acting-man.com / By Keith Weiner / January 7, 2013
Introductory Remarks by PT:
This was originally written on December 31; we now know that the ‘cliff’ has been averted, or at least postponed. However, every word Keith writes below is nevertheless just as true.
Everyone today is talking about the “Fiscal Cliff”. It is a small decrease in spending combined with a significant tax increase. Let’s put this in perspective. The budget for fiscal year 2012 was $3.8 trillion and the deficit (shortfall which had to borrowed) was $1.1 billion. If no deal is reached, and we go “over the cliff”, then spending will be automatically cut by $110B. This is less than 3% of the total budget and 10% of the deficit.
Let that sink in. The government would still borrow about a trillion dollars a year. The debt would rise to $20 trillion by 2016. This is not much of a solution.
To make the math easier, think of it in terms of a family budget. The total salary of the parents is $38,000 but spending is $49,000; the family borrows $11,000 every year. Now they propose to address the problem by spending $47,900, a reduction of $1,100. The kids would probably be screaming about cuts to their allowance.