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ZippyTheChimp
December 20th, 2012, 08:58 PM
Boehner has pulled his Plan B, and House Majority Leader Cantor stated, "The House has concluded legislative business for the week."

Well Reps, see y'all on Wednesday. I think Cantor is going after Boehner's job with gusto.

I thought it was time to open a thread on this absurdity.

So...is it

http://fortunewallstreet.files.wordpress.com/2012/06/fiscal_cliff.jpg or http://sphotos-b.xx.fbcdn.net/hphotos-prn1/c45.0.403.403/p403x403/155441_491314047558283_1015739566_n.jpg

eddhead
December 20th, 2012, 09:00 PM
They both have validity.

BBMW
December 20th, 2012, 09:29 PM
It's a game of chicken, and Boehner won't swerve. In point of fact, even if a deal doesn't happen by 1/1, it doesn't mean there won't be deal. It's just at that point the effects start to be felt. Most wouldn't be permanent until the end of 2013 (when the tax effects would be locked in)

ZippyTheChimp
December 21st, 2012, 12:37 AM
Actually, Boehner caved in. All he was trying to do was get a united front; it would have been rejected by the Senate and Obama anyway, but he couldn't even deliver that.

If the Democrats just let the tax cuts expire, they can introduce legislation to cut taxes for those making less than $250K. If the Republicans are so tied up in this Grover Norquist pledge, how can they vote against a tax-cut?

eddhead
December 21st, 2012, 09:15 AM
I agree. Boehner would cut a deal like the one the President put on the table (increases for housholds making in excess of $400k, with domestic and defense cuts) in a heartbeat if his constituents in the House would let him, but he can't get the support from the teaparty.

Boehner's big problem is in order to retain his position as speaker, he needs the support of the Tea Party who are more inclined to support Cantor. That is why Cantor is giving him such a hard time.

IrishInNYC
December 21st, 2012, 09:30 AM
I agree. Boehner would cut a deal like the one the President put on the table (increases for housholds making in excess of $400k, with domestic and defense cuts) in a heartbeat if his constituents in the House would let him, but he can't get the support from the teaparty.

Boehner's big problem is in order to retain his position as speaker, he needs the support of the Tea Party who are more inclined to support Cantor. That is why Cantor is giving him such a hard time.

I think for many households, especially the middle class of the tri-state area, the difference in 250K and 400K makes a big difference.

Ninjahedge
December 21st, 2012, 09:48 AM
All you have to do is look at the numbers.

Flatly put, $400K and above eliminates the REALISTIC SUBURBAN DREAM of most. It pushes the increased tax limit above when most can see as a realistic possibility in their life.

MOST would like to earn $1M+ a year, but know deep down that that is probably not going to happen. But $250K? that SOUNDS so much more possible.

$400K is just odd. I doubt anybody knows anyone that earns that middle number. Hell, the CEO at my last firm only earned marginally more than that (some numbers were.... misplaced).


Anyway, this stonewalling is ridiculous. If the Republicans had any problems with the legislation, a deal probably could have been made to enact only a percentage of the cuts and a percentage of the tax increase, a stopgap with a rider to enact the rest in 6 months if not revised. Sort of a "fiscal speed bump" rather than this draconian doomsday cliff.

ZippyTheChimp
December 21st, 2012, 10:06 AM
I don't understand what the Tea Bags see as their end-game.

The US economy will not immediately go into a recessionary crisis. The markets may tank, but unless the situation goes on for months, it's transitory.

I can see a scenario where the Democrats craft a tax-cut proposal in January, and if the Republicans don't accept, it becomes a major topic in the State of the Union Address.

As for the proposed tax rate increases, they are marginal rates. The rate would change only for the income above $250K or $400K, not the entire amount of income.

eddhead
December 21st, 2012, 10:13 AM
Forget $400,000, the House leadership cannot even get the votes they need to get passage for the so called "Plan B" which calls for a roll-back the Bush tax cuts for households that earn over $1MM. I guess the feel that $1MM earners fall intoo the middle class

This is a public relations disaster for the GOP. I cannot imagine that most of the population do not see them as the party representing the millioniares.

Boehner's only real choices here are to:

1. Form a coalition of less-radical Republicans, and moderate Dems, in order to secure a deal with the White House that prevents us from going over the Cliff. Oddly, if this happens we could end up with a more Democratic-friendly bill than the one the President initially put on the table

2. Let us go over the cliff, and risk a possible recession.


If he goes with the former, it goes without sayng that his days as Speaker are numbered. If he goes with the latter, he may forever be known as the Speaker who created another great world-wide depression.

Lessor of two evils?

------------------------------------------------------------------------------------------------------------------------------

December 20, 2012

Boehner Cancels Tax Vote in Face of G.O.P. Revolt

By JONATHAN WEISMAN (http://topics.nytimes.com/top/reference/timestopics/people/w/jonathan_weisman/index.html)

WASHINGTON — Speaker John A. Boehner (http://topics.nytimes.com/top/reference/timestopics/people/b/john_a_boehner/index.html?inline=nyt-per)’s effort to pass fallback legislation to avert a fiscal crisis in less than two weeks collapsed Thursday night in an embarrassing defeat after conservative Republicans refused to support legislation that would allow taxes to rise on the most affluent households in the country.

House Republican leaders abruptly canceled a vote on the bill after they failed to rally enough votes for passage in an emergency meeting about 8 p.m. Within minutes, dejected Republicans filed out of the basement meeting room and declared there would be no votes to avert the “fiscal cliff” (http://topics.nytimes.com/top/reference/timestopics/subjects/f/federal_budget_us/index.html?inline=nyt-classifier) until after Christmas. With his “Plan B” all but dead, the speaker was left with the choice to find a new Republican way forward or to try to get a broad deficit reduction deal with President Obama (http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per) that could win passage with Republican and Democratic votes.

What he could not do was blame Democrats for failing to take up legislation he could not even get through his own membership in the House.
“The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Mr. Boehner said in a statement that said responsibility for a solution now fell to the White House and Senator Harry Reid, Democrat of Nevada, the majority leader. “Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff.”

