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 King_Chief_Fan

can't blame them when the game has no rules

The economy has rules.

That's kind of the point.

[Cave Johnson]

Originally Posted by patteeu

That kind of thing didn't happen when Ronald Reagan was uniting the country.

True, Congressional D's weren't this monolithic and unreasonable.

Republican culture since Boehner’s predecessor, Dennis Hastert, has demanded that legislation brought to the House floor have the pledge of support from a majority of the majority — in other words, that House Republicans act in unison, or close to it, before there is any effort to garner Democratic votes, and that no bill go forward unless and until it has support from a substantial majority of Republicans. It has been clear from the outset of the debate over the U.S. fiscal dilemma that, given the imperative of the no-tax pledge endorsed by 90 percent of House Republicans, no compromise would be achievable without the support of at least as many House Democrats as Republicans, and probably more.

Boehner’s dilemma is worsened by the fact that 50 or more House Republicans come from districts that are homogeneous echo chambers, made that way through redistricting and the “Big Sort” that has like-minded people living in close proximity to one another. None of them is threatened in a general election; all could be unseated in a contested primary.

With the Club for Growth and others putting million-dollar bounties on the heads of apostates who vote for any taxes, and with the conservative wind machine of talk radio having its effect, these lawmakers are immune from broader public pressure, the impact of a large election outcome or persuasion by their party leaders. For Boehner, fulfilling his constitutional responsibility as speaker of the House means getting the House to work its will, even if his party does not go along — but doing so imperils his speakership.

http://www.washingtonpost.com/opinio...64b_story.html

[Cave Johnson]

Or batshit crazy extreme, for that matter.

“[Since 1975] Senate Republicans moved roughly twice as far to the right as Senate Democrats moved to the left” and “House Republicans moved roughly six times as far to the right as House Democrats moved to the left.”

http://www.politico.com/blogs/media/...of-151570.html

[mlyonsd]

Originally Posted by Direckshun

Because the Democrats did not take the ball and go home.

They worked for balanced policy.

A policy that doesn't accomplish anything. Kind I'd like bailing the Titanic with spoons.

[patteeu]

Originally Posted by Direckshun

Because the Democrats did not take the ball and go home.

They worked for balanced policy.

Yes, Reagan was good at bringing people together. Even Republicans and democrats.

[Direckshun]

Originally Posted by mlyonsd

A policy that doesn't accomplish anything. Kind I'd like bailing the Titanic with spoons.

Uh, what? Are you saying 1980s policy didn't accomplish anything?

[Direckshun]

Originally Posted by patteeu

Yes, Reagan was good at bringing people together. Even Republicans and democrats.

Because the Democrats did not take the ball and go home.

They worked for balanced policy.

[Direckshun]

http://politicalticker.blogs.cnn.com...cliff-package/

Source: Reid looking for votes on fiscal cliff package
Posted by CNN Senior Congressional Correspondent Dana Bash
December 26th, 2012 02:22 pm

Washington (CNN) – Senate Majority Leader Harry Reid, in conjunction with the White House, is working to see if the scaled back fiscal cliff package President Barack Obama laid out last week can get through Congress before December 31st.

Reid has made clear in private conversations he does not want to bring any bill to the Senate floor unless he is sure it will pass both the Democratic-led Senate and the Republican-held House.

His efforts were described to CNN by a senior Democratic source, who spoke on the condition of anonymity to describe private conversations and the behind-the-scenes process.

"It is to nobody's advantage to have a failed Senate vote at this point. This will be the last train we will have, and there is no sense in it leaving the station before we have assurance it will get through," the source said.

The reason for this is both political and practical.

Reid realizes that in all likelihood, he will need a number of GOP senators to cross party lines. He knows it is unlikely many Republicans would take the big political risk of voting for any tax increases if the vote turns out to be meaningless and the measure goes nowhere. Those Republicans will need to be able to tell their constituents their vote was to successfully avert the fiscal cliff.

The other reason is a failed vote in the Senate, followed by going over the cliff, may send an even worse signal to financial markets than simply going over the cliff.

