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Old 07-20-2012, 10:41 AM  
Direckshun Direckshun is offline
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The Fiscal Cliff Approacheth

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!


Quote:
Originally Posted by Direckshun View Post
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:

Quote:
Originally Posted by Direckshun View Post
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:

Quote:
Originally Posted by Direckshun View Post
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:

Quote:
  • 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

Last edited by Direckshun; 11-14-2012 at 09:54 AM..
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Old 12-21-2012, 04:35 PM   #646
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Originally Posted by BucEyedPea View Post
The House does not have to negotiate. It's their job to come up with a budget and Obama can veto it if he wants.
Barry took off to Hawaii for 17 days.

I'm sure all will be resolved before he gets back.
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Old 12-21-2012, 05:02 PM   #647
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http://nymag.com/daily/intelligencer...d-bargain.html

Obama Waking Up From Dream of Grand Bargain
By Jonathan Chait
Today at 6:20 PM

“Call me a hopeless optimist,” said President Obama at his press conference tonight, in which he pleaded for Republicans to join him in averting the “fiscal cliff,” “but I still think we can get this done."

Okay. You’re a hopeless optimist, President Obama.

It is of course difficult to separate the genuine strategic beliefs of this administration from its attempts to spin journalists and the public, but it seems that, in the last few weeks, Obama reverted at least a bit to his 2011 mentality, when he thought that the force of reason would compel House Republicans to compromise with him. After that failure, Obama rearranged his strategy around using the force of public opinion and the leverage of the fiscal cliff to pry out of Republicans what he seemed to realize they would never surrender.

In recent weeks, Obama seems to have concluded that Republicans have come around, and that it is time to sit down and hash out a deal like reasonable people. He moved his position more than halfway toward Boehner’s. Democrats in Congress are, incredibly, discussing the option of compromising even more.

But reasonable compromise to avert the fiscal cliff is impossible. Republicans, as a whole, don’t even seem capable of linear thinking about the budget. They don’t know what they actually want on spending. They don’t understand why Obama wants more revenue or what role this would play in the broader fiscal picture. They don’t even seem capable of politically organizing in a way that maximizes their fanatic principles. The House Republican caucus is simply a teeming pit of revanchist anger.

Obama’s remarks today indicate an apparent acceptance of the dynamic and a desire to at least steer the process toward minimizing the economic harm that would result if the contractionary policies scheduled for next year take effect. Obama is again demanding a tax cut for income under $250,000 a year, along with canceling out some of the more punitive spending cuts. He can get that if he holds absolutely firm on his income threshold. Unfortunately, his offer to Boehner confused the matter. Obama offered to lift the tax hike level to $400,000 a year. Now, he was proposing to make up the revenue through reducing tax exemptions, so he really changed only the delivery system for higher taxes rather than the end result, but this fact has gotten confused in the reporting, and Obama needs to re-solidify it. (In his press conference, he didn’t.)

Then you have the automatic spending cuts. The key to these cuts is that they disproportionately impact the defense industry and medical providers, two large segments that have a lot of sway with the GOP. Republicans will fold on these cuts if Obama maintains steady pressure. If they want to use these cuts to reduce the deficit in an agreed-upon way, then Obama can trade tax revenue — on top of the revenue from phasing out the high-end Bush tax cuts — for cuts Republicans can accept. I suspect Republicans don’t actually care very much about spending cuts, and certainly not enough to accept more revenue from the rich.

You can see in the Democratic side a persistent good-government impulse, one that finds the GOP’s inability to even advance its own interests rationally as a troublesome failure of government for which they themselves ultimately share responsibility. It’s true that a smarter, better organized Republican party would be easier to deal with. But the GOP remains dysfunctional and apparently bent on self-immolation. The only question for Obama is whether he wants to allow Republicans to turn this fact to their advantage, or whether he is willing to disengage and let them burn out on their own rage.
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Old 12-21-2012, 08:28 PM   #648
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Obama and the dems will end up owning the real cliff when we go over it. Not the little bump we're about to go over.
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Old 12-21-2012, 10:38 PM   #649
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Quote:
Originally Posted by mlyonsd View Post
Obama and the dems will end up owning the real cliff when we go over it. Not the little bump we're about to go over.
You keep saying this. None of the polling indicates this.

You're either relying on good ol' intuition in the face of contradictory evidence, which served you real well on November 6th, or you're patteeu-ing your way through this thing and hoping false bravado will create real results, which served patteeu real well on November 6th.
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Old 12-22-2012, 03:09 AM   #650
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Twas the night before Cliffmas, when all through the land
The Top-Two-Percenters were wringing their hands
Awaiting ObamaClaus taking their shares
For redistribution to equalize shares.

