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

[FishingRod]

Originally Posted by Direckshun

My prediction is that they will do something like that, FishingRod. Not based on anything I've read, I just believe these deals don't get done until the 11th hour, and the 11th hour is honestly late January/early February.

I do think we're looking at a genuine Obama ass-whooping here. Obama was in a far less advantageous position two years ago and still managed to score a 2-to-1 deal that extended the Bush tax cuts for a second stimulative package, a coup in every way but that it extended the top-end of the Bush tax cuts.

I expect this deal to be much, much larger and much, much better.

Not trying to be argumentative ( for a change) but better how and for whom. More Taxes less cuts? More Taxes More Cutes? Most people are all for raising the other guys taxes and cutting the other guys benefits but if the middle class ends up paying a good chunk more and the poor stop receiving the aid they have become accustomed to the towns people are going to grab their torches and pitchforks.

[FD]

Originally Posted by FD

Some depressing poll results from WaPo today. Even Republicans prefer hiking taxes on the rich to minor entitlement cuts.

I think these two things are related:

The GOP’s Medicare confusion
by Ezra Klein


The austerity crisis talks have hit a peculiar impasse. The problem isn’t, as most analysts expected, taxes, where Republicans seem increasingly resigned to new revenue. It’s Medicare. And the particular Medicare problem isn’t that Democrats are refusing the GOP’s proposed Medicare cuts. It’s that Republicans are refusing to name their Medicare cuts.

Politico quotes a “top Democratic official” who paints the picture simply: “Rob Nabors [the White House negotiator], has been saying: ‘This is what we want on revenues on the down payment. What’s your guys’ ask on the entitlement side?’ And they keep looking back at us and saying: ‘We want you to come up with that and pitch us.’ That’s not going to happen.”

That’s partly politics. If nothing else, Republicans are respectful of Medicare’s political potency. Recall that a core Republican message in both the 2010 and 2012 elections was that Democrats, through Obamacare, were cutting Medicare too much. Republicans, already concerned about their brand, don’t want to rebrand themselves as the party of Medicare cuts.

But it’s partly policy, too. The fact is that short of converting the program to a premium support system — a non-starter after they lost the 2012 election — Republicans simply don’t know what they want to do on Medicare.
Scour the various outlets for Democratic policy ideas and you’ll find plenty of proposed Medicare cuts. President Obama’s 2013 budget, for instance, includes hundreds of billions in Medicare cuts (see pages 33-37), and caps the program’s long-term growth at GDP+0.5 percent. More recently, the Center for American Progress released a 46-page proposal for cutting Medicare by almost $400 billion.

Republicans, meanwhile, have focused their energy on a long-term effort to convert Medicare to a premium-support model. Paul Ryan’s 2013 budget kept the Affordable Care Act’s Medicare cuts for the next 10 years and proposed to convert the program to a premium-support model in the future. Mitt Romney’s platform proposed reversing Obamacare’s Medicare cuts and offered a vague framework for converting the program to a premium-support model in the future.

If you dig deep into the Republican think tank world, you can find a few proposals that focus on the near-term. The most serious plan I found came tucking inside the American Enterprise Institute’s contribution to the Peterson Institute’s 2011 Fiscal Summit: In addition to moving toward premium support, they propose simplifying and enlarging the deductible, instituting a 20 percent co-insurance rate, introducing a “premium surcharge” for seniors who use supplemental insurance, and giving physicians more discretion in setting their prices. But there’s little unanimity around these proposals, and no leading Republican politician has endorsed them, perhaps because doing so would be tantamount to suicide.

That’s left Republicans in a peculiar negotiating position: They know they want “Medicare reform” — indeed, they frequently identify Medicare reform as the key to their support for a deal — but aside from premium support, they don’t quite know what they mean by it, and they’re afraid to find out.
The solution they’ve come up with, such as it is, is to insist that the Obama administration needs to be the one to propose Medicare cuts. “We accepted this meeting with the expectation that the White House team will bring a specific plan for real spending cuts — because spending cuts that Washington Democrats will accept is what is missing from the balanced approach that the president says he wants,” Boehner spokesman Michael Steel said in regard to the most recent round of talks.

Democrats find this flatly ridiculous: Given that the Obama administration would happily raise taxes without cutting Medicare but that Republicans will only raise taxes if we cut Medicare, it falls on the Republicans to name their price. But behind their negotiating posture is a troubling policy reality: They don’t know what that price is.

The likely deal here — which some smart Republicans are talking about — will be a Medicare “down payment” that gets us past the fiscal cliff and then a target for the Medicare savings that negotiators need to reach over the next six months. But there’s no guarantee that the state of the politics or the policy thinking on Medicare will be very different six months from now than it is today. Republican policy types need to start thinking about what they want to do to Medicare, and quick.

http://www.washingtonpost.com/blogs/...are-confusion/

[FD]

The TL;DR version of that is that, while Republicans want Medicare cuts as their side of a grand bargain, they aren't bringing any specific cuts to the negotiating table, instead saying thats Obama's job.