It is still an open question, however, whether the vote threshold in the Senate would be a majority, or whether it would be 60 votes. That will depend on what Senate Republican Leader Mitch McConnell and Reid work out.

As far as the House goes, Democrats believe if they can get a bill through the Senate, it is likely they can get it through the House with most Democrats voting yes and, Democrats hope, about 30 or so House Republicans crossing party lines.

House Republicans leaders held a conference call Wednesday afternoon and made no decisions about when to bring their members back to Washington, according to a Republican source on the call. The leaders on the call simply "touched gloves," the source said.

House GOP leaders had promised to give members 48 hours notice before calling them back from their holidays at home.

Democratic sources have told CNN the most likely way to get a scaled-back package successfully through the Senate, House, and to the White House is to wait until the last minute – December 30 or 31.

Why? Several Democratic sources say they think it's likely that Republicans won't feel enough pressure until the bitter end.

The scaled back measure being developed by Democrats would first and foremost keep tax rates at current levels on incomes under $250,000 and let taxes go up on income above that threshold.

It would also extend unemployment insurance and likely extend the alternative minimum tax fix. Other things that may part of the measure include the Medicare "doc fix" and extending the current, lower estate tax rate, as well as other tax extenders.

[Direckshun]

The epic failure of John Boehner continues.

There should be no way he retains his speakership in 2013.

http://www.washingtonpost.com/blogs/...l-cliff-bills/

GOP leaders demand Senate act first on fiscal cliff
Posted by Paul Kane
on December 26, 2012 at 4:33 pm

House Republican leaders said Wednesday that the ball was in the Senate’s court to avert the fiscal cliff, demanding that the upper chamber take up earlier House-approved bills in a legislative “ping-pong” until the two chambers reach a deal to avert austerity measures set to take effect next week.

In a joint statement, the four leaders said the Senate should at least amend the conservative drafts that the House approved last fall — one to extend expiring tax cuts for all income levels, the other to shut off automatic spending cuts on national security agencies — and send them back to the House over the weekend.
With just days left before the Jan. 1 deadline, when the federal government faces a series of tax increases and deep spending cuts, House Speaker John A. Boehner’s leadership team has decided that bouncing bills back and forth between the chambers would be the fastest way to reach a compromise.

“They must be amended and returned to the House. Once this has occurred, the House will then consider whether to accept the bills as amended, or to send them back to the Senate with additional amendments. The House will take this action on whatever the Senate can pass, but the Senate first must act,” wrote Boehner (R-Ohio), Majority Leader Eric I. Cantor (Va.), Majority Whip Kevin McCarthy (Calif.) and Rep. Cathy McMorris Rodgers (Wash.), chairman of the GOP conference.

The move comes just days after these same GOP leaders failed to secure the Republican votes for Boehner’s “Plan B”, which would have extended the expiring tax cuts on all income up to $1 million and modified the pending across-the-board cuts to agency budgets by sparing the Pentagon. The statement did not include any guidance as to what measures the House could accept and did not indicate when Boehner would call the House back into session.

Senate Democrats have resisted any attempt to pin the outcome of the budget negotiations entirely on their chamber’s next step, suggesting that Boehner has to be a party to some compromise.

“You need a bipartisan agreement here, and the two leading protagonists are the president and Speaker Boehner. If they come to an agreement, it will not be too hard to get the Senate to fall in line,” Sen. Charles E. Schumer (D-N.Y.) said as the Capitol shuttered Friday.

Schumer said the “ideal solution” is for a majority from all four party caucuses — House and Senate Democrats, House and Senate Republicans — support a final deal. “That’s a middle ground solution that makes the most sense,” he said.

[Direckshun]

Matthew Yglesias highlights the strategy: the GOP simply think they can get a better deal in the Senate. In post 683, this strategy was highlighted as mostly unworkable, though it could be enough to provide a small patch to avert crisis in January.