The stunning turn of events in the House left the status of negotiations to head off a combination of automatic tax increases and significant federal spending cuts in disarray with little time before the start of the new year.

At the White House, the press secretary, Jay Carney, said the defeat should press Mr. Boehner back into talks with Mr. Obama.
“The president will work with Congress to get this done, and we are hopeful that we will be able to find a bipartisan solution quickly that protects the middle class and our economy,” he said.

The refusal of a band of House Republicans to allow income tax rates to rise on incomes over $1 million came after Mr. Obama scored a decisive re-election victory campaigning for higher taxes on incomes over $250,000. Since the November election, the president’s approval ratings have risen, and opinion polls have shown a strong majority not only favoring his tax position, but saying they will blame Republicans for a failure to reach a deficit deal.

With a series of votes on Thursday, the speaker, who faces election for his post in the new Congress next month, had hoped to assemble a Republican path away from the cliff. With a show of Republican unity, he also sought to strengthen his own hand in negotiations with Mr. Obama. The House did narrowly pass legislation to cancel automatic, across-the-board military cuts set to begin next month, and shift them to domestic programs.

But the main component of “Plan B,” a bill to extend expiring Bush-era tax cuts (http://topics.nytimes.com/top/reference/timestopics/subjects/t/taxation/bush_tax_cuts/index.html?inline=nyt-classifier) for everyone with incomes under $1 million, could not win enough Republican support to overcome united Democratic opposition. Democrats questioned Mr. Boehner’s ability to deliver any agreement.

“I think this demonstrates that Speaker Boehner has a real challenge,” said Representative Steny H. Hoyer of Maryland, the No. 2 House
Democrat. “He hasn’t been able to cut any deal, make any agreement that’s balanced. Even if it’s his own compromise.”

Representative Rick Larsen of Washington accused Republicans of shirking their responsibility by leaving the capital. “The Republicans just picked up their toys and went home,” he said.

Futures contracts on indexes of United States stock listings and shares in Asia fell sharply after Mr. Boehner conceded that his bill lacked the votes to pass.

The point of the Boehner effort was to secure passage of a Republican plan, then demand that the president and the Senate to take up that measure and pass it, putting off the major fights until early next year when Republicans would conceivably have more leverage because of the need to increase the federal debt limit (http://topics.nytimes.com/topics/reference/timestopics/subjects/n/national_debt_us/index.html?inline=nyt-classifier). It would also allow Republicans to claim it was Democrats who had caused taxes to rise after the first of the year had no agreement been reached.

That strategy lay in tatters after the Republican implosion.“Some people don’t know how to take yea for an answer,” said Representative Charlie Dent of Pennsylvania, a Republican who supported the measure and was open about his disappointment with his colleagues.

Opponents said they were not about to bend their uncompromising principles on taxes just because Mr. Boehner asked.

“The speaker should be meeting with us to get our views on things rather than just presenting his,” said Representative Justin Amash of Michigan, who recently lost a committee post for routinely crossing the leadership.

Just days before more than a half trillion dollars in tax increases and spending cuts kick in, a chasm now separates Congressional Republicans from the president, even though the latest deficit offers from the White House and speaker are numerically very close. With his own plan defeated, Mr. Boehner faces a grave decision. A deal with Mr. Obama would almost certainly lose a huge swath of his Republican conference, but it could pass with Democratic support. Does he make such a deal and risk a Republican revolt, or do leaders allow the nation to head into an economic situation that some say could cause a recession?

“It has been deeply troubling that Speaker Boehner has spent day after day on the road to nowhere; making it clear Republicans are having trouble governing and only putting us closer to the fiscal cliff,” said Representative Sander M. Levin of Michigan, the senior Democrat on the House Ways and Means Committee. “The speaker needs to now exercise leadership and go back to the negotiating table with the president to find a path forward that is balanced, equitable, and promotes economic growth.”

Senator Rob Portman, Republican of Ohio, was enlisted to press his former House colleagues to vote yes, but even with the failure of that effort, he said there was a way forward.

“Maybe I’m the last optimist standing in this town, but I still think whether it passes or not, there’s still an opportunity for a broader agreement,” he said.

The speaker’s troubles on Thursday seemed to worsen with each hour. The vote to cancel the military cuts, supposed to be the easiest of the night, passed narrowly, 215-209. Even a routine procedural vote to take up the speaker’s tax bill passed by a surprisingly tight tally, 219-197, with 13 Republicans bolting from their leadership to vote “no.” Recalcitrant conservatives were balking on allowing taxes to rise on incomes over $1 million a year.

“I want something that treats everybody fairly. I think everybody needs to be protected, and I don’t think the bill does that,” said Representative Mick Mulvaney, Republican of South Carolina, who opposes Plan B.

The struggle to muster the votes for Plan B played out against a surreal tableau in the Capitol. Senator Daniel K. Inouye, Democrat of Hawaii, who died Monday, was lying in state in the Rotunda. Mr. Boehner spoke briefly with Senator Reid as they watched the somber memorial service for Mr. Inouye in the morning. Then the two men blasted each other hours later. Representative Kevin McCarthy of California, the Republican whip, could be seen bending arms on the House floor.

Stymied, Republican leaders called a recess around 7 p.m. Members streamed in and out of the whip’s office, munched on Chick-fil-A sandwiches (regular and spicy) and professed uncertainty over what comes next.

Democrats — and some Republicans — hoped the demise of the Boehner backup plan will usher in a last and final round of negotiations between the speaker and President Obama over a broad deficit reduction deal that raises more than $1 trillion in taxes over 10 years while locking in another $1 trillion in savings from entitlements like Medicare (http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/medicare/index.html?inline=nyt-classifier) and other federal programs.

“The math changes” with a bipartisan deal, said Representative Steven C. LaTourette, a retiring Republican moderate from Ohio, who predicted Mr. Boehner could win at least half of House Republicans. “If there’s a negotiated settlement with the president, the speaker will put it on the floor and we’ll see where the chips fall.”

http://www.nytimes.com/2012/12/21/us/politics/house-moves-toward-vote-on-boehners-backup-plan.html?pagewanted=2&hp&pagewanted=print

Ninjahedge
December 21st, 2012, 10:38 AM
“If there’s a negotiated settlement with the president, the speaker will put it on the floor and we’ll see where the chips fall.”
Cow or potato....

stache
December 21st, 2012, 11:15 AM
I don't understand what the Tea Bags see as their end-game.


