This video is very clear and also very concerning. By the looks of things, we are looking at a very chaotic start to the year. What we need to do is start putting temporary extensions into play and figure everything out at the beginning of next year.
the increase in tax will induce people to consume less and therefore will affect the level of aggregate output. the demande for aggregate output decrease so the firms are likely to supply. this decrease in supply increase the unemployment as the firm do not as much factor of production. however this is an sacrifice the U.S has to do in order to eradicate this huge debt. the congress should evaluate the opportunity-cost of each policy in order to set a better situation for the american people
This video gives a clear and concise explanation of a fiscal cliff. I am personally worried about the economy as Obama wants to raise taxes and the budget. Obviously, many others are worried as the stock market dropped 320 points the day after the election. Many are worried about not only the U.S economy but the global economy as well. But regardless, this video gave a well described explanation of the fiscal cliff. Thank you for posting this.
This video is a nice presentation of what the fiscal cliff actually means, and why everyone is so worried about it. This just goes to show how short term minded Americans are. Instead of looking at the big picture, and the impact of tax policies over time, presidents and congress' just look for quick fixes that someone else will need to repair further down. I'm not sure that this will ever change if congressmen and women continue to be among the wealthiest Americans in the country. They're more concerned with themselves, than the people they are representing, key example- they were willing to let soldiers go unpaid before they would put their differences aside for the betterment of the country. Something needs to change.
Thanks to your blog, I'm gonna create one now too, thank you.
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