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]

Bet you didn't know this was a part of the cliff: court budgets!

Thousands of court employees could be laid off.

[King_Chief_Fan]

Originally Posted by Direckshun

Bet you didn't know this was a part of the cliff: court budgets!

Thousands of court employees could be laid off.

It looks like a two week vacation

[Stewie]

[Direckshun]

Originally Posted by Stewie

This is nonsense.

[Comrade Crapski]

[Direckshun]

Two new developments:

1. Boehner has offered a millionaire's tax, rather than a more traditional top 2% tax increase. So the House GOP has finally begun its cave in on higher rates.

2. Boehner has also offered to extend the debt ceiling for a year, in what is clearly a promising start. The White House wants it out of Congress' hands, period.

[patteeu]

Originally Posted by Direckshun

Two new developments:

1. Boehner has offered a millionaire's tax, rather than a more traditional top 2% tax increase. So the House GOP has finally begun its cave in on higher rates.

2. Boehner has also offered to extend the debt ceiling for a year, in what is clearly a promising start. The White House wants it out of Congress' hands, period.

House Republicans would be foolish to give up the debt ceiling lever for anything short of a complete cave by the President. Someone has to constrain his propensity to spend our kids into poverty.

[FD]

A ‘fiscal cliff’ deal is near: Here are the details
By Ezra Klein , Updated: December 17, 2012

All at once, a “fiscal cliff” deal seems to be coming together. Speaker John Boehner’s latest offer doesn’t go quite far enough for the White House to agree, but it goes far enough that many think they can see the agreement taking shape.

Boehner offered to let tax rates rise for income over $1 million. The White House wanted to let tax rates rise for income over $250,000. The compromise will likely be somewhere in between. More revenue will come from limiting deductions, likely using some variant of the White House’s oft-proposed, oft-rejected idea for limiting itemized deductions to 28 percent. The total revenue raised by the two policies will likely be a bit north of $1 trillion. Congress will get instructions to use this new baseline to embark on tax reform next year. Importantly, if tax reform never happens, the revenue will already be locked in.

On the spending side, the Democrats’ headline concession will be accepting chained-CPI, which is to say, accepting a cut to Social Security benefits. Beyond that, the negotiators will agree to targets for spending cuts. Expect the final number here, too, to be in the neighborhood of $1 trillion, but also expect it to lack many specifics. Whether the cuts come from Medicare or Medicaid, whether they include raising the Medicare age, and many of the other contentious issues in the talks will be left up to Congress.

The deal will lift the spending sequester, but it will be backed up by, yes, another sequester-like policy. I’m told that the details on this next sequester haven’t been worked out yet, but the governing theory is that it should be more reasonable than the current sequester. That is to say, if the two parties can’t agree on something better, then this should be a policy they’re willing to live with.

On stimulus, unemployment insurance will be extended, as will the refundable tax credits. Some amount of infrastructure spending is likely. Perversely, the payroll tax cut, one of the most stimulative policies in the fiscal cliff, will likely be allowed to lapse, which will deal a big blow to the economy.

As for the debt ceiling, that will likely be lifted for a year, at least. In contrast to a week or so ago, when the White House was very intent on finishing the debt ceiling fight now, they’re sounding considerably less committed to securing a long-term increase in these negotiations. The argument winning converts, I’m told, is that since the White House won’t negotiate on the debt ceiling now and won’t negotiate on it later, there’s little reason to make it the sine qua non of a deal.

As is always the case, the negotiations could fall apart, or the deal could change. But right now, the participants sound upbeat, surprised at how quickly the process has moved from evident disaster to near-agreement, and fairly comfortable with where they think they’ll end up.

http://www.washingtonpost.com/blogs/...e-the-details/

[dirk digler]

new offer

The details, via a source familiar with the negotiations, include: a movement on revenue demands to $1.2 trillion from an initial $1.6 trillion, a permanent extension of Bush-era tax rates for incomes less than $400,000 (Obama initially set the threshold at $250,000), $1.2 trillion in spending cuts, a "fast track process" for corporate and individual tax reform once the new Congress convenes, permanent extension of tax extenders and the alternative minimum tax, an extension of unemployment benefits set to expire at the end of the year, additional stimulus in the form of infrastructure spending and a two-year debt limit increase.

The White House proposal would also allow the payroll tax cut to expire, and call for $130 billion in savings from Social Security benefits by adjusting the program's inflation index. The offer would include protections for the most vulnerable recipients, the person said.

[Direckshun]

Counteroffers now from Boehner and Obama.

This deal is getting done. It's hard to say when exactly it will get done, though.

We could be going off the cliff, but we should have a deal by early February at the least.

[Direckshun]

Welp, here's the cluster**** we all thought was coming.



After failing to sell his compromises to his caucus, Boehner is now threatening to walk away from the table altogether. He's offered "Plan B," which is a millionaire tax with nothing else, and a promise to go to war over the debt ceiling again.

Given how bizarre and counter productive it is to these talks, which were nearing towards a solution, the White House has now threatened to veto this idea.

[patteeu]

Originally Posted by Direckshun

Welp, here's the cluster**** we all thought was coming.



After failing to sell his compromises to his caucus, Boehner is now threatening to walk away from the table altogether. He's offered "Plan B," which is a millionaire tax with nothing else, and a promise to go to war over the debt ceiling again.

Given how bizarre and counter productive it is to these talks, which were nearing towards a solution, the White House has now threatened to veto this idea.

Useful chart. Boehner #1 looks the best. Obama's desire for extra spending seems to be the main impediment.

[BucEyedPea]

Originally Posted by patteeu

House Republicans would be foolish to give up the debt ceiling lever for anything short of a complete cave by the President. Someone has to constrain his propensity to spend our kids into poverty.

[BucEyedPea]

Gingrich to GOP: Go home, let Democrats take the blame

Newt Gingrich has a simple plan for the House to deal with the so-called “fiscal cliff” that has Washington politicians twisting in the wind: pass one bill with tax cuts, and one bill without, send them to the Senate then go home.

“It is very painful watching the negotiation, it’s sort of an incremental surrender,” the former Republican House speaker and presidential contender said during a meeting Monday with Human Events reporters and editors.

By delivering two versions to the Democratic-controlled Senate, the Republican-led House sends the message to voters they stood by taxpayers of all classes, Gingrich said. If Democrats and the White House decide to raise taxes and the economy tanks, that party will be to blame.

The problem Washington now faces is that Congress and President Barack Obama have decided they don’t want to abide by certain automatic tax increases and spending cuts they have scheduled to take effect Jan. 1 through previous legislation.

[BucEyedPea]

Forgot the link to that Gingrich solution post of mine.

http://www.humanevents.com/2012/12/1...ake-the-blame/