Ruin the country, then blame it on Obama. In their minds it will make the tea bags look better.

ZippyTheChimp
December 21st, 2012, 11:46 AM
"Plan 9 from Outer Space"

mariab
December 21st, 2012, 08:56 PM
Thought they weren't coming back until after New Year's. Well if they come back Wednesday it's somewhat promising.

BBMW
December 22nd, 2012, 02:13 PM
This isn't going to be settled before the first. Until the pressure rises from people actually feeling the effects of the cuts and tax increases, nothing will happen.

When people get that first paycheck of the new year, you will be hearing a lot of noise.

mariab
December 22nd, 2012, 08:52 PM
They did a last minute deal with the debt ceiling, why wouldn't they do it with this?

BBMW
December 23rd, 2012, 04:10 PM
Th deal with the debt ceiling was to kick the can down the road, until now, to avoid the election. If they're going to have a showdown, now's the perfect time. There won't be another election for two years.

And it really isn't some much of a cliff as it is the start of a downward slope that gets steeper the further they go. The longer this drags on, the more the pain on everyone's constituents, until the noise gets so loud that they have to make a deal.

ZippyTheChimp
December 23rd, 2012, 05:40 PM
They did a last minute deal with the debt ceiling, why wouldn't they do it with this?The debt-ceiling impasse wasn't about taxes. This one is. More ideology than fiscal policy.

A good explanation of how this came to be.

How Party of Budget Restraint Shifted to ‘No New Taxes,’ Ever (http://www.nytimes.com/2012/12/23/us/politics/how-party-of-budget-restraint-shifted-to-no-new-taxes-ever.html?pagewanted=all&_r=0)

Ninjahedge
December 26th, 2012, 11:27 AM
When a house has termites, you call an exterminator.

You do not set the house on fire and rebuild it later.

BBMW
December 26th, 2012, 12:13 PM
When the termites have eaten enough of the house, you have some carpentry to do.

I've come to the conclusion that the Republicans should give Obama his tax increases, but only at the price of signifcant cuts in Medicare, Medicaid, and Social Security.

ZippyTheChimp
December 26th, 2012, 12:25 PM
The requested tax increases aren't as significant as people are led to believe.

Ninjahedge
December 26th, 2012, 01:21 PM
It is the blind cuts that are more damaging.

If you want to remove a cancer, you try not to chop the whole arm off in the process.

eddhead
December 28th, 2012, 09:00 AM
When the termites have eaten enough of the house, you have some carpentry to do.

I've come to the conclusion that the Republicans should give Obama his tax increases, but only at the price of signifcant cuts in Medicare, Medicaid, and Social Security.


... you left out defense.

Ninjahedge
December 28th, 2012, 09:34 AM
Here's the key, the quickening, the cut.

It does not matter how MUCH is being spent on ANY of this, really. What matters is what is being spent on and who is really getting the money.

Example: Medicare (I believe) increased its pharmaceutical limit not too long ago... but to my knowledge there is no limit to how much Pfizer, et all, can charge for Grandpa's prostate medication.

Example: Military research into space travel (propulsion systems), field medical apparatus and nutritional studies COULD help us all. Developing, and building, stealth technology is a cash cow that would only serve a limited purpose (how can we apply that tech elsewhere?). How MANY stealth bombers would we REALLY need? How truly mobile do we need our forces? (Do we really need air-tankers flying 24/7?)

We are, in effect, throwing money at stuff without looking at where it is really going.

For a nation that can operate a medical system for our military at a single digit operating cost percentage, it is odd to see so much bloat and surreptitious blowback STILL HAPPENING.

The problem is, you cannot site individual discrepancies in a 15 second soundbyte or 2-paragraph "news summary". All you can say is that we spend XX% on SS and put devil horns on it.

Merry
December 29th, 2012, 06:39 AM
We are, in effect, throwing money at stuff without looking at where it is really going.

That's what politicians do. Quick fix. No policy or thought required. Seen to have done something. Hands washed of the problem.

Wouldn't getting out of Iraq and Afghanistan help enormously? Time to tend to one's own flock.

How about we kick them all off this entirely artificial cliff and start again.

lesterp4
December 29th, 2012, 08:38 AM
I'll second that!!!!!!!!!!!!!!!!!!!!!

lofter1
December 31st, 2012, 02:40 PM
No apparent ultimate solution and yet the Dow is up 62 points with 90 minutes to close. Let's see how the day ends ...

eddhead
December 31st, 2012, 03:45 PM
Actually, the Times is reporting there is progress; they appear to have reached a deal on taxes, but spending is still an issue.

Merry
January 1st, 2013, 04:18 AM
"Ridiculous", indeed.

Could there ever be worthwhile life in the U.S. without all the anachronistic, self-interested and power-hungry politicking?


Over the Cliff: Shoddy Compromise Reflects Well on Nobody

Posted by John Cassidy

As I write this, the latest news (http://www.politico.com/story/2012/12/fiscal-cliff-hanger-as-deal-in-limbo-85599.html) from Capitol Hill is that even if the Senate votes before midnight on the last-minute deal that Senators Harry Reid and Mitch McConnell have put together, the House definitely will not. Thus, the country will go over the fiscal cliff, at least for one night. Still, the betting in Washington is that a bill will be agreed upon tomorrow, or maybe the next day.

Assuming it passes both chambers of Congress—a non-trivial assumption—there won’t be any great cause for celebration. It’s a shoddy compromise that does credit to nobody involved, and it raises questions, once again, about President Obama’s willingness and ability to face down the Republican extremists.

