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

[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?

Well, if you want a big cut, then get rid of the monstrosity of Obamacare. Obamacare is just lighting money on fire and wasting it.

[Direckshun]

Originally Posted by mnchiefsguy

Well, if you want a big cut, then get rid of the monstrosity of Obamacare. Obamacare is just lighting money on fire and wasting it.

Now you're talking.

I mean, it's still a horrible idea, but at least now you're bringing up numbers that will add up.

[mnchiefsguy]

Originally Posted by Direckshun

Now you're talking.

I mean, it's still a horrible idea, but at least now you're bringing up numbers that will add up.

According to more than 50% of Americans, it is a very good idea.

[Direckshun]

Senate Republican Bob Corker puts his balls on the table:

I have shared with House and Senate leaders as well as the White House a 242-page bill that, along with other agreed-upon cuts that are to be enacted, would produce $4.5 trillion in fiscal reforms and replace sequestration. While I know this bill can be improved, it shows clearly that we can do what is necessary, today, with relatively simple legislation. The proposal includes pro-growth federal tax reform, which generates more static revenue — mostly from very high-income Americans — by capping federal deductions at $50,000 without raising tax rates. It mandates common-sense reforms to the federal workforce, which will help bring its compensation in line with private-sector benefits, and implements a chained consumer price index across the government, a more accurate indicator of inflation. It also includes comprehensive Medicare reform that keeps in place fee-for-service Medicare without capping growth, competing side by side with private options that seniors can choose instead if they wish. Coupled with gradual age increases within Medicare and Social Security; the introduction of means testing; increasing premiums ever so slightly for those making more than $50,000 a year in retirement; and ending a massive “bed tax” gimmick the states use in Medicaid to bilk the federal government of billions, this reform would put our country on firmer financial footing and begin to vanquish our long-term deficit.

Corker still supports Obama-Boehner negotiations, however.

[HonestChieffan]

And in return...Obama sends none other than Tim Geitner as the administration point man. Tim ****ing Geitner. This wont end well.

WASHINGTON (WSJ) — Timothy Geithner joined the Obama administration during a crisis. He’s hoping not to leave during one.

The White House has tapped the Treasury secretary as its lead negotiator in deficit-reduction talks with Congress, giving Mr. Geithner about a month to help cut a deal before $500 billion in tax increases and spending cuts begin in January—and before his long-planned departure from the administration.

It is a sharp change in role for the 51-year-old, who has been preoccupied largely with the U.S. financial crisis, banking policy and Europe’s debt crisis in the past four years.

The move is part of the White House’s effort to leave behind the near-catastrophic failure of 2011 talks over raising the debt ceiling. Those negotiations were led by a team, including Jacob Lew, then White House budget chief and now chief of staff, with whom Republicans frequently clashed because they felt Mr. Lew wouldn’t agree to major changes to entitlement programs like Medicaid.

At one point, an aide to Senate Minority Leader Mitch McConnell (R., Ky.) hung up on Mr. Lew. But people close to the White House effort said the blame lay on Republicans’ unwillingness to negotiate major changes to the tax code. They said Mr. Lew has been part of several successful efforts to reduce the deficit, stretching back to his time in the Clinton administration.

[mnchiefsguy]

Originally Posted by Direckshun

Senate Republican Bob Corker puts his balls on the table:



Corker still supports Obama-Boehner negotiations, however.

On its face, it seems like Corker's plan would work well. There are definitely things in it that both the R's and D's will not like, and I think that is a good thing.

I do not see either side going for it though. And that is a shame.

[mnchiefsguy]

Originally Posted by HonestChieffan

And in return...Obama sends none other than Tim Geitner as the administration point man. Tim ****ing Geitner. This wont end well.

WASHINGTON (WSJ) — Timothy Geithner joined the Obama administration during a crisis. He’s hoping not to leave during one.

The White House has tapped the Treasury secretary as its lead negotiator in deficit-reduction talks with Congress, giving Mr. Geithner about a month to help cut a deal before $500 billion in tax increases and spending cuts begin in January—and before his long-planned departure from the administration.

