We're Never, Ever, Ever Going Over The Fiscal Cliff

Afternoon Monkeys,

There's been a lot of talk about the coming fiscal cliff, and Edmundo Braverman and TheKing have both done a great job in explaining what is going on and some of the current options available to law makers. Luckily for us at WSO, they've taken the time to explain what the fiscal cliff is comprised of, rather than what I tend to see in the news media, which is the likelihood of going over the fiscal cliff.

The opinions vary considerably on the question of the probability of going over the fiscal cliff. On Tuesday, Reuters reported that Washington insiders saw a 50-50 chance of going over the cliff a large increase from an AEI report on December 10th that put the probability at roughly 25%. And, of course, because this is such an exact science, Stan Collender put the probability at 75% right in between on the 14th of December. Since I hate being left out of the fun of making predictions, I've decided to thoroughly research, meticulously calculate, and triple check all my assumptions in order to give the WSO readership my "expert" opinion. Without further ado, the probability that we will go over the fiscal cliff is...

0.00%

I did quite a bit of detailed analysis to come to this conclusion, and one of my major findings was politicians are ridiculously narcissistic. So, it doesn't really matter if the body politic will likely blame one or the other for going over the cliff, the mere perception that the citizens might blame Republicans and/or Democrats is enough to propel the two sides to a deal. What that deal will eventually be (or if it's even preferable to going over the cliff) is anyone's guess (and far more interesting), but will we actually go over the cliff? Nope, not a chance.

What do you monkeys think? What's the probability that we go over the cliff? Or, better question, when we don't go over the cliff, what do you think the resulting deal will look like?

tl;dr - It's really all in the title with some nonsense analysis thrown in. And sorry about the Taylor Swift reference, that awful song has been stuck in my head all week.

 

Completely agree with you.

We Are Never Ever Ever Getting Back Together!!

Also, the fiscal cliff thing. I agree with you on that.

Because when you're in a room full of smart people, smart suddenly doesn't matter—interesting is what matters.
 
ricky212:
Completely agree with you.

We Are Never Ever Ever Getting Back Together!!

Also, the fiscal cliff thing. I agree with you on that.

lol +1

Damnit Taylor Swift, why must your songs be awful yet oh so catchy?!?!

"My caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested."
 
whatwhatwhat:
mango001:
I love Maria Bartiromo's comments
i stopped right there

fiscal cliff is a manufactured phenomenon intended to distract from the real long-term fiscal problems we have

I have my own soapbox about how the structure of politics isn't in the best interest of our economy, but I only like to bring it out when I'm a bottle and a half of wine deep and my family is gathered at the table.

Christmas is going to be great.

 
Best Response

Here's where we stand: the Republicans have put forth their final offer, which might just barely have enough Republican support in the House to pass (but that's 50-50 right now), but the Democrats have said it's DOA in the Senate. The Democrats have put forth essentially nothing. We have 4 daily sessions remaining in 2012. My lifelong tenure in Washington leads me to believe that some compromise will be reached, but the mathematics tell me that no compromise will be reached before January 1.

The Republicans MIGHT be able to muster enough support to raise taxes on those making over $1 million, but just barely. The Democrats have flat out rejected that, so where do you go from here? Raise taxes on $500,000 in income? There simply aren't the votes in the House for that. And you probably won't get enough Democrat votes in the Senate willing to pass meaningful spending cuts, so you've got a mathematical and political impasse here.

 

Well there ya go. I mean, we may reach a compromise, but what? There simply aren't the votes in the House to pass a tax increase on those making less than $1 million as that threshold BARELY had 50% House support (Plan B). So where do we go? I mean, a month ago I was positive they'd avoid the fiscal cliff but now I'm not so sure.

 
DCDepository:
Well there ya go. I mean, we may reach a compromise, but what? There simply aren't the votes in the House to pass a tax increase on those making less than $1 million as that threshold BARELY had 50% House support (Plan B). So where do we go? I mean, a month ago I was positive they'd avoid the fiscal cliff but now I'm not so sure.

You should go back to being positive that they'll avoid the cliff. People become a lot more flexible when they think their cushy job might be taken from them.

"My caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested."
 
mikesswimn:
DCDepository:
Well there ya go. I mean, we may reach a compromise, but what? There simply aren't the votes in the House to pass a tax increase on those making less than $1 million as that threshold BARELY had 50% House support (Plan B). So where do we go? I mean, a month ago I was positive they'd avoid the fiscal cliff but now I'm not so sure.

You should go back to being positive that they'll avoid the cliff. People become a lot more flexible when they think their cushy job might be taken from them.

Looks like we're going over the "cliff" even if only for a few days.

 
DCDepository:
mikesswimn:
...like ever.

The only thing this proves is that it wasn't a fiscal "cliff", because they missed their deadline of January 1.

I'm just tying up the joke from the title, but come on, we both knew they weren't "going over the cliff" in the proverbial sense. Deadlines are for people with shit to do, congress need not apply.

"My caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested."
 

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