The Children of Julias lay snug in their beds
While hopes of ObamaStuff danced in their heads.
And Julias and Julians in quilts, warmly wrapped
Had just settled down for a long winter's nap.

When somewhere nearby there arose such a clatter,
They sprang from their beds to see what was the matter,
and straight to their windows they eagerly dashed
in hopes 'twas ObamaClaus bringing his stash.

The moon on the breasts of the street-walking ho's
Gave lust, which in minds of the Julians arose.
What else to their wandering eyes did appear?
A red-suited man in a Limo appeared.

Twas pulled by eight so stubborn and slow
they knew twas ObamaClaus promising dough.
'cross Broad Street to Wall Street while baying they came,
spurred-on by Obama Claus calling their names:

"On, Reid, on, Pelosi, on Fannie and Fred,"
"On, Biden, on Holder, on Geitner," he said.
"On, Barney, once more to the street known as Wall,
or join other asses I keep in the stall."

As Globalized Warming makes hurricanes fly
Their carbonless fooprints they left in the sky
As bounding they did over Wall Street they flew
the Limo so full and Obama Claus too.

And then, in a twinkling, they saw and approved
the prancing and pawing once deemed so uncouth.
On stopping, Obama Claus then turned around
and out of the Limo he hopped with a bound.

Attired all in red from his head to his foot
with hammer and sickle he then undertook
to break into homes of the Two-Percent hacks
to then redistribute their stuff to his pack.

His eyes how they twinkled! His smile was so merry!
So cheeky his visage, so quickly he hurried.
His hair changed by stress from the buying of votes
from vibrantly dark to the whiteness of snow.

The butt of a smoke he held tight in his teeth
with smoke he'd exhaled 'round his head like a wreath.
A broad smile he showed, but the fire in his belly
and tones of his chuckles revealed what he relished.

Not chubby or plump and thus pleased with himself,
To work he proceeded with help from his elves.
A wink of his eye and a twist of his head
Told Julias and Julians they'd nothing to dread.

He spoke the word "fair" in describing his work
as redistribution of Two-Percent's worth.
Then giving a nod, to his Limo he strode
and showed Two-Percenters his mid-finger pose.

He rolled-down his window and uttered this riddle:
"Instead of you-name-it, I've sold you the sizzle."
They heard him exclaim as he flew out of sight,
"My redistribution makes everything right."

The Julias and Julians then fell back asleep
Content stuff from Two-Percent folks they would keep.
But soon after Cliffmas, while reading his script,
Obama Claus said, "We've gone over the cliff."

He added, however, "The fault ain't on me
but rather the blame goes on Bush 43
and top-two percenters afflicted with greed,"
And Julias and Julians did quickly agree.

But soon after that, they experienced chills
when they couldn't pay electricity bills
at skyrocket prices Obama foretold
when EPA Rules ended power from coal.

They then asked Obama, "Just when, please advise,
will gov'ment relief from this coldness arrive?"
"From solar solutions," Obama replied,
Wear blankets with hoodies 'til Summer arrives."

http://thepeoplescube.com/peoples-bl...as-t10193.html
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Old 12-22-2012, 09:16 AM   #651
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Quote:
Originally Posted by Direckshun View Post
You keep saying this. None of the polling indicates this.

You're either relying on good ol' intuition in the face of contradictory evidence, which served you real well on November 6th, or you're patteeu-ing your way through this thing and hoping false bravado will create real results, which served patteeu real well on November 6th.
Thanks for the advice but when our debt soars even farther out of control, unemployment skyrockets again, and incomes drop,even the great Teflon president won't be able to avoid the eventual souring of the public.
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Old 12-22-2012, 10:49 AM   #652
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Quote:
Originally Posted by mlyonsd View Post
Thanks for the advice but when our debt soars even farther out of control, unemployment skyrockets again, and incomes drop,even the great Teflon president won't be able to avoid the eventual souring of the public.
So, that's the Republican stategy then.

They can't compromise, they don't know what they want, so they'll just ignore the polling, send us over the cliff and force Obama to manage it, and once Gotham is in ashes... the people will come around to blaming Obama.

Genius.
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Old 12-22-2012, 11:12 AM   #653
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Quote:
Originally Posted by Direckshun View Post
So, that's the Republican stategy then.

They can't compromise, they don't know what they want, so they'll just ignore the polling, send us over the cliff and force Obama to manage it, and once Gotham is in ashes... the people will come around to blaming Obama.

Genius.
What option is Obama giving us? I can tell you it isn't remotely genius.
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Old 12-22-2012, 03:45 PM   #654
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Quote:
Originally Posted by Direckshun View Post
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.
Who made this deal?
When was this deal made?
Why was their a deadline?
Is January 1 2012 an arbitrary date they decided on, or is there a reason why they set it on that date (ie after the presidential election).