It is a sharp change in role for the 51-year-old, who has been preoccupied largely with the U.S. financial crisis, banking policy and Europe’s debt crisis in the past four years.

The move is part of the White House’s effort to leave behind the near-catastrophic failure of 2011 talks over raising the debt ceiling. Those negotiations were led by a team, including Jacob Lew, then White House budget chief and now chief of staff, with whom Republicans frequently clashed because they felt Mr. Lew wouldn’t agree to major changes to entitlement programs like Medicaid.

At one point, an aide to Senate Minority Leader Mitch McConnell (R., Ky.) hung up on Mr. Lew. But people close to the White House effort said the blame lay on Republicans’ unwillingness to negotiate major changes to the tax code. They said Mr. Lew has been part of several successful efforts to reduce the deficit, stretching back to his time in the Clinton administration.

Geitner does not care how high taxes are raised, since he never pays them anyway.

[Bo's Pelini]

Originally Posted by mnchiefsguy

According to more than 50% of Americans, it is a very good idea.

We've been agreeing a lot lately let's run against Dick & Brainiac

[Comrade Crapski]

Originally Posted by HonestChieffan

And in return...Obama sends none other than Tim Geitner as the administration point man. Tim ****ing Geitner. This wont end well.

What could possibly go wrong?

[Direckshun]

Not a ton of details emerging since Obama's opening salvo.

But all signs still point to progress.

http://www.washingtonpost.com/busine...y.html?hpid=z1

On ‘fiscal cliff,’ both sides lay groundwork for debate’s next phase
By Zachary A. Goldfarb and Lori Montgomery
Nov 27, 2012 02:12 AM EST

Private talks between President Obama and top congressional leaders in search of a deal to avoid the year-end “fiscal cliff” are accelerating, officials said Monday, even as the president began ramping up pressure on Republicans to extend tax cuts for the middle class.

Obama telephoned House Speaker John A. Boehner (R-Ohio) and Senate Majority Leader Harry M. Reid (D-Nev.) over the weekend, in a sign that high-level negotiations are advancing with only weeks to go before an automatic series of spending cuts and tax hikes starts to hit nearly every American.

Boehner, meanwhile, was laying plans Monday for top Republicans to meet with Erskine Bowles, a chief of staff in the Bill Clinton administration who also has close ties to Obama’s White House.

Ahead of the Wednesday meeting, GOP aides noted that Bowles offered a debt-reduction plan last fall in line with Republican principles. That plan called for $800 billion in fresh revenue through an overhaul of the tax code and significant spending cuts, including major changes to Medicare and other federal health programs.

“People in both parties agree we need a ‘balanced approach to deal’ with our deficit and debt and help our economy create jobs,” Boehner said. “We look forward to talking to Mr. Bowles and [others advocating a debt deal] about their ideas to avert the fiscal cliff without tax hikes that target small businesses and cost jobs.”

In recent days, other Republicans — such as Sens. Lindsey O. Graham (S.C.), Bob Corker (Tenn.) and Saxby Chambliss (Ga.) and Rep. Peter T. King (N.Y.) — have voiced support for a deal that includes additional tax revenue and dismissed an anti-tax pledge circulated by GOP activist Grover Norquist. Norquist has long been a potent force in GOP politics, admonishing Republicans who express any openness to increasing tax collections and organizing opposition to them.

Still, a wide gap remains between Obama and the Republicans on taxes and changes to federal retirement programs. Resolving those differences are key to avoiding the year-end tax hikes and spending cuts, which threaten to suck $500 billion out of the economy next year and snuff out the recovery.

Democrats remained Monday in a trust-but-verify posture toward Republican talk of softening opposition to increased taxes. “We need more specifics. We haven’t seen them yet,” Senate Finance Committee Chairman Max Baucus (D-Mont.) told reporters Monday, while still welcoming the rhetorical shift. “It’s not where they were before the election,” he said.

