In-Depth Analysis of the U.S. Fiscal Cliff
旁白: “財政懸崖”是美聯儲主席Ben Bernanke去年冬天發明的新名詞. 它指的是2013年1月1日之前, 除非奧巴馬總統和共和黨控制的國會能夠達成一個減少預算的協議, 來解決美國政府越來越嚴重的債務問題, 否則一系列法案,包括”2011年預算控制法” 將自動開始生效. 稅率將大幅提升, 政府開支將自動被大幅削減. 美國經濟可能面臨沈重打擊,甚至有可能在一段時間內陷入衰退.
旁白: 那麽可能給美國經濟帶來沈重打擊的這一系列法案包括哪些呢? 首先是去年臨時的工資減稅要過期了,這將導致工資稅上漲至少2個百分點, 比這更重要的是一些給企業的特定減稅也要過期,,還有一系列的替代最低稅率(alternative minimum tax)將改變. 一直被延續到今天的布什政府的減稅也將過期, 而針對奧巴馬總統的健保法案需要征收的稅也將開始, 同時,隨著””2011年預算控制法案” 的自動生效,有超過1000個政府項目,包括國防預算和聯邦醫療保險的經費將被大幅削減.
旁白: 當然,這些法案的積極方面是, 它們將使美國減少財政赤字. 美國政府的赤字相對GDP的比例因此將減少一半. 雖然美國的負債還將繼續增加,但是,在未來10年內,美國的負債增加將減少7.1萬億美元,也就是70%. 這樣美國的負債和它的整體經濟容量的比例將大大下降, 這對美國長期的經濟安全至關重要. 但是,很顯然,短期內它對美國經濟卻會造成很大的沖擊,甚至有可能使美國經濟出現一段時間的衰退. 在目前美國經濟還在緩慢復蘇的情況下,任何對經濟的重大沖擊都是美國政府和人民想避免的. 因此,出於對這些法案生效所帶來的影響的恐懼,Ben Bernanke就形象的把它叫做”財政懸崖”.
蕭茗: 上文提到,避免財政懸崖的方式是兩黨必須在12月31日之前達成一個削減政府預算的協議. 目前,奧巴馬總統和共和黨控制的眾議院的議長John Boehber都提出了各自的方案. 兩個方案的組成部分大致相同,都包括了稅制改革,福利制度改革和減少政府開支幾個主要部分,但是,各個部分所占的比例顯示出了兩黨的根本分歧,我們來看一下.
旁白: 奧巴馬的赤字削減計劃聲稱能在10年內削減政府赤字4.4萬億美元,但是,其中有2.4萬億是來自將要結束的伊拉克戰爭和阿富汗戰爭. 分析家認為,這並不能算作政府主動的開支削減.而John Boehner的計劃最終能削減赤字2萬4千億美元. 可以看出這兩個方案在總體數字上相差並不多. 但是在是否給富人加稅,怎麽加,以及福利制度要改多少等方面,我們就可以看出他們的不同.
旁白: 例如, 在奧巴馬的提案中, 對收入最高的2%的富人要通過增加稅率的方式增收1.6萬億(trillion)美元的稅. 而對聯邦醫療保險Medicare等項目的削減只有3500億(350billion)美元.
旁白: 而眾議院議長John Bener的提案中則是通過稅制改革,例如減少稅收減免和漏洞的方式使稅收增加8000億(800Billion)美元, 削減聯邦醫療保險Medicare 和其它健保項目則達到了6000億美元(600 billion).
旁白: 這兩個提案在剛剛出來的時候都被對方堅決否定, 但是,現在共和黨的態度有所軟化, 本周3, 眾議院議長John Boehner在記者會上說: 我相信增加政府收入是應該的, 現在,政府收入的增加來自誰呢? 來自富人.
旁白: 這一番講話起碼在語氣上對於共和黨來說是一個妥協,因為, 共和黨的保守派在不久之前還曾經說過政府負債的問題不在於收入不夠,而在於花銷太大.他們那時可能的態度是,寧可在花銷上減10美元,也不在收入上加一美元.
