Over-Simplification of the Fiscal Cliff?

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Aspinator
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04 Jan 2013, 6:58 pm

A friend and I were talking at work about the Fiscal Cliff and how it was really just a conflict between two different economic theories. President Obama and the Democrats believe that you stimulate demand by giving more money (via tax cuts) to the ordinary working person who in turn will purchase more while the Republicans believe you stimulate demand by giving more money to the wealthy (via tax cuts) who in turn will purchase more items and stimulate the economy from the top. Is this over-simplification of a complex issue?



ASDMommyASDKid
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04 Jan 2013, 8:48 pm

I am not sure if this does not belong in the News and Current Events area, but yeah, it is a bit over simplified. In addition to the divergence on what types of tax cuts are most efficacious, you also have those that believe government spending is preferable to tax cuts (typically on the Dem side) and those who believe that that balancing the budget is always important (typically Republicans) and that the government should not have deficits or surpluses regardless of the state of the economy.

Also with regards to tax cuts, much of the Republican "job creator" argument centers around the theory that you cut taxes not just on rich folks but also on businesses, so that their cost are lowered and so they might hire more people, expand their businesses or create new businesses. The Democrats approach it from the demand side of the equation and say that by giving tax cuts (to the poor and middle class) and by increasing government spending you will increase the demand for products & services, which will cause increases in hiring, business expansions etc.

Edited to add: It gets more complicated than this, even, but that is a good place to start.



Alien_Papa
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06 Jan 2013, 12:16 am

[youtube]http://www.youtube.com/watch?v=d0nERTFo-Sk[/youtube]



ShamelessGit
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06 Jan 2013, 10:27 pm

Most of the people who talk about this issue are lying or don't know s**t. The real issue behind the fiscal cliff is both sides trying to transfer as much wealth from poorer people to rich people as possible, all the while making talking points to try to increase their political standing. The republicans say that they want to decrease the deficit, so they make a plan that cuts taxes for rich people that actually adds to the deficit, while the democrats yell about how bad the republicans are while giving them everything they want without a fight.