I think he gets about half the equation right. The other half, of course, is that the House GOP is too worried about its right flank to make any sort of deal with Obama.

http://www.slate.com/blogs/moneybox/...that_plan.html

Why John Boehner Wants Action to Move to the Senate
By Matthew Yglesias
Posted Wednesday, Dec. 26, 2012, at 4:30 PM ET

The new line from John Boehner is that the onus is now on the Senate to pass a fiscal cliff solution, and then the House will take up and consider whatever the Senate passes.

On the face of it, this is nonsensical. Democrats have a majority in the Senate. Anything that's acceptable to both Barack Obama and John Boehner will easily get through the Senate. That's why all the negotiations thus far have been Obama-Boehner negotiations, with perhaps a side order of Nancy Pelosi. But while Boehner's proposal is illogical, I understand why he likes the idea.

The reason is that while anything Boehner and Obama agree to will easily pass the Senate, in the absence of an agreement it'll be hard for Obama to get anything past the Senate. He'd need a lot of Republican votes to overcome a filibuster, and those votes would probably come through something like Gang of X talks between Republicans and squishy moderates like Kent Conrad and Joe Lieberman. Conrad wants to split the difference between the President's last offer and Boehner's last offer. Then once something like that difference-splitting bill passes the Senate, Boehner gets to take it up as the new baseline for negotiations and pull the ultimate resolution even further to the right.

But that's exactly why Obama would be foolish to take any such thing seriously. Starting in the New Year, the Senate gets more liberal. The House also gets more liberal. And the policy baseline also gets more liberal. The White House isn't going to pull the plug on negotiations, but unless Boehner comes back to the table with something new to say they have no incentive to further weakn their hand.

[Direckshun]

Fox News describes it perfectly:

You go. No, you go.

That's the refrain on Capitol Hill, as House and Senate leaders each refuse to make the first move in crafting a bill that can avert the fiscal crisis scheduled to hit next week.

[patteeu]

Originally Posted by Direckshun

Because the Democrats did not take the ball and go home.

They worked for balanced policy.

Yes, that's what happens when you have a good leader like Reagan who unites rather than divides.

[Direckshun]

Originally Posted by patteeu

Yes, that's what happens when you have a good leader like Reagan who unites rather than divides.

There is absolutely nothing Obama can do about the Republican Party agreeing in the winter of 2008 that absolute opposition and treating Obama with a toxicity usually reserved for the Taliban was the way to go.

For the following four years, Obama offered a ton of Republican ideas and frequently offered deals slanted towards conservativism as his basis for policy. Every time, the GOP spurned him because they understand, I imagine, the generational potential of even a remotely successful Obama administration.

Reagan offered center-right policy, and the Dems hopped on more often than not because governing is more important than politicking. They learned the lesson of treating the President like scum and got beat like a drum in 1984.

What Obama can't fix, on top of all this, is that Republicans simply don't know what they want right now. If Republicans can't get behind any plan when they're at the goddamn steering wheel, there's absolutely nothing Obama can do about that.

The GOP can't point at Obama and scream "why are you allowing us to be so unreasonable!? why can't you keep us from being so crazy and extreme?"

That's our job, as voters. 2012 was a step in the right direction.

[notorious]

Fall off the cliff.


They made their bed, let them sleep in it.

BTW, I think we will be just fine.

[Direckshun]

http://www.politico.com/story/2012/1...ely-85511.html

Fiscal cliff deal increasingly unlikely
By MANU RAJU and JAKE SHERMAN
12/26/12 7:50 PM EST

Nearly all the major players in the fiscal cliff negotiations are starting to agree on one thing: A deal is virtually impossible before the New Year.

Unlike the bank bailout in 2008, the tax deal in 2010 and the debt ceiling in 2011, the Senate almost certainly won’t swoop in and help sidestep a potential economic calamity, senior officials in both parties predicted on Wednesday.

Nearly all the major players in the fiscal cliff negotiations are starting to agree on one thing: A deal is virtually impossible before the New Year.