旁白: 共和黨態度的軟化在很大程度上是受美國民意的壓力. 最近的民調顯示,如果美國摔下”財政懸崖”, 53%的美國人認為是共和黨控制的國會的責任,而只有27%的人認為是奧巴馬的責任.
旁白: 因此,奧巴馬總統這次的立場變得比以前強硬了很多, 他的目標首先是一定要讓最富有的2%的人的稅率提高, 而這正是共和黨長期以來一直反對的. 他們認為提高稅率會傷害經濟發展.
旁白: 雖然共和黨的態度有所軟化,但是他們依然堅持協議中要有對福利制度的大力改革和對政府開支的大幅削減的承諾. 而這也正是民主黨一貫以來反對的.
旁白: 值得註意的是, 據兩黨政治中心(Bipartisan Policy Center )的分析, 兩黨的提案其實都不能真正解決美國未來的債務問題, 據他們的計算,要使美國的債務和GDP的比例在2022年維持在69%的水平, 美國政府在未來10年中實際上需要2萬8千億美元的赤字削減.
蕭茗: 到目前為止, 對於如何削減未來10年的赤字,奧巴馬和國會依然沒有達成協議,而且,兩方的關系也很緊張, 本周內,除了一通沒有結果的電話通話之外,奧巴馬和John Boehner根本沒有坐下來談判過.難怪美國人稱他們都像被灌壞了的孩子. 但是,如果在財政懸崖之前,他們真的不能達成協議,那麽美國經濟會承受多大的打擊,是否會出現衰退,兩黨的方案在一些關鍵的方面到底有多大的不同,就這些問題,我稍早之前采訪了美國智庫,美國企業研究會的經濟研究員Matt Jensen先生.一起來看一下.
蕭茗: 如果美國不幸真的摔下了”財政懸崖”, 那麽,它對美國經濟和每個家庭到底意味著什麽呢? 也許沒有人能夠給出一個絕對準確的答案,因為, 這不僅是一個數字的問題,更重要的還有一個信心的問題, 但是, 對於每個家庭來說, 絕對收入的改變還是有一些辦法可以被計算出來的,下面請雪莉給我們介紹一下.
雪莉: 好的蕭茗. 這個網站叫creditcards.com, 上面有一個fiscal cliff calculator, 就是財政懸崖計算器, 它被彭博網站評為是計算財政懸崖對你的收入的影響最好,最容易用的工具.
比如,你就輸入你的收入,例如$50,000, 然後,再輸入你繳稅的方式,個人還是夫妻聯合繳,還是一家之主, 然後,它就給你算出來了.也就是說,如果那些華盛頓的官員不能在12月31號達成協議的話,美國就摔下財政懸崖, 你,作為一個年收入$50,000美金,一家之主的人,2013年,你會比2012年多繳$1635美元的稅.
另外一個華盛頓智庫Tax Foundation的網站設計了一個更復雜的工具,可以計算3種不同情況下,你的稅率將如何變化. 這3種情況就是對華盛頓應對”財政懸崖” 的3種不同方式的猜測. 除此之外,你還可以輸入更多的參數來計算更為復雜的情況. 蕭茗.
蕭茗: 謝謝雪莉. “財政懸崖”對每個家庭的影響, 以及我們應該做什麽準備來最大限度的減少損失, 對於這些問題,我們再來聽一下美國企業研究會的經濟研究員Matt Jensen的看法.
