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Fun With the Fiscal Cliff

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Hoofy & Boo tackle the nation's pending crisis/opportunity.

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MINYANVILLE ORIGINAL Hi there, ladies and gentlemen, and welcome to the opening of the Minyanville Debate Series with Hoofy & Boo. I'm your moderator, Jonah Loeb, star of about half my family's home movies and Twitter stalker of Molly Ringwald. Hi, Molly! Today we'll be discussing the fiscal cliff, the looming financial perfect storm of expiring tax cuts, new spending cuts, and a miserable economy.

While some analysts are already stocking their panic rooms with saltines, Campbell's Chunky Soup, and gin, others are trying to see the bright side of the crisis.

Jonah: Joining me on the optimistic side of the debate is our resident bull, Hoofy.

Hoofy: Hey there.

J: And for the, well, less optimistic side, our resident bear, Boo.

Boo: Hi!

J: Now, before we get started, I've got to ask: Are you both house-trained?

H: I have good days and bad days.

B: Yeah, we're working on it, especially when I'm not in the woods.

J: Fair enough. So the first question goes to Boo: There's been a lot of dire talk about the fiscal cliff. Can you explain what's got everyone so scared?

B: Absolutely. One thing that doesn't bode well for the stock market is that the two issues-the expiration of the tax cuts and massive spending cuts-make each other worse. The federal government pours a huge amount of money into the economy and if that lets up, there will be less money in the pockets of Americans…which is also what the tax cuts will do. That lack of spending could then feed on itself and make the economy even more stagnant.

J: Hoofy, a retort?

H: There are a lot of reasons to be optimistic-yes, optimistic-about the fiscal cliff, and Boo has once again exaggerated the potential pitfalls. First, the cliff can be easily avoided by an extension of the tax cuts. If Americans have money to spend, the economy won't tank the way the naysayers warn that it will. Besides, the potential budget cuts don't include vital things like veterans' benefits or Social Security, so Americans who rely on those won't be left out in the cold.

B: You haven't addressed the huge portion of the GDP that comes from the federal government! It's hard to be happy-go-lucky and sing "Yankee Doodle" when the national fife-and-drum budget is at zero.

H: Wait, what?

J: Yeah, I don't follow either. Boo, if taxes are down and spending is down, what's the problem?

B: Okay, it was a weird figure of speech, but hear me out. The government's involvement in the economy is a major factor in investor confidence. Even if the tax cuts get renewed, people aren't going to be confident enough in the economy to spend that money.

H: What do you mean, "if" the tax cuts get renewed? It's an almost surefire way to avoid the major consequences of this crisis!

B: Oh, Hoofy, it must be so nice living in Nirvana. Send me a postcard sometime and tell Kurt I said hi!

H: Oh my God, you are just like your mother.

J: Whoa! Okay, both of you have to calm down.

B: Aww, don't worry. Hoofy just sees red sometimes.

H: I've told you before that I find that figure of speech racist!

B: Bulls aren't a race!
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