About the best that can be said of the deal (http://bostonglobe.com/news/nation/2012/12/31/details-tentative-fiscal-cliff-deal/aaodkpbOD6LKO2MRWUuDfO/story.html) is that it avoids a hasty shift towards big spending cuts, which could endanger the recovery. But that’s only because the deal punts most of the big questions about federal spending into 2013, when the G.O.P. ultras will be eager to exploit the fact that the Administration once again needs their support to raise the debt ceiling. Anybody who was hoping that the fiscal-cliff negotiations would settle the issue of deficit reduction for the next ten months, let alone the next ten years, will be disappointed.

Come February or March, when the debt ceiling will be breached, we could well be back to the summer of 2011, with the G.O.P. holding the economy hostage and demanding big cuts in Social Security and Medicare. The President has said that he won’t negotiate with the Republicans over the debt ceiling, but will he have any choice? Even before that showdown, there will be questions about the concessions that his negotiators made to reach this deal.

The White House will claim—Obama already has claimed—that the deal is a worthwhile one because it avoids a big tax increase for middle-class families and extends unemployment benefits, and several other income-support programs, for millions of Americans. That is all true, but it isn’t saying very much. The Republicans, wary of being accused of robbing the poor to pay the rich, were always going to cave eventually on extending unemployment benefits and preserving the enhanced tax credits for low-income families. Similarly, there was never any prospect of Congress allowing the Bush tax cuts for the lower income brackets to expire. The only question was whether the cuts would be made permanent in the days before or after January 1st, and by an act of the old Congress or the new one.

In order to prevent a few days of confusion and possible turmoil in the markets, the Administration agreed to raise the income threshold at which the higher top rate kicks in, from $250,000 to $450,000. (For individuals, it will be $400,000.) That was a big concession. It means that only about a million and half households, rather than three million, will face the new top rate of taxation, and, for future reference, it effectively designates any family that earns less than $450,000 a year as middle class, which is ridiculous. The median household income is about $50,000 a year. Four out of five American families earn less than $100,000 a year. Fewer than one per cent of households earn more than $450,000.

Having lambasted the Bush tax cuts as reckless when they were first introduced, Obama and the Democrats have now conceded that, under no circumstances, should anybody but members of the one per cent—the very richest Americans—be asked to pay higher income tax rates. Well-off Yuppie couples—ad executives or lawyers, say, who pull down $200K a year each—are to be treated like janitors and cops. In a country wary of consumption taxes, such as gas taxes and V.A.T., this puts a strict limit on the revenues that the federal government can raise. It virtually concedes the Republican argument that, going forward, the burden of deficit reduction should fall on spending cuts.

And that wasn’t the only surrender on the White House’s part. In giving up on extending payroll-tax cuts it introduced in 2010 and 2011—a concession it made weeks ago—it gave lie to the claim that middle-class families won’t face a tax increase. For the past two years, American workers have been paying two percentage points less than usual in payroll taxes. Now the rates will go back to normal. For a family earning $60,000 a year, this will mean a tax hike of about a thousand dollars.

Taken in isolation, there were sound reasons for restoring the payroll tax to its normal level. (The proceeds are used to pay for Social Security and Medicare.) But the feeling grows that, somehow or other, President Obama didn’t make the most of the situation he found himself in. In addition to raising the top tax threshold, he agreed to a very modest raise in the tax rate on dividends and capital gains—from fifteen per cent to twenty per cent. If the Bush tax cuts had been allowed to expire, dividends would once again have been treated as ordinary income, which means that the very rich—who receive most of them—would have paid a rate of 39.6 per cent.

That’s a big plus for the one per cent, as is the agreement to exempt the first five million dollars of inherited wealth from the estate tax. (In the old days, the exemption was $1 million.) And in an even bigger win for the members of the 0.001 per cent, there doesn’t appear to be any mention in the agreement of eliminating the earned-interest deduction used by hedge-fund and private-equity managers, or of enforcing the Buffett rule. So much for cracking down on the loopholes enjoyed by Mitt Romney and his cronies.

To be sure, the Republicans in Congress aren’t easy to deal with, and, as I said earlier (http://www.newyorker.com/online/blogs/johncassidy/2012/12/fiscal-cliff-fiasco-where-did-obamas-leverage-go.html), Obama didn’t have as much leverage as it first appeared. But he always had the option to walk away from the talks, let the Bush tax cuts expire, and then sit down after the New Year with the Republicans and talk about restoring some of them on a selective basis in return for an extension of the debt ceiling. Unfortunately—and this was something I noted early on (http://www.newyorker.com/online/blogs/johncassidy/2012/11/obama-tax-hikes-and-fiscal-cliff.html)—the President never really appeared willing to play this card, which encouraged the G.O.P. to be its obstreperous self.

As the details of the agreement leaked out on Monday, there was a rare consensus among liberal and centrist economic commentators that it was a pretty putrid one. Robert Reich, the former Labor Secretary, called it a “lousy deal.” (http://robertreich.org/post/39333816768) Marc Goldwein, the policy director at the Committee for a Responsible Budget, favored an excremental (https://twitter.com/MarcGoldwein) adjective. Even Jared Bernstein, a liberal economist who until pretty recently worked for Vice-President Joe Biden, was skeptical. “But jeez,” he wrote on his blog (http://jaredbernsteinblog.com/the-cliff-deal-in-the-offing/). “This meets the R’s further on their side of the field than one might have expected given the White House’s leverage.”

Perhaps there is something about the deal that these folks are missing. I hope so. For now, coming just two months after Obama was reëlected with a handy majority of the popular vote, it all seems pretty depressing.

http://www.newyorker.com/online/blogs/johncassidy/2012/12/shoddy-compromise-reflects-well-on-no-one.html

Merry
January 1st, 2013, 05:08 AM
Just deals? Nothing about for the good of the people?

$715 billion over 10 years doesn't sound like much. A lot can happen in 10 years.




Fiscal Cliff Deal Growing More Likely, Would Raise $715 Billion In Revenue

by Sam Stein and Ryan Grim

WASHINGTON -- The preliminary fiscal cliff deal being negotiated by Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden would achieve up to $790 billion in revenue over the next decade. Some of that money would be offset by extensions of tax credits and other stimulative policy, leaving roughly $715 billion in debt reduction over that same time period.