詹森：如果美國跌落財政懸崖，當涉及到外國時，辨別哪個國家將受的打擊最嚴重是非常困難的。問題是，許多國家現在都面臨著各自的經濟問題。歐盟正面臨著一個非常大的問題 – 南歐國家債務危機。在最近幾年中，中國經濟已放緩。如果我們跌下財政懸崖，那麽所有這些已面臨各自問題的國家只會看到自己的問題被加上世界經濟的額外拖累。
蕭茗：現在大家的註意力全都集中在了美國如果摔下”財政懸崖”,將會出現什麽惡果上了, 以此作為避免危機的一個動力. 但是, 從另一方面看, 如果奧巴馬總統和共和黨能在避免這次危機上, 通過妥協最後形成一個協議, 這將對他們以後共同改革稅制和改革福利體系提供一個極為珍貴的基礎. 雖然我們不能斷定這個基礎到底有多牢固,但是,在現在這個政治環境下,任何這樣的基礎對華盛頓乃至美國都是極為重要的. 感謝您收看這一期的世事關心,我們下期節目再見.
In-Depth Analysis of the U.S. Fiscal Cliff
Simone Gao: On December 31, which is in about 20 days, the United States will officially be on the verge of the fiscal cliff. The fiscal cliff has been widely covered by nearly all U.S. media at great length lately. What on earth is it about? What kind of impact will it bring to the U.S. and the world economy? What is the probability of the United States going over the fiscal cliff? On what aspects will the fiscal cliff affect average Americans, and how should they deal with it? In this episode of Zooming In, we will explore these issues together. First, we will explain what the fiscal cliff is.
Narration: “Fiscal cliff" is a new term coined by the U.S. Federal Reserve Chairman Ben Bernanke last winter. It refers to the coming into force of a series of laws, including the Budget Control Act of 2011, prior to January 1, 2013, unless President Obama and the Republican-controlled Congress are able to reach a budget reduction agreement to resolve the aggravating debt problem faced by the U.S. government. The tax rate will be significantly increased; the government spending will be automatically reduced. The U.S. economy could face a heavy blow, and it could even fall into a recession for a period of time.
Narration: What are the series of laws that may deal a heavy blow to the U.S. economy? First, there is the expiration of the temporary payroll tax cut implemented in 2011, which will result in a payroll tax increase of at least 2%. More significant than this is the expiration of specific tax cuts granted to some U.S. companies. Also, the Alternative Minimum Tax thresholds will be revised. The Bush administration’s tax cuts that have been extended to this day will also expire. The new taxes imposed by President Obama’s Patient Protection and Affordable Care Act will come into effect. At the same time, as the Budget Control Act of 2011 automatically takes effect, the funding for over 1,000 governmental projects, including the defense budget and Medicare, will be reduced significantly.
Narration: Of course, a positive aspect of these laws is that they will help the United States reduce its fiscal deficits. As a result, the U.S. government’s deficit to GDP ratio will be reduced by half. Although the United States’ liabilities will continue to rise in the next 10 years, the United States’ increase in debt will be reduced by $7.1 trillion, which is 70%. Therefore, the U.S. government debt as the proportion of its overall economic capacity will significantly decline, which is critical to the United States’ long-term economic security. However, obviously, in the short-term, it will have a very large impact on the U.S. economy, and it may even cause a recession for a period of time. Under the current circumstances, the U.S. economy is still in a slow recovery, the U.S. government and the American people are trying to avoid any significant impact on the economy. Therefore, fearing the impact of these laws’ entry into force, Ben Bernanke vividly termed it “fiscal cliff".
Simone Gao: As mentioned, the way to avoid the fiscal cliff is for both parties to reach an agreement on government budget reduction before December 31. Currently, President Obama and Speaker John Boehner of the Republican-controlled House of Representatives have put forward their own plans. Both plans have roughly similar components, including tax reform, social welfare reform and government spending cuts, to name several major parts. However, the proportions of the various parts show the fundamental differences between both parties. Let’s take a look.
Narration: Obama’s deficit reduction plan claims to be able to cut $4.4 trillion government deficit in 10 years. However, $2.4 trillion of the reduction is related to ending the wars in Iraq and Afghanistan. Analysts believe that this shouldn’t be seen as the government taking the initiative to cut spending. John Boehner’s plan can eventually reduce $2.4 trillion in deficit. Both programs are not much different in their overall amounts of deficit reduction. However, on the issues of whether to increase taxes for the rich, in which ways to increase the taxes paid by the wealthy, as well as the extent of reform to the social welfare system, we can see both parties’ differences.
