2 months until next budget crisis?
A prominent economist known as 'Dr. Doom' says the country's budget dispute will come roaring back soon.
We have some breathing room after lawmakers made a fiscal cliff deal on New Year's Day. But the country is far from OK. In fact, one well-known economist says another crisis will hit in two months.Without Congressional action, the country will see $110 billion in spending cuts commence on March 1, writes New York University professor Nouriel Roubini in the Financial Times. And just as those spending cuts hit, the U.S. will hit the debt ceiling. "That is only the beginning," he added.
Known as "Dr. Doom" for his dour views on the economy, Roubini won acclaim for predicting the collapse of the housing market and the 2008 recession. Now, he says that 2013 will be plagued by numerous debates on the budget and the economy. Later this year, talk will turn to medium-turn fiscal consolidation, triggering yet another argument between Republicans and Democrats, he adds.
So expect a big fight about entitlements, and a series of little fights over tax reform: Should the US introduce a value added tax? A flat tax? Higher (or lower) income taxes? A carbon tax? Should we close corporate tax loopholes to raise more revenue? It'll soon get messy.
There's more. Amid all the fierce debates on the horizon, there will be real damage to the economy. Roubini and other economists expect that the combination of tax increases, spending cuts and an increase in payroll taxes will eat into the country's economic growth. Roubini estimates that it will translate into a 1.2% of GDP drag on the economy this year.If the economy was strongly growing at around 3.5%, then that wouldn't be as much of a problem, he said. But recently, the economy has only grown at about 2%.
"So the U.S. could quite easily come perilously close to stall speed this year -- or worse, if the eurozone crisis worsens," he added.
So who's right on this issue, Republicans or Democrats? No one, says Roubini. Even typical Republican voters don't want to gut the welfare state, and "Tea Party extremists are more noise than signal."
He says that maintaining a basic welfare state "is right and necessary" in our age of globalization, rapid technological change and demographic pressure. But doing so means higher taxes for the middle class along with the rich.
It will probably take years for the U.S. to confront the reality of its fiscal position and raise revenues to a level sufficient to fund a reformed -- but not gutted -- welfare state. Large fiscal deficits will remain the norm for the next few years, at least so long as the bond market remains quiet, as I believe it will.
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There are steps we can take. Just we neither have imagination, guts and leadership qualities at any level of Government , business , religion or society at large.
(1) Put a cap on medicare after age 75 or 80. At some point one as to think meeting good lord.
(2) Tell poor to stop making babies. In nature if you cannot afford babies do not survive.
(3) People can live healthy life on rice and beans, peanut butter sandwiches and eggs. If you are poor you are poor and until you can make better life yourself, it is poor life. Mother Theresa even says so.
(4) Rapist , Killers, mentally sick that cannot be fixed with reasonable expense have their life over.
(5) Export prisoners and prisons to Mexico and operate at 20 % of the cost or even better export them to remote tropical island and drop daily food and forget the rest..
(6) Very poor, very old, very sick can be sent out of city at less expenses.
(7) Crook business people, bankers, real estate people. do not coddle them. Keep them in the slammer and take away their entire fortune. If they commit crime against society, good life is over.
(8) Politicians, Government employees if they violate the trust of office and take bribe or harass make sure there is enough punishment that they call their mommies for water.
Let us be tough on those who are bad guys and who are too much burden on hard working Americans and we will have better society.
Last one stop being fearful and go to all these foreign wars that we cannot win and costs us arm and legs. If congress wants to go to war, let them go three months every year to fight and pay for them by additional taxes just for it.
Illinois Senate Democrats advanced legislation late Wednesday to restrict semiautomatic weapons and high-capacity magazines, pressing forward with new gun control measures in the waning days of the session over the objections of firearms groups.
Amid the developments, the Illinois State Rifle Association issued an “urgent alert” to its members warning them that Democratic legislators were trying to push through last-minute anti-gun legislation.
“There would be no exemptions and no grandfathering,” the group stated in its alert. “You would have a very short window to turn in your guns to the state police and avoid prosecution.”
A Senate committee approved two bills, one dealing with the weapons and the other with magazines. Democratic supporters could face a tough sell in the full Senate.
One measure would ban the possession, delivery, sale and transfer of semiautomatic handguns and rifles. People who currently own such weapons could keep them but would have to register them. The bill would allow semiautomatic weapons to be used at shooting ranges, but those facilities would be regulated.
National Rifle Association lobbyist Todd Vandermyde told lawmakers the bill would restrict about 75 percent of handguns and 50 percent of long guns in circulation today. He also said it would treat law-abiding gun owners like criminals, and is in conflict with Second Amendment rights upheld by the courts.
"I've never seen a piece of legislation that tramples on so many court decisions," Vandermyde said.
The other bill, introduced by Democratic state Sen. Dan Kotowski, would limit ammunition magazines to 10 or fewer rounds.
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I have neighbors across the street, one example, they are a family of seven including obese members. The son-in-law works so that keeps their welfare margin to a maximum and the rest are collecting on it. I overhear them talking on summer days from their yard saying my doctor this and my doctor that. The Patriarch smoked in excess until a few summers ago and now carries around an oxygen tank. The Matriarch is a taxi service for the younger who do not drive but are old enough and from observances able to work. How much medicare/medicaid being doled out here????? They have three although not new albeit not junker vehicles.
Another neighbor faking a back problem ( he rides a scooter and plays a beautiful drum set from his basement ), has a Miller Lite can glued to his palms, is overweight. How much SSD being doled out hear????? This is just a small example from a six home area in one neighborhood in our country.
I work for Federal.
I will see so many old folks more than 75 years old work in the offices, they will come around 9:30 AM to work with the coffee and there house problems. After 3-4 hours they leave and travel to all meetings on GOVT expenses. This is waste of GOVT $$.
Why can't OBAMA introduce a mandatory retirement age for Federal workers. GOVT can replace 2 employees with 1 old federal employee. That can solve at least some un employment issues and economy should be on right track.
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