Thanks Drek. I know how concerned you are on this matter, so you should have no problem providing this information with links.
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Old 12-24-2012, 01:14 PM   #655
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Quote:
Originally Posted by Direckshun View Post
So, that's the Republican stategy then.

They can't compromise, they don't know what they want, so they'll just ignore the polling, send us over the cliff and force Obama to manage it, and once Gotham is in ashes... the people will come around to blaming Obama.

Genius.
That one is for free.
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Old 12-24-2012, 02:24 PM   #656
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Old 12-24-2012, 09:12 PM   #657
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Quote:
Originally Posted by mlyonsd View Post
What option is Obama giving us?
Meeting halfway.
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Old 12-24-2012, 09:12 PM   #658
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That one is for free.
Damn straight.
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Old 12-24-2012, 11:36 PM   #659
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http://www.nytimes.com/2012/12/23/bu...business&_r=1&

In the Fiscal Debate, a Little Symbolism Can Go a Long Way
By TYLER COWEN
Published: December 22, 2012

“GRANT me chastity and continence, but not yet.” That line from St. Augustine could describe the undercurrent of the fiscal negotiations in Washington. We must decide whether to pursue a relatively loose and stimulative policy, and to trust in our later discipline, or to slam on the brakes now.

Yet there may be a way to square this circle. When it comes to income tax rates, we could raise them for virtually everyone, to send a clear message that the current fiscal situation is unsustainable. At the same time, we could limit those tax increases for most income classes to a relatively small percentage, much less than the full expiration of the Bush tax cuts would imply.

The sorry truth is that we Americans seem like the addict who keeps saying “I can quit any time,” yet doesn’t cut back. So what else might we say to frame this problem in a more useful way?

To see how this could work, consider this script: Let’s say the Republicans decide to largely give in to what the President Obama is proposing. There is, however, a catch: the president has to agree to raise marginal tax rates on all income classes, not just on the rich. The tax increase would be one-quarter of a percentage point, or some other arbitrary small amount, with larger increases possible for higher incomes, as has been discussed. The deal also stipulates that both the president and Congress must publicly acknowledge that current plans for government spending can’t be financed unless taxes on most or all income groups climb further yet, and by some hefty amount.

Given the slow economy, it is undesirable to reverse all or even most of the Bush tax cuts. A small but publicly trumpeted clawback of some of the cuts would send the right message to voters, while minimizing the macroeconomic fallout. The nice thing about symbols — single shots across the bow — is that they often can suffice.

If people already rationally expect these tax increases, this signal would do neither good nor harm, but perhaps such an approach would nudge political expectations closer to reality without draining the economy.

With such a deal, President Obama would get much of what he wants, which many Republicans find objectionable. Still, the Republicans are in any case unlikely to win this round of budget negotiations. The positioning suggested here would highlight the major weakness and, indeed, an evasion in the Obama administration’s fiscal stance — namely, the president’s campaign pledge to protect the middle class from income tax increases. It is commonly agreed that raising taxes on the wealthy alone will close only a small part of our fiscal gap over the next 10 years; an estimate of 15 percent is optimistic.

It could also be agreed that taxes could come back down in the future, but only if politicians found matching spending cuts.

Think of this stance as a first step toward the explicit pairing of spending and taxes, toward a goal of more responsible fiscal decisions. Although taxes would go up for now, this could lead to a smaller, more effective government than our current mismatch of taxes and spending would produce.

Economic conservatives often stress the connection between low taxes and smaller government. But that observation, as an argument for lower current taxes, looks weaker as the years pass. Keeping taxes low doesn’t stop the growth of government spending and, indeed, makes spending taste like a free lunch, because the bill is paid much later. The conservative strategy has long been to hold the line on taxes now, but it would be better to encourage the public to more readily grasp and internalize the costs of government spending.

There is something to be said for “pricing” big government by making an explicit connection to taxes, much the way utilities explicitly price water and electricity. And higher tax revenue now will decrease the extent to which interest on the debt consumes future budgets — and that probably means lower taxes in the future. Counterintuitively, raising tax rates sooner rather than later may be the true “low-tax policy” because it may increase the chance of limiting future taxes.

In the minds of many moderate and independent voters, the Republicans are currently identified with dysfunctional politics. But this proposal would let them take a credible stand against obstructionism. If the president didn’t like such a deal, he would be the naysayer, and the resulting publicity would shine a bright spotlight on the tax-and-spend mismatch. Suddenly, it would be the Republicans emphasizing the classic American line that “we are all in this together.”

