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

[Bo's Pelini]

Originally Posted by Direckshun

Talk of raising the gas tax is on the table.

Another tax hike on the middle class.

[Bo's Pelini]

Originally Posted by mnchiefsguy

Any politician who votes for or advocates raising the tax on gasoline has no credibly when it comes to talking about supporting the middle class, or any class below it. A tax on gas is direct shot to the gut, as the middle and lower classes are the ones using their cars to work their two to three jobs to make ends meet. A tax on gas also raises the cost of food, and pretty much anything that is transported via truck in this country.

If Obama truly cared about the middle class as he claims, this would not be on the table. The fact that it is not a non-starter with the Republicans shows that they don't give a crap about the middle class either.

This.

[mnchiefsguy]

Originally Posted by HonestChieffan

Gas tax on top of a carbon tax seems great. Hope it applies to diesel so we can get transportation of goods and food up a bit higher.

Consumption taxes are not all bad.

A quadruple tax for consumers basically. Consumers pay the carbon tax and gas tax at the pump, and then they pay it again at the grocery store, etc. when businesses pass along their carbon tax and fuel tax expenses to the customers in the form of higher prices.

[HonestChieffan]

Rich folks dont have enough money to pay the bills so its just a little extra for everybody. But dont forget we put it to those robber barrons more.

[Direckshun]

Originally Posted by mnchiefsguy

Any politician who votes for or advocates raising the tax on gasoline has no credibly when it comes to talking about supporting the middle class, or any class below it. A tax on gas is direct shot to the gut, as the middle and lower classes are the ones using their cars to work their two to three jobs to make ends meet. A tax on gas also raises the cost of food, and pretty much anything that is transported via truck in this country.

If Obama truly cared about the middle class as he claims, this would not be on the table. The fact that it is not a non-starter with the Republicans shows that they don't give a crap about the middle class either.

Everybody's got to chip in, do they not?

You try to find a way to cut into a trillion dollar deficit that doesn't touch the middle class in any way.

[Direckshun]

Yeesh:

Number of the Day: $1,423.00. That’s the net increase in federal tax burden coming for a married couple making between $20,000 and $30,000 a year if the austerity-crisis negotiations fail to produce a deal, according to a story by John D. McKinnon, Kristina Peterson, and Josh Mitchell in The Wall Street Journal. Roughly 90 percent of American households, according to the Tax Policy Center, will face higher tax bills in 2013 under such a scenario. Middle-income families, or those making between $40,000 and $65,000 a year, may pay an additional $2,000 in taxes. For more on the austerity crisis, see Wonkbook’s special section below.

[Direckshun]

Clive Crook offers some mildly interesting thoughts:

What would this offer of compromise look like? The main sticking point is tax rates. Democrats want to reverse the Bush administration’s tax cuts for couples making more than $250,000. Republicans say they are willing to discuss revenue increases, but refuse to countenance higher rates even for the rich.

The two sides should agree at once to restore the pre-Bush tax rates for couples making more than $1 million a year -- pending a comprehensive tax reform that raises revenue mainly by capping deductions. Under this formula, each side gains something and loses something.

Democrats gain a more progressive tax code, but give ground on higher rates for couples making between $250,000 and $1 million. Republicans limit the scope of higher marginal rates and get the commitment to the base-broadening approach they say they favor, but concede higher rates right now for the very rich.

On public spending, neither side wants sequestration. The immediate fix is simply to lift the threat of it. The forward- looking commitment should abolish the recurring calamity of the debt-ceiling procedure -- and, ideally, set an adjustable cap on federal spending as a share of gross domestic product. What that number should be, how to adjust it according to demographic or other circumstances, and what to do if it’s breached would have to be argued -- strenuously, no doubt -- next year.

The issue couldn’t, and shouldn’t, be settled once and for all. Mere convergence on the principle would be a notable, confidence-boosting achievement. In effect, it would be a promise to limit the scope of the fiscal wars -- a commitment to moderation.

As before, each side would be getting and conceding something important. Both would be renouncing the ambition to carry through a fiscal revolution -- either to shrink or enlarge the role of government, as the case may be -- in return for the same promise from the other side. Since neither party can expect to seize, much less retain, total control of Washington, that’s a worthwhile exchange of concessions. And never fear, in the composition of federal spending, Democrats and Republicans would still have plenty to argue about.

