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

[donkhater]

Originally Posted by Direckshun

Clinton had the benefit of a smooth economy.

Obama inherited the Great Recession. Naturally, his purported tax policies will be more conservative.

Or....

He really does want all tax rates to rise. Hence the proposal without the 3:1 spending cuts to revenue balance he ran on. When the GOP balks, all tax rates rise as we go over the 'cliff' and he demagogues the hell out of them for allowing tax rates to rise on everyone in the middle of a recession while 'protecting' the rich.

He is Chicago through and through. Dishonest and unapologetic.

[mlyonsd]

Originally Posted by HonestChieffan

I think its time to go. Lets hit the cliff.

Its Obamas game after that. Why not?

What is the downside for the country long term? Forget party politics.

If revenue is needed as Obama states what's wrong with more revenue?

[mlyonsd]

Originally Posted by donkhater

Or....

He really does want all tax rates to rise. Hence the proposal without the 3:1 spending cuts to revenue balance he ran on. When the GOP balks, all tax rates rise as we go over the 'cliff' and he demagogues the hell out of them for allowing tax rates to rise on everyone in the middle of a recession while 'protecting' the rich.

He is Chicago through and through. Dishonest and unapologetic.

Dishonest is putting it politely.

[donkhater]

Originally Posted by Direckshun

Clinton had the benefit of a smooth economy.

Obama inherited the Great Recession. Naturally, his purported tax policies will be more conservative.

Clinton had the benefit of being president during the .com bubble. Then proceeded to recall Glass-Stengell and set up the housing bubble with the Community Reinvestment Act that led to mortgage back securities that were at the heart of the 2008 crash.

But Clinton was above all this wasn't he?

[patteeu]

Originally Posted by Direckshun

Obama inherited the worst deficit in American history, and cut it faster than anybody has cut a deficit since WW2.

In a recovery from a recession.

I'll take that against anybody's record on deficits in modern American history.

Obama inherited an artificially inflated $1.2 trillion deficit (which included $700 billion of TARP spending that was really more like a loan to a large degree than spending).

He immediately increased that deficit to a record $1.4 trillion (because the largest deficit in American history just wasn't high enough for him, apparently).

Shortly thereafter, most of the TARP funds were repaid. You want to blame Bush for the "deficit" created by the loan of TARP funds but give credit to Obama for the repayment, ie deficit reduction, of TARP funds. I don't know exactly how much of TARP was repaid, but let's say it was something like $450 billion. If we account for that reasonably, it means that the deficit Obama effectively inherited was not $1.2 trillion, but $750 million instead. And it also means that his subsequent deficits were really $450 million greater. Measured from that starting point, the BS about Obama heroically reducing the deficit crumbles to dust.

[mlyonsd]

Originally Posted by donkhater

Clinton had the benefit of being president during the .com bubble. Then proceeded to recall Glass-Stengell and set up the housing bubble with the Community Reinvestment Act that led to mortgage back securities that were at the heart of the 2008 crash.

But Clinton was above all this wasn't he?

Be prepared to be deluged with fiscal charts that show pictures of what happened without the details.

[patteeu]

Originally Posted by Direckshun

I do not think that you do.

Why don't you think I do?

[donkhater]

Originally Posted by mlyonsd

Be prepared to be deluged with fiscal charts that show pictures of what happened without the details.

Yeah I've seen his charts and figures. I could probably also provide a chart that shows global warming is the result of bird farts in Africa, but that doesn't prove anything.

Read A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers. It lays it out and points to Clinton's actions as the main initiator. It's not a blame game book, but it also doesn't mince words as to who played what part in it all.

[HonestChieffan]

Originally Posted by mlyonsd

If revenue is needed as Obama states what's wrong with more revenue?

Revenue is not the issue clearly. We can get there from multiple directions. Lets go. Grab on to the towel and jump. **** this bullshit. Boehner is a nitwit, Obama is a liar of the highest order. Its all a game. Lets go. Nuts on the line. If Obama is right he is a hero. All in.

[Direckshun]

Originally Posted by donkhater

Or....

He really does want all tax rates to rise.

I don't doubt that Obama wants all of the Bush tax cuts to vanish.

You have to do it responsibly, however, and phase that in as the economy improves.

[Direckshun]

Originally Posted by donkhater

Clinton had the benefit of being president during the .com bubble. Then proceeded to recall Glass-Stengell and set up the housing bubble with the Community Reinvestment Act that led to mortgage back securities that were at the heart of the 2008 crash.

But Clinton was above all this wasn't he?

I'm not defending Clinton. I think he was overrated.

[Direckshun]

Originally Posted by patteeu

If we account for that reasonably, it means that the deficit Obama effectively inherited was not $1.2 trillion, but $750 million instead.

The recovery measures are nowhere near a majority of the deficit Obama inherited.

The deficit he inherited was mostly the Bush tax cuts, two wars on the credit card, and a complete bottoming-out of the economy before he ever stepped into office.

Recovery measures were part of it, but not a very big part.

[Direckshun]

Originally Posted by patteeu

Why don't you think I do?

Because you posted about debt as if it was the deficit.

[Direckshun]

Originally Posted by donkhater

Read A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers. It lays it out and points to Clinton's actions as the main initiator. It's not a blame game book, but it also doesn't mince words as to who played what part in it all.

Almost nobody denies that the housing bubble first started inflating during the Clinton years.

[Direckshun]

Originally Posted by Direckshun

The recovery measures are nowhere near a majority of the deficit Obama inherited.

The deficit he inherited was mostly the Bush tax cuts, two wars on the credit card, and a complete bottoming-out of the economy before he ever stepped into office.

Recovery measures were part of it, but not a very big part.