Because the revenue is counted over a decade, much depends on a variety of inexact assumptions, which is why the White House calculation of the total revenue raised by the deal is only $600 billion.

The details for the deal, which are still being tinkered with, were passed along to The Huffington Post by a source with direct knowledge of the talks. While progressive lawmakers (http://www.huffingtonpost.com/2012/12/31/tom-harkin-fiscal-cliff-talks_n_2388612.html) and pundits (http://nymag.com/daily/intelligencer/2012/12/why-is-obama-caving-on-taxes.html) have bemoaned some of the provisions, some top Hill aides seemed increasingly bullish on the prospect of closing a deal before the day was through.

Under the framework, the Bush-era tax cuts would be extended permanently for individuals at $400,000 and joint filers at $450,000. A second Senate Democratic source familiar with the state of play confirmed those details. The top rate on ordinary income would go back to 39.6 percent and raise an estimated $370 billion in revenue over 10 years.

The same thresholds would be applied for capital gains and dividends, with the top rates in that case going up to 20 percent -- a concession to Republicans (the rate on dividends was set to return to 39.6 percent) but not far from the president's position during the campaign.

Left unaddressed, at the moment, are the $1.2 trillion in sequestration-related cuts that will be triggered on Jan. 1. The parties are arguing over how long to stave off the cuts, and whether and how to offset them.

House Republicans will make no decision on next steps until the Senate finally acts, at which point the leadership will convene the entire conference and make a party-wide decision, said a person familiar with the planning. The aim is to avoid a repeat of the Harry Reid-dubbed "mother of all debacles" that was Plan B, which was concocted by the Republican leadership and delivered to the conference, which publicly rejected it.

The estate tax, which had been a sticking point, will be raised slightly. Currently, it stands at 35 percent on a $5 million threshold. That would be raised to 40 percent, again on a $5 million threshold, which would raise an estimated $25 billion in revenue over 10 years.

Tax benefits would also decrease for high-income earners, with respect to their personal exemptions and itemized deductions. Under the deal being negotiated, the personal exemption phase-out would be capped at $375,000 for individual filers and $425,000 for joint filers. The limitation on itemized deductions would be set at $250,000 and $300,000 respectively. What this means, in basic terms, is that above those income levels, the value of exemptions and deductions goes down and the tax bill paid by those taking the exemptions and deductions goes up. These provisions would raise an estimated $185 billion over 10 years.

The deal being negotiated would, in addition, include a permanent patch to the alternative minimum tax, which was designed to ensure that the wealthy paid a share of taxes, but could engulf millions of middle-class earners if left untouched.

The deal would include a five-year extension of stimulative tax policies, such as the Earned Income Tax Credit, the Child Tax Credit and the college credit expansions. Democrats are counting $135 billion in savings here because they are not extending these policies over a ten year window (the savings come from letting the policies lapse in years five through 10). It's an accounting gimmick that the White House hasn't made itself, in part out of a belief that the provisions will likely be extended beyond 2017.

The deal would also include a one-year extension of the 50 percent bonus depreciation provision (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Bonus-Depreciation-and-Increased-Section-179-Deduction-under-the-American-Recovery-and-Reinvestment-Act) introduced in the American Recovery Act, which enables small businesses to deduct up to $250,000 of the cost of machinery and other equipment.

There are still major areas of disagreement to be negotiated. For example, the deal calls for a one-year resolution to the so-called doc-fix, which adjusts the amount of money doctors receive for taking Medicare patients. But as of Monday morning, there was no agreement on how to pay for it.

Both sides had also agreed that unemployment insurance should be extended for one year, affecting an estimated 2 million recipients. But again, there was a dispute over how to cover the $30 billion cost.

While those issues remain unresolved, questions also loomed over whether there was enough support among lawmakers to see the deal through.

A top Democratic Senate aide, wondering why Democrats are panicked at the prospect of a deal that keeps Bush-era tax rates for income higher than $250,000 when the House couldn't even pass one that keeps them for $1 million in income, noted that whatever happens in the Senate still needs to be dealt with by House Speaker John Boehner (R-Ohio). "What I want to know is: if Boehner couldn't get $1 million through the House and now McConnell is caving at $450,000, then how does Boehner deal with this?"

http://www.huffingtonpost.com/2012/12/31/fiscal-cliff-deal_n_2388823.html

BBMW
January 1st, 2013, 03:11 PM
Chances are not good this is getting through the house without bigger spending cuts.

scumonkey
January 1st, 2013, 04:21 PM
Breaking (from msnbc): House majority leader Eric Cantor does not support the cliff deal.
House GOP may try and amend fiscal cliff deal.

House Republicans balk at "fiscal cliff" deal(Reuters (http://www.reuters.com/video/reuters-tv?videoId=238165734&videoChannel=118066&lc=int_mb_1001)) - Washington's last-minute scramble to step back from a "fiscal cliff" ran into trouble on Tuesday as Republicans in the House of Representatives balked at a deal to avert a budget crisis.
Republican leaders in the House said they might try to change the bill approved by the Senate which voted to raise taxes on the wealthy in a late-night show of unity.

That would set up a high-stakes game of chicken between the two chambers and risk a stinging rebuke from financial markets that are due to open in Asia in six hours.

The bill drew overwhelming support from Republicans and Democrats alike in the Senate when it passed by a vote of 89 to 8. But Majority Leader Eric Cantor, the No. 2 Republican in the House, told reporters after huddling with other Republicans that he does not support the measure.

Republicans said they might try to add more spending cuts to the bill, which contains over $600 billion in tax increases but only around $12 billion in spending cuts.

With the Senate adjourned until Thursday, it appeared possible that Congress could push the country over the "fiscal cliff" after all, despite months of effort.
Republicans could face a backlash if they scuttle the deal. Income tax rates technically rose back to 1990s levels for all Americans at midnight, and across-the-board spending cuts on defense and domestic programs are due to kick in on Wednesday.

Economists say the $600 billion combination of tax cuts and spending cuts could push the economy into recession, and public opinion polls show Republicans would shoulder the blame.