Talks began 10 days ago with a meeting between Obama and congressional leaders at the White House. That session ended with the four congressional leaders — Boehner, Reid, House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Mitch McConnell (R-Ky.) — standing side by side and expressing optimism about a potential deal. But continuing work by staff up to the Thanksgiving weekend and on Monday has not yet made enough progress for a second meeting between Obama and the congressional leaders to be scheduled.

A key dispute is how to raise taxes on the wealthy. Boehner has previously opened the door to about $800 billion in new tax revenue — achieved through an overhaul of the tax code that eliminates deductions that disproportionately benefit the rich. The speaker and other Republicans have opposed any proposal that increases tax rates.

Obama, however, favors $1.6 trillion in new tax revenue and insists that it be achieved by allowing tax rates on the wealthy to increase at the end of the year, as well as by eliminating deductions.

On Monday, White House press secretary Jay Carney made clear the president was maintaining that position. “Math tells us that you can’t get the kind of balanced approach that you need without having rates be part of the equation,” he said. “We *haven’t seen a proposal that achieves that, a realistic proposal that achieves that.”

Carney, however, also embraced the view that any plan to tame the national debt would require adjustments to the nation’s health programs for the elderly and the poor, Medicare and Medicaid.

Obama “believes and understands that in order to achieve a deal, a compromise, that everybody has to make some tough choices, and he remains committed to that principle,” Carney said.

On the other hand, he said the White House is less interested in tackling the rising cost of Social Security during the current talks, echoing Senate Democrats who have said the program should be reviewed separately next year. “Social Security is not currently a driver of the deficit. That’s an economic fact,” he said.

In addition to pursuing private talks, the White House began making a public push on Monday. Obama is strongly considering holding events in Washington or elsewhere later this week to argue for extending current tax rates for 98 percent of Americans and letting rates rise for the wealthy, according to administration officials.

White House officials met Monday with the leaders of two major business groups — the Business Roundtable and the U.S. Chamber of Commerce — part of Obama’s campaign to persuade business executives to get behind a deal that raises $1 trillion or more in tax revenue. Obama plans another meeting with executives Wednesday.

As part of its campaign over tax rates, the White House published a report Monday warning that the average family will pay $2,200 more in taxes next year if Congress does not freeze rates for the middle class.

The White House report says Americans could dramatically pull back on spending in the crucial holiday season if they expect sharp tax hikes next year that would cut deeply into take-home pay. A tepid shopping season would interrupt a string of positive data in recent weeks that suggest Americans are opening their pocketbooks after years of post-recession caution.

If the middle-class tax cuts and related provisions were to expire, the economy could lose $200 billion in 2013, according to the White House report, which was completed by the Council of Economic Advisers and National Economic Council.

Analysts at the nonpartisan Congressional Budget Office and the independent Tax Policy Center have arrived at similar conclusions.

Consumer spending represents the lion’s share of economy activity, and nervousness about higher taxes could take a bite out of the economy as the year comes to an end. One-fifth of annual retail sales take place between now and Jan. 1.

Consumer confidence took a dive in the summer of 2011, when the nation flirted with a default on its debt and Congress was paralyzed over questions of taxes and spending.

So far, such fears are not yet apparent among consumers this holiday season. This past weekend, consumers spent $59.1 billion on holiday shopping, 13 percent more compared with last year.

The White House report says that letting the middle-class tax cuts expire — and failing to patch the alternative minimum tax, which applies to many upper-middle-class households — could trim consumer spending by 1.7 percent in 2013. That, in turn, would slow economic growth by 1.4 percent.

[Direckshun]

http://www.washingtonpost.com/blogs/...0ab3_blog.html

Reasons to be encouraged about fiscal cliff’s endgame
By Greg Sargent
Posted at 01:07 PM ET, 11/27/2012

Now this is encouraging. I’m told that representatives of major unions and progressive groups met privately this morning with senior Obama administration officials at the White House — and were pleased with what they heard.

Things can always change at a moment’s notice. But attendees at this meeting came away convinced — for now — that the White House firmly believes it has the leverage in the fiscal cliff talks, and has no intention of budging on the demand for higher tax rates from the rich or on other core priorities.