Unlike the bank bailout in 2008, the tax deal in 2010 and the debt ceiling in 2011, the Senate almost certainly won’t swoop in and help sidestep a potential economic calamity, senior officials in both parties predicted on Wednesday.

Senate Democrats are considering fallback options to resolve the crisis, but they appear unlikely to push forward if Republicans decide to mount a serious opposition. The White House, a senior administration official said, is in close coordination with Senate Democrats. Late Wednesday, Reid’s office pushed Republicans to pass a bill to extend tax rates for income below $250,000.

A meeting at the White House between Congressional leaders and President Barack Obama is likely this week, sources said.

The House sidestepped a decision Wednesday to bring the chamber back into session, putting the burden squarely on the Senate, where the stars will need to align for swift action in the next few days. Speaker John Boehner’s leadership team said bluntly: the “Senate first must act” before the House will consider additional legislation to avoid the cliff. So that they’re all on the same page, House Republicans will have a members only conference call Thursday.

For Senate Majority Leader Harry Reid to bring up a new bill, he’ll need assurances from Senate Minority Leader Mitch McConnell not to filibuster it — and not to pressure his members to block it. And Reid will need Boehner’s word that any Senate-passed bill would be scheduled for a vote and could pass with support largely from Democrats, even if it lacks a majority of Republican support.

That scenario seems unlikely right now.

From McConnell’s perspective, the White House will have to pare back its demands for tax increases if Republicans will concede the fight and risk the wrath from the right. And then President Barack Obama will need to give far more on cuts to entitlement programs like Medicare and Social Security in order to get some GOP cooperation on tax rate hikes, Republican officials say.

McConnell almost certainly won’t try to jam Boehner by allowing a bill to pass the Senate that doesn’t have support among House and Senate Republicans, sources say. And Democrats believe that Boehner will have more leeway to cut a deal in the new year once he’s reelected speaker, though the Ohio Republican has said he’s not concerned his perch atop the House has been threatened by his handling of the fiscal talks.

Democrats also have good political reasons to hold out until after the New Year, when the new Congress convenes Jan. 3.

Democrats are slated to increase seats in both chambers in the next Congress — with a robust 10-seat majority in the Senate, and the White House believes it has little incentive to cave to GOP demands ahead of the fiscal cliff.

Over the truncated Christmas recess, neither side reported any headway to resolve the impasse — McConnell’s staff didn’t hear from the White House before Wednesday afternoon. And even if all sides were to suddenly agree to a deal, the Senate could need several days to jump through a series of procedural hurdles, plus the House would have to scramble back to Washington and vote on it — even though there are just a handful of days until 2013.

“What Obama has outlined as minimally acceptable to him doesn’t come within a country mile of passing either the House or the Senate,” said one senior GOP aide. “No negotiation can change the fundamentals.”

Added a Democratic aide: “Unless Boehner and McConnell are willing to buck their tea party members, then I see nothing happening.”

Senators, too, sense the inevitability of ending 2012 with no deal — and Republicans argue Boehner shouldn’t simply accept Obama’s demands as Jan. 1 rapidly approaches.

“I’m not sure why he would have to accept that – the president’s attitude, his stated message was, ‘Accept what I’ve given you or we’ll go off the cliff,’” said Sen. Richard Burr (R-N.C.), the chief deputy whip. “Why is it not OK for John [Boehner] to say, ‘I tried what I thought was doable – and it’s not. So we’ll go off together.’”

House Republican leaders spoke on a conference call Wednesday afternoon, but no decisions were made on a new strategy, according to sources. House Republicans believe Senate Democrats need to pass a bill to avert tax increases before the House acts. If the nation careens off the cliff, they’re trying to make sure Reid shares in the blame.

The hurdles of the deal before the nation reaches the fiscal cliff aren’t just limited by policy differences, but also logistics. House Republican leaders vowed to give lawmakers 48 hours before they need to come back to Washington. As of late Wednesday afternoon, that had not happened.

If members of Congress are told Thursday to come back to Washington by Saturday, they’d face a 70 percent likelihood of snow in the D.C. area, according to current weather forecasts which could snarl airport traffic.