Lingering uncertainty over U.S. fiscal policy has unnerved investors and depressed (http://www.reuters.com/article/2013/01/01/us-usa-fiscal-idUSBRE8A80WV20130101#) business activity for months.
Financial markets have staved off a steep plunge on the assumption that Washington would ultimately avoid pushing the country off the fiscal cliff into a recession.
With financial markets closed for the New Year's Day holiday, lawmakers have only Tuesday to close the deal before Wall

Street has time to weigh in.

"My district cannot afford to wait a few days and have the stock market (http://www.reuters.com/article/2013/01/01/us-usa-fiscal-idUSBRE8A80WV20130101#) go down 300 points tomorrow if we don't get together and do something," Representative Steve Cohen, a Democrat from Tennessee, said on the House floor.
The bill passed by the Democratic-led Senate at around 2 a.m. would raise income taxes on families earning more than $450,000 per year and limit the amount of deductions they can take to lower their tax bill.

Low temporary rates that have been in place for less affluent taxpayers for the past decade would be made permanent, along with a range of targeted tax breaks put in place by President Barack Obama in the depths of the 2009 recession.

However, workers would see up to $2,000 more taken out of their paychecks annually as a temporary payroll tax cut was set to expire.
(Additional reporting by Thomas Ferraro; Writing by Andy Sullivan; Editing by Alistair Bell and Jackie Frank)

mariab
January 1st, 2013, 11:37 PM
Well finally. Now let's see what the market does first day of the new year. Should be good, unless bad news from other countries snot up the works.

eddhead
January 2nd, 2013, 08:23 AM
The final deal was outrageous. I am sorry but the is a GOP fantasy come true.

Income tax increases limited to those individuals earning greater than $400K and families earning greater than $450. For the most part, the Bush tax cuts are now permanent. I know Obama has pledged to revisit them but good luck on that.

Also lost in the details, the payrol tax holiday was suspended. This is huge.

The net effect? Because payroll taxes are set to increase by a flat 2% across all income groups, and because of the income ceiling on payroll taxes, this legislation will result in a regressive tax increase, weighted toward the middle and lower ends of the income strata. 77% of all earners will see their taxes increase, including virtually all lower income earners.

As far as I am concerned, the GOP got their wish; a broader tax base with more proportional contribution from the lower income class. Also, few changes to estate tax laws, and none to capital gains tax rates. As a result, few wealthy Americans will share the burden proportionally.

Bad deal for the Dems. Frankly, we would have been better off going over the cliff, and putting additonal pressure on the house GOP.

http://blogs.wsj.com/economics/2013/01/01/payroll-tax-cut-expires-how-much-more-will-you-pay/

http://www.newyorker.com/online/blogs/comment/2013/01/obamas-next-fight.html

Ninjahedge
January 2nd, 2013, 08:39 AM
Fiscal Cliff -> Fiscal Carnival.

IrishInNYC
January 2nd, 2013, 08:52 AM
If I don't hear the word "fiscal" for the rest of my life it'll be to soon.

eddhead
January 2nd, 2013, 08:56 AM
This also marks the beginning of the end of Boehner's rein as Speaker.

@ Irish - ... fecal > fiscal, or at least = to.

IrishInNYC
January 2nd, 2013, 09:06 AM
This also marks the beginning of the end of Boehner's rein as Speaker.

@ Irish - ... fecal > fiscal, or at least = to.

And oddly similar to fisting also :eek:

Ninjahedge
January 2nd, 2013, 09:35 AM
Lets not get anal about this.

BBMW
January 2nd, 2013, 10:35 AM
You realize this is only half done. Obama got his tax increase (although not as much as he wanted.) But they punted out the vote on the budget cuts and debt ceiling for two months. So there will be another go around at the end of February. This time, the big across the board tax increases won't be hanging over the negotiations, so the Republcans may not feel the need to give in on this one (hopefully.)

Ninjahedge
January 2nd, 2013, 10:54 AM
As much as HE wanted?

What about 95% of the American people? What most of THEM wanted was an increase on things like Capital Gains and an elimination of things like personal yachts (and the like) deductible as "business expenses".

And the Repubs really did not "give in" on anything. This was not the no tax increase (or, lets get this strait, non-renewal of a TEMPORARY TAX RELIEF), this was marginal at best. All are behaving like kids in a sandbox. Unfortunately we, as the voters, do not really have the ability to send them to their rooms for behaving like spoiled brats.

IrishInNYC
January 2nd, 2013, 11:21 AM
This is a defeat for Obama in many ways...less than half of what he asked for and not in the places he asked for it.

And cut the military budget already...it's a sickening waste of money justified by the "threat" of terror. Is there any real need for 662 overseas bases in 38 countries (http://www.acq.osd.mil/ie/download/bsr/bsr2010baseline.pdf)?

eddhead
January 2nd, 2013, 11:43 AM
You realize this is only half done. Obama got his tax increase (although not as much as he wanted.) But they punted out the vote on the budget cuts and debt ceiling for two months. So there will be another go around at the end of February. This time, the big across the board tax increases won't be hanging over the negotiations, so the Republcans may not feel the need to give in on this one (hopefully.)

Yes I realize that this is only half done, but I do not agree that he GOP holds all the cards in February. If he debt cieling is not raised, the Federal Gov comes to a grinding halt. If you don' think the public will blame he house GOP for that you're forgetting about what happened when Gingrich shut down the govt. during Clinton's second term.

I do agree there should be budget cuts though. Let's start with defense where we spend more than the next 17 countries in the world combined and where our spending represents almost 1/2 of he world's total defense spending. Make some serious inroads there, than come back to me.

Ninjahedge
January 2nd, 2013, 12:23 PM
Edd, I will chime on that one.

Like I said previously, we need to re-examine what we are spending on. Doing medical research (whether it be for medics or weapons) may yield great benefits in the private sector, but buying Stealth Bombers will not work in today's political environment. Do you think China will be able to be taken completely by surprise by a "pre-emptive" strike or other targeted affair w/o knowing it was from the US and retaliate? Also, how will this technology help in the private sector AT ALL?