I think the solution is obvious. Put Paul Ryan in charge of the GOP's negotiating position on Medicare. He wont get full-fledged "premium support", but he has made it his political mission to cut Medicare. If he doesn't support the outcome its dead in the water anyways, so have him lead the way on it.

The final agreement will be a hard sell regardless if those poll numbers I posted are close to true. There is nobody who could do a better job designing cuts and then selling them than Ryan.

[Direckshun]

The plot thickens.

http://politicalwire.com/archives/20...iff_talks.html

Boehner Claims No Progress on Fiscal Cliff Talks
November 29, 2012

House Speaker John Boehner (R-OH) said there had been "no substantive progress" in fiscal cliff negotiations in the two weeks since congressional leaders met with President Obama, The Hill reports.

Said Boehner: "Despite claims that the president supports a balanced approach, the Democrats have yet to get serious about real spending cuts. Secondly, no substantive progress has been made in the talks between the White House and the House in the last two weeks."

[Taco John]

I don't know why anyone believes that they are going to come to any compromise when they didn't before after putting together a committee dedicated to coming to a compromise.

[Calcountry]

Originally Posted by Direckshun

The plot thickens.

http://politicalwire.com/archives/20...iff_talks.html

Boehner Claims No Progress on Fiscal Cliff Talks
November 29, 2012

House Speaker John Boehner (R-OH) said there had been "no substantive progress" in fiscal cliff negotiations in the two weeks since congressional leaders met with President Obama, The Hill reports.

Said Boehner: "Despite claims that the president supports a balanced approach, the Democrats have yet to get serious about real spending cuts. Secondly, no substantive progress has been made in the talks between the White House and the House in the last two weeks."

You really give a shit about this?

[Calcountry]

I can't give two rats ass about it. You are beeing played fool.

[mlyonsd]

Originally Posted by Taco John

I don't know why anyone believes that they are going to come to any compromise when they didn't before after putting together a committee dedicated to coming to a compromise.

... oh shit.

[Direckshun]

And Obama has publicly revealed what deal he's looking for. It's 1.6T in tax increases, almost certain to resemble exactly what's in the OP:

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

Now, the actual details of what adds up to 1.6T are not revealed, but it's almost certainly set up like this. And this was posited a couple weeks ago. So this isn't new news.

What is new news (but not if you've been following this thread) is that Obama is throwing in $50 billion in stimulus spending, raising the debt ceiling for another year and including a national mortgage restructuring plan.

To pay for this (and again, not new news if you've been following this thread) is that Obama has included $400 billion in entitlement cuts, primarily in Medicare. But those cuts would be agreed to by the end of 2013, and despite his specifics on revenue, he didn't specify much of anything on those cuts.

Republicans have been using some really heated rhetoric the past couple hours in response to it.

Understandable. They really don't like raising revenue, but they haven't offered a plan. They haven't even offered what they want to cut -- they've told Obama they want him to come up with that. With everything that's been discussed in this thread -- I must have posted 15 to 20 articles -- not a single thing has included a proposition made by Boehner and the Republicans.

The only Republican that's offered anything was Tom Cole, who was quickly smacked down by Boehner.

I'm now predicting with near certainty we're going over the cliff. We're taking this thing to the 11th hour in early February, and even then that might not do the trick. This has been the most unproductive Congress is modern history, I'm not really sure why I expected them to successfully negotiate anything.

[Direckshun]

The Wall Street Journal says it all:

Republicans haven't put any comparable offer on the table.

The Washington Post sums the whole problem up beautifully:

The problem isn’t, as most analysts expected, taxes, where Republicans seem increasingly resigned to new revenue. It’s Medicare. And the particular Medicare problem isn’t that Democrats are refusing the GOP’s proposed Medicare cuts. It’s that Republicans are refusing to name their Medicare cuts.

That’s partly politics. If nothing else, Republicans are respectful of Medicare’s political potency. Recall that a core Republican message in both the 2010 and 2012 elections was that Democrats, through Obamacare, were cutting Medicare too much. Republicans, already concerned about their brand, don’t want to rebrand themselves as the party of Medicare cuts.

But it’s partly policy, too. The fact is that short of converting the program to a premium support system — a non-starter after they lost the 2012 election — Republicans simply don’t know what they want to do on Medicare.

That’s left Republicans in a peculiar negotiating position: They know they want “Medicare reform” — indeed, they frequently identify Medicare reform as the key to their support for a deal — but aside from premium support, they don’t quite know what they mean by it, and they’re afraid to find out.

The solution they’ve come up with, such as it is, is to insist that the Obama administration needs to be the one to propose Medicare cuts. “We accepted this meeting with the expectation that the White House team will bring a specific plan for real spending cuts — because spending cuts that Washington Democrats will accept is what is missing from the balanced approach that the president says he wants,” Boehner spokesman Michael Steel said in regard to the most recent round of talks.