OF course, the notion of tolerating — and especially endorsing — any tax increase is anathema to many of President Obama’s opponents. But keep in mind that possible alternatives, like another debt-ceiling debacle or an agreement that panders to our fiscal illusions, would probably be worse for both the economy and the longer-term reputation of the Republican Party.

In our country, the typical approach to fiscal deadlines is to kick the can down the road. But that assumes we are kicking a can, not a grenade. It’s time for at least one party — and why not the electoral loser? — to do something just a little shocking. It can give in on much of the negotiations, but insist that both sides start stressing the fiscal truth.
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Old 12-24-2012, 11:49 PM   #660
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The longer Republicans wait to make a deal, the worse their deal is going to get.

http://www.washingtonpost.com/blogs/...tax-increases/

Obama’s “small deal” could lead to bigger tax increases
Posted by Ezra Klein
on December 22, 2012 at 12:39 pm

The juiciest passage in the Wall Street Journal’s behind-the-scenes report on the fiscal cliff negotiations comes when House Speaker John A. Boehner (R-Ohio) asks President Obama whether he can have the deal he rejected in 2011. “You missed your opportunity on that,” the president replies.

Ouch.

But the most important insight into the White House’s strategic thinking comes when Boehner says to the president, ”I put $800 billion [in tax revenue] on the table. What do I get for that?” Obama’s response is cold and telling. ”You get nothing,” the president said. “I get that for free.”

That, right there, is the central fact of negotiations for the Democrats and the central problem for the Republicans. At the end of this year, more than $5 trillion in scheduled tax increases begin. But the White House doesn’t believe that’s real revenue. Democrats in Congress won’t permit that kind of a tax increase on ordinary Americans. The White House won’t permit that kind of a tax increase on ordinary Americans.

But they’re certain they can hold onto almost $800 billion of it. The Senate already passed a bill letting the Bush tax cuts lapse for income over $250,000. That bill is very, very popular. The White House expects that if we go over the cliff, the House will have to pass that bill, too, and the president would have little choice but to sign it. That bill raises taxes by a bit more than $700 billion, which is less than the $1.6 trillion the White House wants. But that $700 billion, to the White House, is the baseline: If they get nothing else, they will certainly get that.

And that’s why Boehner’s offer of $800 billion doesn’t impress. The White House already has some $700 billion in the bank, as they see it. The reason to negotiate with Boehner is that an agreement with him could, in theory, push that number well above $1 trillion while stabilizing the debt and avoiding the economic pain of falling off the fiscal cliff. But there’s no reason to cut a deal with Boehner in which the White House gives up spending cuts in order to get a tax increase they can have anyway.



The talk in Washington now is about a “small deal.” That would likely include the Senate tax bill, some policy to turn off at least the defense side of the sequester and a handful of other policies to blunt or delay various parts of the fiscal cliff.

That’s not a very good deal for the short-term health of the economy. Depending on how much of the fiscal cliff gets delayed, we could tip into recession anyway. But it could lead, in the end, to much more revenue than a “big deal” now.

Here’s how it would go. Some time in the next month or so, the small deal would pass and the White House would pocket that $700-plus billion in tax revenue. They really would get that for free, just as the president told Boehner.

But pressure would quickly mount to strike a larger deal, both because there would be another fiscal cliff coming and because the debt ceiling would need to be raised. (The White House swears they won’t negotiate over the debt ceiling, but it’s not exactly clear what that will mean in practice.)

The White House would insist that the next deal includes a 1:1 ratio of tax increases — all of which could come through Republican-friendly tax reform — to spending cuts. So a subsequent deal that included $600 billion or $700 billion in spending cuts would also include $600 billion or $700 billion in tax increases, leading to total new revenue in the range of $1.2 trillion to $1.4 trillion.

There’s precedent for this. After the 2010 midterms, Republicans forced the passage of the Budget Control Act, which included more than a trillion dollars in spending cuts and no offsetting tax increases. They’ve subsequently refused to count those cuts toward any future deals. If the president, after winning the 2012 election, pocketed $700 billion in tax increases and insisted that revenue was unrelated to the next negotiation, he’d simply be following Boehner’s lead.

All of which is to say, if Boehner had taken the White House’s deal in 2011, he could’ve stopped the tax increase at $800 billion. If he took their most recent deal, he could stop it at $1.2 trillion. But if he insists on adding another round to the negotiations — one that will likely come after the White House pockets $700 billion in tax increases — then any deal in which gets the entitlement cuts he wants is going to mean a deal in which he accepts even more tax increases than the White House is currently demanding.

Today, Boehner wishes he’d taken the deal the president offered him in 2011. A year from now, he might wish he’d taken the deal the president offered him in 2012.
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