Indeed, one person at the meeting — which included people from the AFLCIO, AFSCME, SEIU, MoveOn and others — came away convinced that the White House would ultimately prove willing to go over the fiscal cliff if necessary, rather than give ground on core demands, though this is not by any means a desired option and isn’t being discussed as a strategic possibility.

The attendee tells me the White House is cool to the idea of going over the cliff, but added: “Would they if it’s between that and compromising their core principles? I was left with the impression that they would.”

“They remain in the same place: They expect taxes to go up on the wealthy and to protect Medicare and Medicaid benefits,” the attendee added. “They feel confident that they don’t have to compromise.”

White House officials also signaled in the meeting that they are going to insist that Republicans agree to resolve the need to raise the debt ceiling as part of the fiscal talks — and won’t abide a separate fight over it, attendees said. Also key: Attendees got the impression the White House does not view this looming debt ceiling battle in the same terms as the 2011 fight, where Republicans had the leverage.

“They don’t seem to have the same fear now,” the attendee said. “They intend to get this wrapped up in these negotiations, and don’t intend to have a separate fight. Their position is this needs to be resolved all at once.”

“One of the key takeaways was that they want this resolved,” a second attendee said of the discussion of the debt ceiling. “They think that now is the time to do it."

Anything can happen in the days ahead. And it’s always possible that White House officials are projecting such a resolute attitude to these groups to mollify them; after all, they are pressuring the White House to stand firm on core priorities. But these groups are very attuned to any signs of a potential cave. So if they’re saying privately they are happy with what they’re hearing, that could be a good sign.

[Direckshun]

A couple things the Democrats are reportedly arguing for in the Grand Bargain:

1. An extension of jobless benefits.

2. An increase of the debt ceiling, so they don't have to risk a repeat of Summer 2011.

[Direckshun]

A raise of the debt ceiling is a big deal in these talks, say some insiders on TPM:

Implicitly responding to House Speaker John Boehner's warning to President Obama that raising the nation's debt ceiling will come with "a price," a top Senate Democrat said Tuesday that an increase in borrowing authority will have to be part of whatever package Congress and the White House settle on to avert automatic spending cuts and tax increases at the end of the year.

"I think honestly it's going to be closer to $4 trillion when it's all said and done, and I also think that the President isn't going to sign off on any agreement that doesn't include some certainty as to budgets, appropriations, dealing with our debt ceiling," said Senate Dem Whip Dick Durbin (D-IL) after a policy speech at the liberal Center for American Progress. "We're not going to find ourselves at some big party celebrating in February and then turn around in March and have another doomsday scenario with the debt ceiling. We've got to get this done as one big package."

[Direckshun]

The right-wing Daily Caller says that Democrats are starting to have some conversations about cuts to Medicare. Social security is not likely to be on the table.

On CNN’s “Starting Point” Monday night, CNN contributor James Carville said Democrats will have to concede some significant cuts to Medicare to avert the so-called fiscal cliff.

“They have to negotiate something on Medicare,” Carville said. “There’s no doubt about that. Remember, the person doesn’t get the Medicare payment. The hospital or doctor, the pharmaceutical, whoever it is, gets that. … It’s obvious that there are going to be some kind of entitlement cuts that come out of this.”

Carville also agreed with Illinois Democratic Sen. Dick Durbin’s assessment that Social Security isn’t a major factor driving the national debt.

“I want to go back to Sen. Durbin’s point,” Carville said. “If you want to do something Social Security, do something about Social Security. But leave Social Security in the debt aside for the moment, because it doesn’t drive debt. I think Sen. Durbin is right on that.”

Not all Democrats are on board with that, though.

[patteeu]

Originally Posted by Direckshun

A couple things the Democrats are reportedly arguing for in the Grand Bargain:

1. An extension of jobless benefits.

2. An increase of the debt ceiling, so they don't have to risk a repeat of Summer 2011.

This is an example of why Grover Norquist and many Republicans are so insistent that taxes not be raised. Increased revenue will inevitably be spent by Congress instead of being used to reduce the deficit, especially (but not exclusively) when democrats are in control.