To add to that, there’s an open question what could even pass the House. A bill to extend rates below $1 million didn’t even make it to the floor. Democrats say they’d use the $250,000 threshold. Some Republicans are floating the idea that the Senate should pass a bill that extends rates for income below $500,000, but that idea doesn’t seem to be going anywhere in the Senate.

Since Election Day, both Boehner and Obama have exchanged a series of deficit-cutting offers to avert the $500 billion in tax hikes and automatic spending cuts set to take place in the new year if Washington doesn’t act. But the sticking point remains over raising tax rates on the top 2 percent of wage earners, with Obama pushing to raise taxes on families who earn more than $250,000. The two men narrowed their differences when Obama said he’d increase that threshold to $400,000 and Boehner said he would agree to higher taxes on millionaires.

But Democrats and conservative Republicans rebelled at the speaker’s so-called Plan B approach last week, leaving the speaker weakened and the ball in the Senate’s court. With Obama returning from Hawaii and Senate returning to session Thursday, Democrats hope that Republicans, with their backs against the wall, will pressure McConnell into accepting a bill even if it could jam Boehner.

Indeed, some conservative Republicans candidly acknowledge how tough it would be to vote against a bill to prevent tax hikes on most Americans.

“We are in a topsy-turvy world because everything is going to expire,” said Sen. Rand Paul (R-Ky.), saying it would be “difficult” to vote against a fall-back plan like Boehner’s to prevent most taxes from going up. “If I had to take affirmative action, I would never vote to raise taxes on anyone. Because it takes affirmative action to prevent taxes from going up, things are kind of flipped.”

Still, it appears unlikely McConnell would try to strike a deal that couldn’t win the backing of a large number of Republicans in both chambers. If he did, it would isolate Boehner and risk a conservative backlash against McConnell, who wants to avoid trouble from the GOP base back home as he prepares for a 2014 re-election campaign.

To some, last week’s debacle in the House looked a lot like several of the near-misses from year’s past; most notably in 2008 when the Dow Jones Industrial Average dropped 778 points after the House rejected the initial version of the Troubled Asset Relief Program before the Senate ended up cutting a bipartisan deal to right the country’s finances.

Though others say today’s situation is far different.

“It’s not like TARP because TARP was a very real crisis of immense proportions,” said former Sen. Judd Gregg (R-N.H.), who helped cut the TARP deal. “The fiscal cliff is a self-inflicted wound, which would be really inexcusable to commit on ourselves. It would have nowhere near the impact of what would have happened if we hadn’t done TARP.”

Even though economists warn that a double-dose of spending cuts and tax hikes could send the U.S. back to recession, many lawmakers believe the economy won’t feel the impact right away, giving them added time next year to get a deal. But even then, it won’t be easy to get a deal.

“I think if you can’t do it now, how difficult is it going to be Jan. 1?” retiring Sen. Olympia Snowe (R-Maine) said. “You’re dealing with a new Congress, newly elected senators, new members. It’s a whole new equation. It’s not going to be that easy to put the genie back in the bottle here.”

To that end, the White House last Friday floated a plan it considered “scaled-back” from its original proposal, seeking to extend the Bush-era rates only for those who earn less than $250,000, to extend expiring unemployment benefits and delay automatic spending cuts known as sequestration. There’s also talk of limiting the impact of the alternative minimum tax on the middle-class, though that would only drive up the package’s price tag.

Republicans scoffed at that plan. And McConnell aides say they have yet to see any details, making it impossible for them to assess whether Republicans — or even conservative Democrats — would allow for such a proposal to pass with 51 votes, rather than 60.

Republicans say Obama must take the long view with no deal in sight.

“Remember who the speaker of the House was during the Hoover administration?” Arizona Sen. Jon Kyl, the No. 2 in the Senate GOP hierarchy, said last week. “It was the Hoover Recession. I would think the president and his people would be thinking a little longer range than how the polls would look like this weekend.”