Narration: For instance, in Obama’s proposal, increasing taxes on the top 2% will generate $1.6 trillion in tax revenue. However, his plan reduces only $350 billion in spending on Medicare and other programs.
Narration: In House Speaker John Boehner’s proposal, through tax reform, such as reducing tax breaks and closing loopholes, tax revenue will be increased by $800 billion, while $600 billion will be cut in spending on Medicare and other health insurance projects.
Narration: When both proposals first came out, they were firmly rejected by the other party. However, the Republican attitude has now softened. On Wednesday, House Speaker John Boehner said at a press conference, “I believe that it’s appropriate to put revenues on the table. Now, the revenues we’re putting on the table are going to come from — guess who? — the rich.”
Narration: At least, the tone of this speech reflects a compromise on the part of the Republicans. This is because not long ago, the Republican conservatives said that the government’s debt problem was not about insufficient income, but due to overspending. Their then-attitude might have been that they’d like to cut $10 in spending rather than generate $1 in income.
Narration: The softening of the Republicans’ attitude was largely due to pressure from U.S. public opinion. A recent poll shows that if the United States goes over the fiscal cliff, 53% of Americans will think that the Republican-controlled Congress is responsible for it, while only 27 % of the people surveyed believe that Obama is responsible.
Narration: President Obama’s stance has become a lot tougher than before. His goal is to first raise the tax rate of the richest 2% Americans, which is what the Republican Party has long been opposing. The Republicans believe that the increased tax rates would hurt economic development.
Narration: Although the Republican Party’s attitude has softened, they still insist that there has to be a commitment to consider major reforms of the social welfare system and to significantly reduce government spending in the agreement. This is also what the Democratic Party has always been opposed to.
Narration: It is worth noting that, according to the Bipartisan Policy Center’s analysis, neither party’s proposal can really solve the United States debt problem. According to their calculations, to maintain the U.S. debt to GDP ratio at 69% by 2022, the U.S. government needs to reduce $2.8 trillion in deficit in the next 10 years.
Simone Gao: So far, President Obama and the Congress still haven’t reached an agreement on how to reduce government deficit in the next 10 years. Also, the relationship between both parties is strained. During the week, besides a phone conversation between Barack Obama and John Boehner which yielded no results, the men did not sit down to negotiate. Little wonder Americans say that they behaved like spoiled kids. However, if they really cannot reach an agreement before the fiscal cliff hits, then how much of a heavy blow will the U.S. economy receive, will there be a recession, and how different are both parties’ proposed solutions on some of the key issues? Earlier I interviewed Mr. Matt Jensen, an economic research associate with the U.S. think tank – the American Enterprise Institute. Let’s take a look at the interview.
Simone Gao: Is all the hype about the “cliff” real? How big of a hit will the economy really take if we go over the fiscal cliff?
Matt Jensen: The fiscal cliff is composed of both a great deal of tax hikes and also spending cuts. When you take them all together, we are talking about almost 600 billion dollars in the first year of the drag on the US economy. The expectation is, according to studies by the Congressional Budget Office, they could push the US economy into a recession. That being said, a lot of US long-run budget problems could be resolved by going over the fiscal cliff. There is a balance between the short-term pain and the long-term gain.
Simone Gao: Everybody is afraid of this short-term crisis, and do you think that if we go over the cliff, are there any retroactive measures that can somehow make up for the short-term loss still?
Matt Jensen: That’s right, there could be some retroactive measures that are taken, if the Congress and the president are not able to resolve the fiscal cliff at the end of this year. That being said, those retroactive measures lose their value as time goes on. So you end up taking a lot of the pain, because you don’t resolve things this year, and you only fix a little bit later on with the retroactive measures. It might be worthwhile if we don’t resolve it, just take all the savings that we make from going over the fiscal cliff and don’t do anything retroactively and help to solve the long-run budget problem.