Between now and Dec. 31, the challenge isn’t just to avoid the fiscal slope. It’s to do so in a way that provides clarity and restores confidence. Another postponement isn’t good enough. There must be an exchange of concessions. The bigger, the better.

[mnchiefsguy]

Originally Posted by Direckshun

Everybody's got to chip in, do they not?

You try to find a way to cut into a trillion dollar deficit that doesn't touch the middle class in any way.

I did not make the promise, the politicians did.

The middle class needs a chip in, sure, but they do not need a tax that rapes them six ways to Sunday the way a gasoline tax would.

Here is a way to cut a trillion dollar deficit...don't spend so much damn money.

Our government is addicted to spending, and no amount of taxation is going to cure the problem until the spending is brought under control.

Spending seems to be the only thing the Republicans and the Democrats can agree on.

[Direckshun]

Originally Posted by mnchiefsguy

I did not make the promise, the politicians did.

The middle class needs a chip in, sure, but they do not need a tax that rapes them six ways to Sunday the way a gasoline tax would.

Here is a way to cut a trillion dollar deficit...don't spend so much damn money.

Our government is addicted to spending, and no amount of taxation is going to cure the problem until the spending is brought under control.

Spending seems to be the only thing the Republicans and the Democrats can agree on.

That all sounds fine and good and everything, except the part where you claimed that "politicians" have made some promise that I must be forgetting, or the part where you failed to offer any alternate ideas that you've had or read that would be a fair, new burden on the middle class to contribute new revenues to the equation, or the part where you claimed you can cut $1 trillion on spending alone that you haven't specified.

But other than that, it all sounds fine and good.

[mnchiefsguy]

Both Obama and Romney made repeated pledges during the campaign to not raise taxes on the middle class. Raising the gas tax would violate said pledges.

The government is spending too much, period. When spending reaches the point to where you can tax the richest of the rich at a 100% rate and only fund the government for a week, you have a spending problem.

Here is a suggested spending cut.....cut off the Palenstians and bank the billion dollars we give them, and cut all foreign aid by 1/2. Reduce unemployment back to 26 weeks. Privatize the Postal Service. That is just off of the top of my head at 3 am.

I believe that Americans would be willing to temporarily pay more in taxes to fix the problem, if they had enough faith and confidence in Congress and the President to not go and spend the additional revenue like a bunch of drunken sailors.

[gonefishin53]

If Clinton era spending authority and tax rates produced a balanced budget, the simple solution would be to restore Clinton era spending authority and tax rates to produce a balanced budget.

[patteeu]

Originally Posted by gonefishin53

If Clinton era spending authority and tax rates produced a balanced budget, the simple solution would be to restore Clinton era spending authority and tax rates to produce a balanced budget.

Somehow you'd also have to restore Clinton era growth (including the component from the dot.com bubble) too and that's not an easy task at this point in the Obama economy.

[gonefishin53]

Restore the regulatory bureaucracy to what was in place at the start of Clinton's second term. Restore banking laws to what was in place at the start of Clinton's second term. Recreate the climate for economic growth that existed when progress was made.

It's the job of a free press to be on guard against fraud and corruption in a free economy. If the old press ignores this responsibility, we need to find new voices who will.

[Direckshun]

Originally Posted by mnchiefsguy

Here is a suggested spending cut.....cut off the Palenstians and bank the billion dollars we give them, and cut all foreign aid by 1/2. Reduce unemployment back to 26 weeks. Privatize the Postal Service. That is just off of the top of my head at 3 am.

While I understand this post was at 3am, this is why Romney got flack for Big Bird. Like his proposed cut to PBS, these cuts wouldn't amount to much.

For instance, you'd be fine cutting off the 500million (not billion) or so we give the Palestinians, but the 3 billion we give Israel? Off limits, right?

[mnchiefsguy]

Originally Posted by Direckshun

While I understand this post was at 3am, this is why Romney got flack for Big Bird. Like his proposed cut to PBS, these cuts wouldn't amount to much.

For instance, you'd be fine cutting off the 500million (not billion) or so we give the Palestinians, but the 3 billion we give Israel? Off limits, right?

800 million cut to the Palestinians, Israel's foreign aid would be cut by 50%, so that would be 1.5 billion.

There is no magic cut that is going to take care of the spending problem. It is going to take hundreds, maybe even thousands, of small spending cuts. You have to start somewhere. If the government cut just a little from everywhere, significant progress could be made.