As bad as EM interference research (basically short circuiting the human nervous system from a distance) could be as a weapon, further development could help to develop devices to help treat seizures and other problems.

the main problem we have in talking about military cuts is simple. The things that would get cut first would not be building tanks and bombers. it would be cutting long term benefits for vets. It would be cutting programs to try and help rebuild what we destroyed in our own military maneuvers. We need to be VERY CAREFUL , and specific when we start calling for cuts there, just like any other.

eddhead
January 2nd, 2013, 01:16 PM
In a budget that exceeds the combined total of the next 17 countries and is comprised of 50% of the world's defense spending, there is plenty of room to make drastic cuts without affecting benefits to disabled vets or rebuilding what we broke overseas. If this money was coming out of our individual budgets we'ld be a lot less tolerant of waste, bloating, kick-backs, no-bid awards, and corruption. And we wouldn't tolerate spending billions on planes that don't fly.

Eisenhower was right about the miliary-industrial complex. It is a sham and a crime to tax payers.

IrishInNYC
January 2nd, 2013, 02:21 PM
Edd, I will chime on that one.

Like I said previously, we need to re-examine what we are spending on. Doing medical research (whether it be for medics or weapons) may yield great benefits in the private sector, but buying Stealth Bombers will not work in today's political environment. Do you think China will be able to be taken completely by surprise by a "pre-emptive" strike or other targeted affair w/o knowing it was from the US and retaliate? Also, how will this technology help in the private sector AT ALL?

As bad as EM interference research (basically short circuiting the human nervous system from a distance) could be as a weapon, further development could help to develop devices to help treat seizures and other problems.

the main problem we have in talking about military cuts is simple. The things that would get cut first would not be building tanks and bombers. it would be cutting long term benefits for vets. It would be cutting programs to try and help rebuild what we destroyed in our own military maneuvers. We need to be VERY CAREFUL , and specific when we start calling for cuts there, just like any other.

I don't think it would be hard to get specific and the vet benefits would be way down the list. Stop with the hundreds of billions on developing more tanks, bombs, ships, and planes. There are ENOUGH already. Almost 10,000 aircraft between the Air Force and Navy alone and 300 ships! That we know of. Where are they going with all that?

Hoping for medical advancements to come out of military R&D is also no reason to not make drastic cuts. That's fanciful thinking; if there is a need and demand for something, someone in this great nation will invent it.

The word cut is wrong too. Slashing is needed. Not that we'll get this in February; "cuts" this year will only dampen the growth of the "defense" budget, checking it down to 2007 levels....no true cuts are on the table.

BBMW
January 2nd, 2013, 02:45 PM
Because it's defense that driving the country into insolvency, right?

16770

IrishInNYC
January 2nd, 2013, 03:14 PM
Not by itself, but like everything, it's contributing to the problem. Government is so bloated, so massive, so free spending that the unchecked waste is practically out of anyone's control.

I just have a particular problem with the military waste and the continued "war on terror" propaganda, the targeted recruitment and glorification of war and the death it heralds.

Ninjahedge
January 2nd, 2013, 03:55 PM
Also take a look at how much money from things like Medicare actually GO to care and how much ends up in Pfizer's pockets.

Our pharms control our medical plans and what people can afford to live.

We just do not go beyond the first step when we scream about budgets. We say military and the first thing that gets cut is US Military bases and retirement benefits.

We scream Medicare and eligibility gets restricted, but no attempts are made to develop wellness programs or restrict charges for medication costs.

Lastly, we call about government spending, like Teachers, and do not see that administrative salaries are included in the tally and things such as grandfathered retirement packages (someone "working" for the government for 20 years at $2K salary is "promoted" for the last 2 years they have before they "retire" and end up getting a $50K/yr pension).

We need to site the problems, but then deal with them with a surgeons precision.

eddhead
January 2nd, 2013, 05:19 PM
Because it's defense that driving the country into insolvency, right?

16770

US defense spending constitutes 45% or the worlds defense spending. We spend almost as much on defense as the rest of the world combined. We guarantee the security of the 28 NATO member countries. We can no longer afford to do this, we need more from our allies.

In contrast, the US is not responsible for anything near 45% or the world's social spending. In fact, we rank 25th amoungst developed countries in the share social spending as a percentage of GDP at 16.2%. We are the greatest and richest country in the world, and we spend proportionaely less on supporting the health and living standards of the elderly and interned than all but 9 members of the OECD.

Entitlement reforms are needed, and maybe we can start by raising or eliminating the payroll tax ceiling. But there is a lot more room in the defense budget because there is a lot more bloat there.

BBMW
January 2nd, 2013, 05:40 PM
The rest of the "developed" world (ie, Europe in this context) is also driving themselves into bankruptsy with their social spending. We're probably just a little bit behind them on that. But given the aging population and the unfunded liabilities we're not far behind.

Besides, what other countries do isn't particularly relevent to what we need to be doing. The entitlements have done nothing but hook the elderly and the poor on government assistance. Allowing this to happen was a huge mistake. They're doing nothing more now than voting themselves other peoples money.

eddhead
January 3rd, 2013, 08:54 AM
http://9bcernuda.colband.blog.br/fabiogondo/family-guy-kool-aid-man-gif-i15.gif

Ninjahedge
January 3rd, 2013, 09:10 AM
So the solution is not COPYING what other countries do, but to learn from their mistakes.

BBMW, your argument is like "Well yeah, fire burns, but Cancer is really bad!"

???

I understand what you are saying, but one wrong does not absolve another. It is a VERY common political device. "Oh, we would like to do XYZ, but we have to keep our nuclear arms up to make sure we are "safe" from Russia!!!". We have learned that the arms race, among other things, bankrupted Russia, but we are still plodding along long after the USSR has dropped from that particular match-up.

So what do we learn from Europe? We look at what countries like Germany have done right. Switzerland. Not Italy. Ones where workers are given rights, but also pride and expected to perform for their benefits. Where there are inexpensive and reputable places for people of all income levels to leave their children as they go to work. Where people do not have to worry about a medical bill for the Flu and go in to see the doctor when they get a cut rather than waiting until it gets infected.

I am not saying we should have 30 hour work weeks and 8 weeks vacation with yadda yadda yadda, but again, spending BILLIONS on war gear, having bases in countries that we beat 60 YEARS ago that we should just let take care of their own affairs......

