Monetary Reform Task Force

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Fiscal Cliff compromise proposal posted

Posted by dr.ron45 on December 6, 2012 at 3:05 AM

In the disciple we call Decision Sciences,  the first step in the process is to correctly frame the decision problem.  The first two proposals for avoiding the fiscal cliff (first by the White House, and the reply by the House GOP) show that this first step has not been done correctly.  If you take a close look at the Budget Control Act of 2011, it provides that the sequester cuts will go into effect only if at least $1.2 trilllion in budget cuts have not been passed by congress in time, i.e. the end of this year.  It is not necessary to provide for a $2.2 trillion deficit reduction, and it is certainly not necessary to provided for a $4.4 trillion reduction either.  Only $1.2 trillion is required.

So instead of each saying the other's proposal is totally unacceptable, they should be noticing that the elements for a compromise has already been reached, and get busy and get the details worked out in time.

The basic idea is to take the House GOP tax reform revenues, and the White House cuts, put them together and see if the resulting total deficit reduction is greater than or equal to $1.2 trillion.  Plain and simple.  Well, here's what you get:

House GOP tax reform revenues:  $800 billion

White House cuts:                            $600 billion

White House expenditures:          -$200 billion

House GOP CPI revenues:            $200 billion


Total:                                                  $1.4 trillion

Viola!  So the President was right when he said this isn't very hard, it should take only a week or so!  Amazing!

The president just has to put aside the idea of increasing tax rates on the upper incomes (not really necessary), and the House GOP has to set aside the idea of decreasing tax rates on the upper incomes (not really appropriate).  Fair's fair.

So click on the new button on the home page, print out the one page summary of the compromise deal, and forward to as many government officials as you have time for.  Maybe we can get them to the negotiating table again and get the deal done in time.  Promoting green money can wait until next year.

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