Simone Gao: Now you just mentioned that we have this short-term problem and we have this long-term debt problem. If we let the US go over the fiscal cliff, in the short-term the economy will take a really big hit, and in the short-term we are really trying to push the economy go forward. Would that become a bigger challenge, if at the same time we also want to solve the longer-term problem and reduce the debt?
Matt Jensen: Ideally we would resolve the problems this year. We would resolve the fiscal cliff this year, and try to take care of the long-term problems in a measured way with time to deliver it and time for Congress and the president and the different interests across the country to put their heads together to come up with a reasonable solution. But the long-term problems are serious. And they will certainly require some sort of action if not now, in the next year or two.
Simone Gao: Speaker Boehner acknowledged that the wealthy will be taxed more one way or another. Under that overall philosophy, how different is Republican’s closing loopholes and reducing deductions from Obama’s raising tax on the top 2% if they both have the same goal of making the wealthy pay more?
Matt Jensen: Speaker Boehner’s proposal is an attempt to make the economy more efficient. So considering an economy where you only have two products, apples and oranges, if you tax oranges at 20% and you tax apples at 30%, then what you do is that you end up incentivizing people to make and buy oranges and people don’t eat as many apples as they want to. What Speaker Boehner wants to do is to make the apples and oranges equal, because people like apples and oranges about the same. They don’t want taxes to influence their decision. If instead of eliminating these loopholes and deductions, they create these distortions. Instead of doing that, you raise tax rates, you actually make the distortions worse. So if you raise tax rates, you make it, so that people will act even more influenced by taxes when they are deciding whether to create apples or oranges.
Simone Gao: If the US falls off the “fiscal cliff”, what does it mean to US economy and to each American family? Perhaps, no one can give an absolutely correct answer because this is not just a numbers problem. More importantly, it involves confidence. However, for a specific family, there are ways to calculate the income change. Let’s ask Sherry to give us an introduction.
Sherry: OK. There is a website called creditcards.com. There is a fiscal cliff calculator on the site. Bloomberg suggested that this calculator was the best, and was very easy to use.
I tried it and it was very easy to use.
For example, you enter your income, let’s say $50,000, then, you input how you file your tax return, that is, individual or joint filing or as head of household. With that, it produces the result for you. If Washington cannot reach an agreement by December 31, the US will fall off the fiscal cliff. As the head of household with an annual income of $50,000, you will pay $1635 more tax in 2013 than in 2012.
Tax Foundation, a Washington think tank, designed a more complex tool which can tell you how your tax rate changes under three different situations. The three situations are for three different guesses on Washington’s “fiscal cliff.” In addition, you can input more parameters to calculate more complex situations. Back to you, Xiaoming.
Simone Gao: Thank you, Xueli. “Fiscal cliff affects every family. What preparations should we make in order to efficiently reduce losses? For this question, let’s listen to Matt Jensen who is an economical analyst at American Enterprise Research Association.
Simone Gao: How should the average family prepare for the fiscal cliff or policy change around this time?
Matt Jensen: It is very uncertain about what the average family should do at this point in time, because there is a great deal of counteracting measures. For example, they are likely receiving more dividends this year, because the dividend tax rate is going to go up next year. So, they might want to divest, and they may want to get rid of stocks that they expect to pay a lot of dividends in the future, after they receive that one-time dividend. On other measures, they just have no ways to plan, because a reform is likely, and we don’t know what the reform is going to be. Trying to guess what the Congress is going to do, is difficult for people like me, who are sitting in Washington. Trying to guess what the Congress is going to do is practically impossible for someone at home, sitting in front of their personal finance spreadsheet figuring out what to do. There are competing measures that the households need to consider, when trying to assess the pain from the fiscal cliff. While it is true that if we go over the fiscal cliff, it would be very damaging to household finances, but so will the long run up to debt that is expected if we don’t go over the fiscal cliff. The average household today, middle-income household, is paying almost 4,000 dollars a year higher taxes, just because of the interests on the US’s debt. That would more than double if we don’t go over the fiscal cliff, and debt continues to rise over the next 10 years. There is very significant pain when it comes to middle-class households, just because debts are going up and we are going to pay the interests on the debt, and the economy slows down. They need to consider all of these factors, both the higher taxes and the higher debt, when considering whether the fiscal cliff is good or bad for them.