Democrats find this flatly ridiculous: Given that the Obama administration would happily raise taxes without cutting Medicare but that Republicans will only raise taxes if we cut Medicare, it falls on the Republicans to name their price. But behind their negotiating posture is a troubling policy reality: They don’t know what that price is.

The likely deal here — which some smart Republicans are talking about — will be a Medicare “down payment” that gets us past the fiscal cliff and then a target for the Medicare savings that negotiators need to reach over the next six months. But there’s no guarantee that the state of the politics or the policy thinking on Medicare will be very different six months from now than it is today. Republican policy types need to start thinking about what they want to do to Medicare, and quick.

Let's hope that changes soon.

[Direckshun]

The actual offer.

STAGE ONE

Taxes

• Immediate increase in both top marginal rates, as well as capital gains and dividends: +$960 Billion
• Additional taxes: +$600 Billion
• 2009-level estate tax
• AMT and business tax extenders: -$236 Billion
• Payroll tax extension or alternative policy: -$110B
• Bonus depreciation extension

Spending/Extras

• $50 billion stimulus package in FY13
• Mass refi mortgage proposal
• Deferral of sequester
• Savings from non-entitlement mandatory programs
• Extension of unemployment insurance: $30 billion
• Medicare SGR Patch: $25 Billion
• Increase in the debt limit to avoid requiring Congress to vote to increase

STAGE TWO

• Tax reform consistent with $1.6 trillion tax increase
• Entitlement policies from President’s FY13 budget that could total $400 billion in savings

[Comrade Crapski]

Originally Posted by Direckshun

The actual offer.

STAGE ONE

Taxes

• Immediate increase in both top marginal rates, as well as capital gains and dividends: +$960 Billion
• Additional taxes: +$600 Billion
• 2009-level estate tax
• AMT and business tax extenders: -$236 Billion
• Payroll tax extension or alternative policy: -$110B
• Bonus depreciation extension

Spending/Extras

• $50 billion stimulus package in FY13
• Mass refi mortgage proposal
• Deferral of sequester
• Savings from non-entitlement mandatory programs
• Extension of unemployment insurance: $30 billion
• Medicare SGR Patch: $25 Billion
• Increase in the debt limit to avoid requiring Congress to vote to increase

STAGE TWO

• Tax reform consistent with $1.6 trillion tax increase
• Entitlement policies from President’s FY13 budget that could total $400 billion in savings

Yeah, no.

You're not getting an EIC check this year, Drek.

[patteeu]

Originally Posted by Direckshun

And Obama has publicly revealed what deal he's looking for. It's 1.6T in tax increases, almost certain to resemble exactly what's in the OP:



Now, the actual details of what adds up to 1.6T are not revealed, but it's almost certainly set up like this. And this was posited a couple weeks ago. So this isn't new news.

What is new news (but not if you've been following this thread) is that Obama is throwing in $50 billion in stimulus spending, raising the debt ceiling for another year and including a national mortgage restructuring plan.

To pay for this (and again, not new news if you've been following this thread) is that Obama has included $400 billion in entitlement cuts, primarily in Medicare. But those cuts would be agreed to by the end of 2013, and despite his specifics on revenue, he didn't specify much of anything on those cuts.

Republicans have been using some really heated rhetoric the past couple hours in response to it.

Understandable. They really don't like raising revenue, but they haven't offered a plan. They haven't even offered what they want to cut -- they've told Obama they want him to come up with that. With everything that's been discussed in this thread -- I must have posted 15 to 20 articles -- not a single thing has included a proposition made by Boehner and the Republicans.

The only Republican that's offered anything was Tom Cole, who was quickly smacked down by Boehner.

I'm now predicting with near certainty we're going over the cliff. We're taking this thing to the 11th hour in early February, and even then that might not do the trick. This has been the most unproductive Congress is modern history, I'm not really sure why I expected them to successfully negotiate anything.

It's funny that you blame Congress after admitting that the President's proposal is almost exclusively based on real, specific tax increases with only allusions to (vaporware) spending cuts at some point in the future. The problem we've been having for the past 4 years has been a near total lack of leadership in the White House. He let Nancy Pelosi and Harry Reid lead the country for the first two years and he's shown no ability to function in a divided government setting since then. It's disgraceful that he was re-elected.

[Direckshun]

Originally Posted by patteeu

It's funny that you blame Congress after admitting that the President's proposal is almost exclusively based on real, specific tax increases with only allusions to (vaporware) spending cuts at some point in the future.

The President was asked to bring the tax hikes he favored to the table. The GOP was asked to bring spending cuts they'd like to see.

Only one of them has lived up to their end of the deal.

Shrug.

[Direckshun]

Apparently Obama's opening offer calls for a removal of the debt ceiling, too.

****ing finally.