Bayou Renaissance Man has been writing a LONG series of posts about what's happening, and what's coming. Lots of cites, big words, and good information.
Even CNN is getting in on the action now.
Here's why: If there is no fiscal cliff deal, the Bush tax cuts will expire, and everyone's tax rates will go up. That will reduce the amount of money paid to workers, because employers will be withholding more.MrsZ and I aren't quite living paycheck-to-paycheck, but we're in the fairly typical spot of young-ish couples - building a savings while paying off student loans, mortgage, and a car payment. We're grinding along, and a $100-200 per month decrease in our take home pay will hurt. No, we won't go broke, not even slowly. We'll trim a little more, cancel the things we really don't need, and figure out how to make it work. Things like cell phones, internet at home, and NetFlix will go by the wayside. Luxury food items (we love good cheese) will become a real luxury treat instead of an every-few-weeks enjoyment. Spending on hobbies will be cut.
In addition, the temporary payroll tax holiday -- which for the past two years has boosted pay by more than $80 a month for workers making $50,000 and twice that for those making $100,000 -- will also expire, reducing paychecks even more.
Make sure you understand the source of this. It's not "the Bush tax cuts". It's a government that has run amok, refuses to pass a budget for years, and continues to increase expenditures without a plan to pay for them. The pundits have called it "kicking the can down the road". Guess what? The can is resting against the curb. If you kick it, you're going to break your metaphorical toe. Wikipedia has a pretty good image. Those gaps between the red bar and the blue line? That's our economic death by papercuts.
I have no problem with a social safety net - but that net isn't a goddamn hammock. (h/t Robb Allen) Welfare isn't meant to be comfortable, it's meant to be subsistence while you look for something better. It's time to start examining how things like food stamps, EBT, and phones are being handled. Healthcare is going through the roof with the change to single-payer healthcare. A post I saw yesterday had a guy's family-coverage insurance premiums increasing from $3,800/yr to $4,900/yr. It's not chump change. Bailouts are costing us money; social programs are bleeding us dry - and we're refusing to open our eyes and look.
People are screaming, "Tax the rich!" and, "Tax the corporations!"
We'll take those in reverse. Corporations don't pay taxes. Oh, they write a check to the government every month, or every quarter, but where do those taxes come from? Right out of their gross receipts on products sold. Increase taxes, increase prices. Simple.
As to the rich... The 20 richest people in the US have a combined net worth in the vicinity of $540 billion. That's a hell of a lot of money. But it's not their annual income. It's their worth on paper; in stocks and property. If Microsoft crashes, Bill Gates is still rich but has lost about a quarter of his personal wealth (6.4% holdings of 8.9B public shares at $26.00ea). If the government chose to confiscate the fortune of every one of those twenty richest people, and applied it directly to the national debt, it would eliminate about three percent of the US debt. That's it. If, instead, those confiscated fortunes were applied to the current year's expenditures, we'd reduce our deficit from about $900B to $400B. It's still a deficit and cannot continue forever.
Let me reemphasize that: It's still a deficit and cannot continue forever.
The only fix for where we are now is to balance the budget, start running a surplus, and pay off our national debt. That's only going to happen with some painful changes. NOW is the time to make those changes, while we have some choice in where the cuts are made. The longer we wait, the narrower our window becomes, and the more abrupt and painful the fall will be.
I saw a phrase somewhere last night about the economy being "the spark of anger" or some such nonsense. It's not. I don't see an armed uprising on the horizon. Localized disturbances, yes, but not large-scale revolution. No, what will happen is just what Ayn Rand predicted: people are going to go Galt.
The government is refusing to spend my taxes wisely; thus I will start reducing those taxes in any way possible. Trade, barter, and exchange. Buy used, for cash. Claim every possible deduction on income taxes. Build my ARs and reload my own ammo, instead of buying already-manufactured. (Did you know there's an 11% excise on guns and ammunition?)
We can't drop off the grid completely... but we can sure reduce our footprint.
How long until this is the image on the steps of the Capitol?