The Fiscal Cliff: Focus on the “Hippo Not The Bird”

My recent post on Facebook has received a lot of attention from friends and colleagues so I am going to use the power of WordPress to push this out.  With kind thanks from the folks at JP Morgan Chase, here is the summary of the Fiscal Cliff, provided in zoological terms for your consideration.

2102 Zoological Fiscal Cliff

“The Congressional Joint Committee on Taxation and the Brookings Tax Policy Center analyzed the proposal, under the assumption that the Bush tax cuts sunset for the top two brackets. If that’s the case, the incremental revenue raised by the Fair-Share Tax Act is around $8 billion per year. This is real money and may be sound public policy, but in the context of a $1 trillion budget deficit expected for FY2013, it’s a rounding error.

To convey this zoologically, we show two animals whose volume is proportionally the same (125 to 1): a hippopotamus, and its symbiotic companion, the yellow-billed oxpecker. I would like to think that elected officials and political commentators would avoid grandstanding and not mislead anyone on the fiscal impact of their proposals, but right now, there are some people who need help distinguishing between birds and hippos.”

So, in short …. our spending problem is the hippo, not the bird. Feel free to hash tag #HippoNotTheBird on Twitter. For more information and to receive the weekly JP Morgan Chase “Eye on the Market Report” please visit the firm research page.
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2 Comments

Filed under Business Analytics, Enterprise Performance Management, Financial Management, Operations, Strategy, Technology

2 responses to “The Fiscal Cliff: Focus on the “Hippo Not The Bird”

  1. Zesty

    Let’s start with what’s the current reality. For FY2012, the U.S. Federal govt. estimates it will have brought in ~$2.6 Trillion. Of that, we will spend 84% “entitlements”, 51% spent on Defense/Non-Defense “discretionary”, and 8% spent on Interest payments (keeping in mind that we are spending ~143% of what we bring in). This is the background. If we are talking about the fair share act as originally proposed then we actually shouldn’t be(maybe that’s an old slide deck you posted). I.e., it should be updated to reflect imposing such a rate at incomes over $250k as opposed to $1MM as suggested by the Fair-Share Tax. So, we’re talking more revenue. At the end of the day, as illustrated above, we’re going to have to reform entitlements, cut discretionary spending, and raise taxes. But I definitely agree that Entitlements are the pink Elephant in the room that most people want to ignore……….this saga will continue in Washington.

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    • Thanks for the feedback. No matter your political economic position, this is a big problem that – like most things in Washington – will in all likelihood get kicked down the road at least another year.

      Like

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