Still Confused About What the Cliff Deal Means?

Everyone is spinning this one way or the other, so if you just want the facts and the bottom line, who can you trust? I have a place for you to get the Facts. The source of this information is impeccable, and ALL of the facts are spelled out in just 1,360 words.

Here’s the (Link), It will take you to this page at the White House:

The White House presents the “facts” of this matter. But it leaves out a few facts that are, no doubt, inconvenient for the White House to fess up to. If the President’s men really wanted to be honest about the facts, they would have added a paragraph:

-A consequence of the tax agreement is to increase payroll taxes on 155m American workers by $125B. We know this hurts middle and low income workers and their families. We understand that this is a very big tax increase, and that it will knock at least 1% of 2013 GDP (and beyond). We’re sorry about this, it couldn’t be helped. Nancy Pelosi and Harry Reid insisted it be this way.

Now about this fact sheet. Just a few items on the list of “Achievements” that stand out to me:

Strengthens our recovery next year by cutting taxes for the middle-class

This is twice wrong. Middle class taxes are going up $125b in 2013. And the consensus opinion is that the net effect of the tax deal is a drag on GDP of 1%.

Provides greater economic certainty for families and businesses

They gotta be kidding with this line. The tax deal leaves open the pesky questions of A) the debt limit, B) the sequestered amounts, C) cuts in entitlement spending, D) additional taxes and don’t forget E) the President needs another Continuing Resolution (CR) to keep the lights on. (No budget from the Prez means another CR is required)

Me? I’m crapping in my pants over that list. The market may be happy today, but what is in front of is much more troubling than what is behind us.

Cuts the deficit and reduces the debt as a share of the economy over the next five years

Compared to what? The fact is the country just agreed to an additional $4t in debt. Here’s the picture of the debt profile that is the result of this deal. That ugly orange stuff is the additional debt the country signed up for with the tax deal. How do you call this progress?

I guess if you really want the facts on this deal, you better look elsewhere.

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About Bruce Krasting 208 Articles

Bruce worked on Wall Street for twenty five years, he has been writing for the professional press for the last five years and has been on the Fox Business channel several times as a guest describing his written work.

From 1990-1995 he ran a private hedge fund in Greenwich Ct. called Falconer Limited. Investments were driven by macro developments. He closed the fund and retired in 1995. Bruce also been employed by Drexel Burnham Lambert, Citicorp, Credit Suisse and Irving Trust Corp.

Bruce holds a bachelor's degree in economics from Ithaca College and currently lives in Westchester, NY.

Visit: Bruce Krasting's Blog

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