Simone Gao: If president Obama and Speaker Boehner struck a deal before the fiscal cliff, what do you think it will most likely entail?
Matt Jensen: The House Republicans are in a very tight spot in the fiscal cliff negotiations. The president was just re-elected, and he is claiming a mandate to raise taxes on the rich. This is something that the House Republicans don’t want, at least they don’t want to see tax rates to go up. But they have very little bargaining power. My expectation is that the House Republicans will accept maybe a one or two percent tax rate increase on upper-income Americans. As of the negotiation with the president, who wants to see over 4% tax increase. So, expect to see some sort of compromise on the tax rates. In exchange for that, the president would likely offer concessions on entitlement spending. So, we are likely to see some reductions to social security, Medicare and Medicaid, in order for the president to get his deal on the higher tax rates.
Simone Gao: So you think both sides will eventually compromise?
Matt Jensen: That’s right. The Republicans have very little bargaining power. If we go over the fiscal cliff right now, the polls show that the Americans will likely to blame the House Republicans. They face re-election in three years, as they do every two years. And the president doesn’t have to face re-elections again in his life. The chances are that the Republicans don’t want to face the anger of the voters, if we end up going over the fiscal cliff.
Simone Gao: Can you make a prediction? Do you think we will go over the cliff?
Matt Jensen: The likelihood at this point of going over the cliff, I’d say is around 20 to 30%. It’s not over 50%, it’s not what I think is likely to happen, but it is a such high percent that it is scary, as the chances that the US will be in a recession next year are higher than anyone would like them to be. And, if that happens, the entire world economy will be going to suffer. Europe is in a tight spot right now. That would be very damaging for Europe, as it would be for many countries in Asia.
Simone Gao: In terms of the impact on the world economy, what do you think are the factors that matter the most? Do you think the confidence is a big factor here? If you just lose confidence in the US economy, then the financial market will take a downturn. Is that what’s going to happen?
Matt Jensen: One of the big problems for the rest of the world, if the US goes over the fiscal cliff, is the US spending on goods and products that are made outside of the US. Right now we import a great deal of products from Europe and also from countries like China in East Asia. If we go over the fiscal cliff, households will have less money, the government will be spending less money and will be importing less goods. That will be damaging. The lack of confidence in the US economy will also, I think, spook the financial markets on a global scale.
Simone Gao: Do you think the fiscal cliff will hit countries like China more or Europe more? Because the country that imports the second most products from China is the US. If the US really goes over the cliff, do you think that China will really take a big hit?
Matt Jensen: It is very difficult to tell who will be hurt the most, by going over the fiscal cliff, when it comes to foreign countries. The problem is that many countries are facing their own economic problems right now. The European Union is facing a very large problem with the southern European countries’ debt crises. And China has had a slower economy in recent years than it would like. If we go over the fiscal cliff, then all of these countries that have their own problems will be just going to see their problems compounded by this extra drag on the world economy.
Simone Gao (closing remark): Now, everyone is paying attention to what will happen if the US falls off the “fiscal cliff,” which could be a motivation to avoid crisis. But, if President Obama and the Republican Party can compromise and make a deal to avoid this crisis, it will build a good foundation for them to work on future tax and welfare system reforms. Although we cannot say for sure how solid the foundation is, any such foundation will be very important for Washington and America. Thank you for listening to World Events of Concern. See you next time.