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Fiscal Cliff

Overview of the fiscal cliff.

With the election done, the question turns to the approaching crisis of budget, taxes, and social programs.

Back in June, 2001 the Congress lowered tax rates. Again in 2003. Together these actions comprised the Bush Tax Cuts. Set to expire in 2010 (at the time of passage, it was thought (or claimed to have been thought) that larger reform would be accomplished by then), they have been extended to the end of 2012. And there’s currently no deal to extend them further, leading to a situation whereby tax rates revert to their former levels (which can be sneakily called rate hikes).

Budget sequestration. Enacted in August of 2011. This is the set up to a perverse game of chicken, in which the Democrats and Republicans tie themselves together and race headlong at the cliff, and if either fails to turn away in time, we all go over.

All of the non-exempt departmental budgets will be cut by a quarter-percent.

But what is the cliff itself? It is a combination of lower revenues from the tax cuts, which created the trench, and increasing costs/outlays, creating the ramp. We’re moving along a curve, and come the end of the year (technically the cliff hits in a more nuanced way), the curve drops off and the trench closes up as revenues increase due to rates returning to normal.

It’s not really as much of a cliff as a ramp. Into a revenue wall.

The fear is that the turmoil of decreased government spending, coupled with increase pressure from taxes, will lead to a recession.

All of this is overshadowed by the larger fear that the government no longer functions properly, and won’t deal with the underlying causes of the cliff in a meaningful manner.

That is, between the military budget, Social Security, Medicare, and the broken tax code, we face long-term debt and deficit issues that impact our ability to adhere to our values.

The Republicans believe that we should cut the government down to size, except for the military.

The Democrats believe we should raise revenues through tax increases.

In many ways, the entire cliff is built out of the same sort of crisis the Republican party should be going through in the wake of the 2012 election. They have shown an inability to adjust their values to the modern world. They weren’t willing to take up immigration reform when it was their own president, George W. Bush, pushing for it. They continue to try to enact draconian measures against women, including efforts to block access to contraception and abortion.

We face a similar crisis of values. Our military is too large. Our prisons are too full. Our tax system offers perverse incentives. Our medical system uses misguided payment arrangements such as fee-for-service. And so on.

Big military replaced the value of security. Big prisons replaced the value of justice. Tax loopholes replaced the value of government by the people. Fee-for-service and similar money-first schemes replaced the value of pursuit of happiness.

Reelection and career politician replaced the value of government of the people.

Our underlying values are still strong, but their weak counterparts, their value-for-dummies equivalents, are detriments to the functioning of our system.

The supposed traditionalists, the Republicans, are not calling for a return to our true, core values. But the Democrats are silent on most of them as well (notable exceptions being things like equality under the law when they call for recognition of marriage).

In the end, it’s unclear whether the fiscal cliff will scare the congresscritters into action.

Trends and Equilibrium

Short, rambling musing about trends and equilibrium.

There are a number of interesting trends going on right now. Some of them have been noticeable for years, others are just growing enough that they will (probably) become statistically likely at some point in the future.

There are a number of common trends which the world is tracking:

  1. Economic trends, including government spending, average wages, employment data, debt
  2. Educational trends, including literacy rates, college graduation rates, high school graduation rates
  3. Ecological/Climatological trends, including species population data, carbon output, ocean acidity, ice concentration, rainfall averages, temperatures
  4. Health trends, including death, birth, fertility, infant mortality, obesity, and cancer rates

There are some other trends, like planetary discovery and the search for the Higgs boson. The former may be a proxy for estimating the discovery of extraterrestrial life and then of discovery of intelligent aliens. The latter signals an approaching greater understanding of the universe, which will bring further advancements over time.

These last trends are of a different sort than the former, because they involve an accumulation of data which doesn’t represent an equilibrium-based system. The educational trends also fit in this category of accumulations. The literacy rate can’t be too high.

But they still represent equilibrium events. At first, the literacy rate was very low, and over time the amount of resources spent teaching people to read has increased. But at some point, it reached a peak. It costs less to teach more people to read today than it used to.

The amount of effort to find the Higgs boson is at (or near on either side of) its peak. As soon as it’s found, there will be efforts to understand the data, possibly to repeat the experiments, but nobody will be searching for its existence.

But the economic, ecological/climatological, and negative health trends represent equilibrium-based systems. The current economic trends can only exist for so long before the whole economic system breaks down (eg, 2008 financial crisis), after which the system finds a new equilibrium.

The same is true for the climate. You can boil a pot of tap water at 100 degrees Celsius, or if you add salt, you can raise that boiling point a bit. The same volume of water can now hold in more heat.

Your own body can only be deprived of sleep for so long before it will force you to sleep in most circumstances. Another equilibrium system.

Breath, blood pressure, hydration, heat regulation, and other bodily functions are all equilibrium-based.

Equilibrium is one of those neat concepts that, once you start looking at it, you see it everywhere.

Regarding the Debt Ceiling

This is an experiment in writing a brief synopsis of developments in the Debt Ceiling Crisis while maintaining party-agnostic language.

Note: This is an attempt to write a brief synopsis of the Debt Ceiling Crisis as it exists to-date.  The experimental aspect is that it is written in a party-agnostic manner.

Latest analysis points to a basic deal to raise the debt ceiling, possibly including some extremely modest budget cuts, as more ambitious talks continue to falter and time runs short.

Over the past months (since February 2011), the US Congress and US Executive sought a plan to resolve the decade-long trend of increasing public debt in the USA.  As we approach August 2011, the consequences of inaction grow more dire.  Threats from credit rating agencies that bore some responsibility in the recent economic recession have served to escalate the feeling of urgency.

The president called for a major reform deal that would include a mixture of tax raises and budgetary cuts, but several influential representatives abandoned that idea quickly.  They cited philosophical opposition to taxes, though failed to provide any substantive philosophical underpinnings for the claim.  They instead sought plans focused entirely on cutting spending.  This, despite the reports that one of the major contributors to the rising debt were tax cuts put in place by the government a decade ago.

Several in congress offered other routes.  One bizarre scheme by a normally influential Senator called for the president to sign into law an action that would allow him to veto a follow-up action.  Another plan would tie the debt ceiling increase to the future passage of an amendment to the US Constitution, which analysis shows would likely never happen.

These plans, designed to shirk responsibility, evoked ire from the public.  Many complained of Congress still arguing over a months-old issue while hiring legislation failed to materialize.  Others still felt the more ambitious approaches should revive and be enacted, noting that justifying the length and cost of the negotiations required broader action.

Part of the lack of culture change in Washington is driven by both the habits of the media to report in a certain way and their choice to quote politicians without questioning the partisan rhetoric (or only questioning it for political reasons).  I suspect that having more media move away from those styles of writing would have a beneficial impact.