The Fiscal Cliff Approacheth

[Direckshun]

In an effort to make this thread sticky-worthy, I am going to update this OP to keep casual glancers informed.

This post is the official one-stop shopping of the key points/developments of the fiscal cliff negotiations.

Far as I understand, the fiscal cliff:

1. Gets rid of the Bush tax cuts for the wealthy.
2. Gets rid of the Bush tax cuts for everybody else.
3. Slashes defense spending by something like $500 billion.
4. Slashes domestic programs like the NIH, Head Start, and medicine/drug care for the poor by $500 billion.

The new idea is for Democrats to allow the cliff to hit, then immediately introduce a bill that would bring 2, 4, and some of 3 back. But not 1.

Here is a chart detailing exactly what the fiscal cliff is going to do, financially:

Spoiler!

Originally Posted by Direckshun

New CBO projection: if the fiscal cliff hits, we are in another recession, and lose two million jobs.

http://www.reuters.com/article/2012/...87L0JV20120822

The poor would be hurt by the fiscal cliff:

Originally Posted by Direckshun

Overall, if the tax breaks from the 2009 stimulus are allowed to expire—the EITC and Child Tax Credit expansions, along with American Opportunity Credit for college tuition—the poorest 20 percent of Americans would see their taxes go up by $209 on average, reducing their after-tax income by 1.9 percent, according to the Tax Policy Center.

As would the middle class:

Originally Posted by Direckshun

According to estimates by the Tax Policy Center, more than half of all married couples will owe an additional tax of around $4,000 unless Congress acts. And more than a third of families with children will fall subject to the AMT, with parents of three or more children facing an extra tax of $4,700.

Among married couples with at least two children and adjusted gross income between $75,000 and $100,000, the center estimates that 84 percent will face a significantly higher tax bill this year because of the AMT.

There seems to be some consensus between the parties that substantial revenues want to be raised. Boehner and the GOP hopes that's through limiting tax deductions rather than tax raises.

Obama's opening offer, essentially:

• Allow the Bush tax cuts on high earners to expire. $849 billion
• Limit itemized deductions to 28 percent, close some loopholes and deductions on high earners, eliminate tax breaks for oil and gas companies, eliminate the carried interest loophole, plus a few other items. $584 billion
• Create a special "Buffett Rule" tax rate for millionaires. $47 billion
• Restore the estate tax to 2009 levels. $143 billion
• Limit corporate income shifting to low-tax countries. $148 billion
• Other miscellaneous tax increases and reductions. About -$200 billion
• Total: $1.6 trillion

[Direckshun]

Originally Posted by jiveturkey

Is the Obama proposal that you listed a 10 year projection?

I believe so.

[Donger]

Originally Posted by jiveturkey

Is the Obama proposal that you listed a 10 year projection?

Of course it is. Meanwhile, he can over-spend by that in one year easily.

[jiveturkey]

Originally Posted by Donger

Of course it is. Meanwhile, he can over-spend by that in one year easily.

I figured it was but didn't want to jump the gun.

That reduces our annual deficit by $160 billion. That only leaves approximately $840 billion in annual cuts in order to bridge the gap.

[patteeu]

Originally Posted by jiveturkey

Is the Obama proposal that you listed a 10 year projection?

I don't think he's planning on letting us survive that long.

[Direckshun]

Originally Posted by jiveturkey

I figured it was but didn't want to jump the gun.

That reduces our annual deficit by $160 billion. That only leaves approximately $840 billion in annual cuts in order to bridge the gap.

On current spending trends, the deficit is actually shrinking on its own, so that's not exactly accurate.

In addition to that, it's the largest deficit reduction plan offered so far. The GOP will likely counter with one much, much smaller.

[Donger]

Is it hidden in there somewhere, or is Obama not addressing entitlement spending?

[jiveturkey]

Originally Posted by Direckshun

On current spending trends, the deficit is actually shrinking on its own, so that's not exactly accurate.

In addition to that, it's the largest deficit reduction plan offered so far. The GOP will likely counter with one much, much smaller.

I want to see what cuts he's willing to offer. Most people seemed to be in agreement that a balanced approach makes the most sense.

[Direckshun]

Originally Posted by Donger

Is it hidden in there somewhere, or is Obama not addressing entitlement spending?

Originally Posted by jiveturkey

I want to see what cuts he's willing to offer. Most people seemed to be in agreement that a balanced approach makes the most sense.

No leaks of what he's offered to cut, if he's offered to cut anything.

The White House is reportedly looking for a 1:1 ratio in cuts-to-revenue. So this, I suppose, is exactly half of the deal.

[Direckshun]

[Direckshun]

Reportedly the President will accept top marginal rates being hiked up just shy of the Clinton rates so long as a heap of deduction limits are included.

Number of the Day: “37 or 38 percent.” That’s the top marginal income tax rate President Obama would accept if Republicans offered additional increases in tax revenues, according to a story by Lori Montgomery and Zachary A. Goldfarb in The Washington Post. The President had previously suggested that he wanted the rate to return to 39.6 percent, where it was during the Clinton administration. Possible means to increase tax revenues without hiking rates beyond 37-38 percent include eliminating or shrinking tax deduction categories, capping the total amount of deductions, or replacing deductions with credits.

[Direckshun]

Peter Suderman
@petersuderman

Obama is not making a return to Clinton-era tax rates for top earners an absolute condition of a deal.

[King_Chief_Fan]

Originally Posted by vailpass

Bring it. We all need to get through this thing together; no one segment should have to bear a larger percentage of the responsibility than any other.

pulled out of all markets and sitting on cash to wait the thing out.

We ain't seen anything yet\

can't wait for the recession to hit and drive up the unemployment numbers and see retirement and 401k programs bottom out.

yup...let er rip

[King_Chief_Fan]

Originally Posted by Direckshun

No leaks of what he's offered to cut, if he's offered to cut anything.

The White House is reportedly looking for a 1:1 ratio in cuts-to-revenue. So this, I suppose, is exactly half of the deal.

a few million government workers being terminated will help the cause

[Direckshun]

Originally Posted by King_Chief_Fan

a few million government workers being terminated will help the cause

The federal government has ~2.65 million employees.

How many "few million" are you looking to reduce it by?

[patteeu]

Originally Posted by Direckshun

Reportedly the President will accept top marginal rates being hiked up just shy of the Clinton rates so long as a heap of deduction limits are included.

Can we agree now that the President wants the top rate increased to satisfy a cosmetic goal rather than any kind of fiscal or economic goal?