IMF’s Lagarde: US Must Address ‘Fiscal Cliff’ Now to Avoid Disaster Read more: IMF’s Lagarde: US Has To Address ‘Fiscal Cliff’ To Avoid Any Disaster

By Forrest Jones

The U.S. economy is growing, albeit tepidly, and can continue to improve provided lawmakers address the fast-approaching “fiscal cliff” sooner rather than later, says Christine Lagarde, managing director at the International Monetary Fund, a multilateral lending institution.

The fiscal cliff will hit at the last day of the year, when Bush-era tax cuts and other tax holidays expire right when automatic spending cuts designated under the 2011 debt ceiling agreement kick in.

The combination of tax hikes and spending cuts at the same time could siphon billions out of the economy next year alone and derail recovery.
Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

Congress can adjust the timing of the events.

"If those risks materialize, or if the threat of it grows, that could really, Number one, erode confidence and Number two, if they were to materialize, it could contract the U.S. economy that we see growing in 2012 at about 2 percent and 2.3 percent in 2013," Lagarde tells CNBC.

"But if these risks were to materialize, it would reduce that growth to almost nothing. The second downside risk is the risk coming from the outside. That is the eurozone. Deterioration of the situation in the eurozone area would be a risk to the U.S. recovery."

The sooner the government gets busy the better and that goes beyond temporary measures taken by the government.

"It would be far better, far better that it is addressed early on and before we get close to the risk. We think that the debt ceiling risk is likely to materialize very early in 2013, and I'm sure the Treasury Department can use certain tools and mechanism to push the deficit cliff a little bit into 2013," Lagarde says.

"If there was an agreement early on, it would be a serious confidence booster for the U.S. economy."

Some lawmakers are suggesting allowing the fiscal cliff to occur on January 1, 2013.

The logic, however, would be that after November's elections, a new government could quickly tackle the problem, as neither party wants the damage from the fiscal cliff to occur, and with the government flush in fresh tax revenues at the beginning of the year, a quick decision on adjusting tax hikes and spending cuts would cause only minimal damage, even if tax cuts, for example, were retroactive.

"My preference would not be to accept a lesser solution than you could get in February and March just to say that you got it done before the end of the year," say Senator Roy Blunt, a member of Republican leadership and congressional liaison to Republican presidential nominee Mitt Romney, according to Reuters.
Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did



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Read more: IMF’s Lagarde: US Must Address ‘Fiscal Cliff’ Now to Avoid Disaster

Choosing Change

Choosing Change
Tue, 05/22/2012 - 11:15 am PST by Jeff Jawer

Here in the U.S. we’re heading toward another election when the similarities between the presidential candidates on core issues are far greater than their differences. We’ve grown accustomed to the illusion of choice as supermarket aisles are filled with a hundred kinds of soda pop that are all basically carbonated water, sugar and flavoring. Consumers are flooded with advertising touting the benefits of various brands, as if buying Coke or Pepsi is a decision that really matters. The fault, though, does not lie in the stars or with the companies that produce and promote these products. The responsibility for making change and hard choices is ours alone.

Change is necessary if we are going to avoid falling into economic and cultural decline. It is also necessary for personal growth and, perhaps, our collective survival. It is unlikely to come from the upper echelons of public or private institutions, where leaders won't want to risk their comfortable positions by shaking the status quo. In these days of innovative Uranus in independent Aries, change must come from individuals like you and me.

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Gov. Jerry Brown warns more budget cuts are coming

By Chris Megerian and Anthony York, Los Angeles Times
May 11, 2012

SACRAMENTO — Gov. Jerry Brown warned Californians on Thursday to brace for another round of difficult budget cuts as he hand-delivered boxes of petitions to election officials requesting that his proposed tax hike be placed on the November ballot.

Brown, who is expected to unveil his revised budget proposal Monday, said he needed far more than the $4.2 billion in spending reductions he asked for in January. And he continued to raise the specter of even deeper wounds to public schools, colleges and other state services if his bid for tax hikes fails.

"With this tax measure, and with the cuts that I'll be proposing on Monday, California will put itself in a very, very strong position," said Brown, flanked by his wife and dog at the Sacramento County Registrar of Voters.

It's become a familiar refrain from the governor — telling Californians to trust that he is being frugal while asking them to open their wallets wider. Brown hopes the message sticks even as the mood in Sacramento turns grim.

Tax revenue has lagged by $3.5 billion and the state has shelled out $2.1 billion more than expected so far in the current budget, according to the state controller. Brown said Thursday that his new spending plan will fall between $85 billion and $90 billion, down from the $92.6 billion proposal he released in January.

A budget for the new fiscal year, which begins July 1, is due from the Legislature by June 15.

The linchpin of the governor's financial plan is his request that voters approve a quarter-cent increase in the state sales tax for four years and a seven-year hike on incomes of $250,000 or more that will range from 1 to 3 percentage points. He says the measure would raise $9 billion in the upcoming budget year.

Brown has said that he would be forced to cut $5.4 billion from the next budget — mostly from public schools and colleges — if his tax plan failed. That number is expected to increase in his revised proposal Monday.

The cautious optimism of January, when Democrats hoped that a windfall from Facebook's IPO and a rebounding economy could help them dodge social service cuts, has now given way to an acceptance in the Capitol that sagging revenue will require steeper reductions than expected.

Activists who have met with administration officials said they expect cuts in health and welfare programs in particular. Casey Young, a lobbyist for AARP, said Brown's health secretary, Diana Dooley, "appeared visibly shaken by the choices she was having to sort through" in a recent meeting.

It's not just the poor and needy who are likely to feel the ax. Brown is also expected to ask unions to help reduce state payroll costs. Yvonne Walker, president of Service Employees International Union Local 1000, the largest state worker union, said she had been conferring with administration officials on the issue.

She assured union members in an email that "furloughs are not on the table," as they have been in past years.

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What it means to be born on the 6th of the month

Your strengths
You are family-oriented and have a talent for settling disputes between people to the satisfaction of both sides. You somehow know the middle ground. Your lesson in life is to work with the whole subject of balance. You must come to truly understand the ancient and fundamental principle of opposites that seek harmony. Whether the realm is the emotions, caring for others, finances, work, or play, you must learn where you can be of service, exactly what you can do, and what are your limits.

You have a considerable amount of artistic talent. You have a deep appreciation of beauty and art. You are highly responsible and will do without in order to fulfill a debt.

Your focus is on relationships. You want to help others, and have a talent as a healer and could make a profession of the healing arts, either as a nutritionist, alternative health therapist (acupuncture, massage, for example) or doctor.

Your challenges
You need to know you are appreciated. You are given to flattery and vulnerable to praise. Criticism, on the other hand, leaves a very damaging impression on you. You take it deeply to heart. You will sacrifice your own comfort to support and help others. You are generous, kind, and understanding. You can be highly emotional and given to extremes in sympathy and sentimentality. You must learn to provide more than merely a shoulder to cry on. Study and the development of your healing skills brings you great rewards in life.