The problem is, I believe congress can say how much is spent on given areas, but not SPECIFICALLY.... So we cut "spending" and we still get extra police in Bridgeport, but no repairs on public housing and a wage freeze on teachers.

eddhead
January 3rd, 2013, 09:17 AM
While deficits in social spending are an issue for many European countries, as much as anything, it is the Euro that is dragging most of those countries down. The inabilty to unilaterally regulate the soverign value of their currency has eliminated an important monetary tool to regulate economic and employment conditions, and has created an enviornment ripe with contagion. This is why even countries with relatively strong economies like Germany are exposed to issues originating in other Eurozone countries.

In contrast, countries such as Norway and Denmark are to an extent isolated from the economic woes of Euro countries, and as a result healthier despite the fact that they spend proportionally much more on entitlements than the US does. They also spend far less on defense.

These countries have the ability to regulate their currency, print money, buy open market securities, etc...

The US is not Europe, and the dollar is not the euro.

stache
January 3rd, 2013, 09:41 AM
So what do we learn from Europe? We look at what countries like Germany have done right. Switzerland. Not Italy. Where there are inexpensive and reputable places for people of all income levels to leave their children as they go to work. Where people do not have to worry about a medical bill for the Flu and go in to see the doctor when they get a cut rather than waiting until it gets infected.


Plus you have to look at the much lower rates of graft in Northern European countries, compared to the U.S. And when everybody works 30 hours, it means 25% more of the population gets a job.

ZippyTheChimp
January 3rd, 2013, 11:08 AM
It looks like the era of the GOP mantra that tax cuts don't cost anything (balanced by economic growth) has come to an end.

Two significant cost items of the first decade of the 21st century.

Iraq and Afghanistan war: $1.5 trillion
Bush tax cuts: $$2.8 trillion.

I said back during the 2004 election that it was reckless to finance a war while cutting taxes. Even without the economic collapse in 2008, these two items would have had a huge impact. Now, we can't even roll back to Clinton era tax-rates for everyone without plunging back into recession. We're locked in.

The Bush tax cuts (http://www.cbpp.org/cms/index.cfm?fa=view&id=3873)

eddhead
January 3rd, 2013, 11:15 AM
It looks like the era of the GOP mantra that tax cuts don't cost anything (balanced by economic growth) has come to an end.



There remain many Republican Congress members who continue to buy into this non-sense. The hard right is shrinking in numbers and stature, but those who remain continue to insist on increased defense spending, low taxes on high earners, and broadening the tax base by burdening the lower and middle classes with higher payroll taxes.

Ninjahedge
January 3rd, 2013, 01:44 PM
Maybe capital gains needs to be reclassified as "limited extended payroll income" and have it taxed at (marginally reduced) rates.

You earn less than $10K/yr on your investment you should be paying nada. You earn $14.2M you BETTER be paying more than 15%.

I think that we stand a better chance of renaming something and dealing with it than trying to change the progressively slipping status quo.

eddhead
January 3rd, 2013, 02:04 PM
"Limited extended payroll income" huh? Sounds like you should be a tax attorney ;)

Of course we could just call it "ordinary income" and accomplish the samething by using the current graduated tax rates.

stache
January 3rd, 2013, 02:29 PM
Isn't that what they did in the 1950's, but with a lot of deduction options?

eddhead
January 3rd, 2013, 02:44 PM
Actually I believe capital gains were taxed at 25% in the 1950's, while ordinary income for the highest earners was taxed at a MARGINAL rate of 90%. The rationale behind a lower capital gains tax was that capital gains tend to be saved, while ordinary income is consumed. Thus taxing capital gains at a lower rate promotes savings.

However that theory was debunked by economists through the Reagan administration. Yes, even Reagan was in favor of raising capital gainstax rates to those of ordinary income, and enacted legislation to that end (sorry tea baggers!)


The idea from the 1950s to the 1980s was that people who earned their income from wages and salaries spent most of their income while those who received most of their income from capital gains tended to save those gains. Thus, keeping taxes low on capital gains would promote saving while high rates on top incomes would not affect saving much.

Economists, however, argued against this idea throughout this period. Evidence mounted that high marginal tax rates on labor income affected saving (and hours worked as well), and that saving rates were roughly the same regardless of family income sources. So economists called for eliminating the distinction between ordinary-income tax rates and capital-gains tax rates.

The 1986 tax reforms, enacted under President Ronald Reagan, embodied this idea. The graph illustrates this in 1986, when the income tax rate and the capital-gains tax rate are equal. The reform not only eliminated the labor income-capital gains distinction, it eliminated loopholes and many deductions, reduced the number of tax brackets, and lowered rates across the board.
http://wirednewyork.com/sites/default/files/images/articles/HouseholdSaving452.jpg



http://www.minnpost.com/macro-micro-minnesota/2012/01/myth-behind-lowering-capital-gains-taxes

EDIT: Sorry, it doesn't look like the graph displayed, but it is available through the link.

eddhead
January 8th, 2013, 01:49 PM
I am not sure if this is in the right place or not, but mods feel free to move it is appropriate to do so.

This article makes the case that one cannot be both a global military power and a supporter of entitlments to the elderly. Given that we live in a democracy, and that the entitlement programs are populuar with over 70% of the population, public and political pressujre will mount to continue funding medicare even at the cost dis-investing in military spending over the coming years.

------------------------------------------------------------------------------------------------------------------------------------------
Why Hagel Was PickedBy DAVID BROOKS (http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/davidbrooks/index.html)

Americans don’t particularly like government, but they do want government to subsidize their health care. They believe that health care spending improves their lives more than any

In a democracy, voters get what they want, so the line tracing federal health care spending looks like the slope of a jet taking off from LaGuardia. Medicare spending is set to nearly double over the next decade. This is the crucial element driving all federal spending over the next few decades and pushing federal debt to about 250 percent of G.D.P. in 30 years.

are no Thereconceivable tax increases that can keep up with this spending rise. The Democrats had their best chance in a generation to raise revenue just now, and all they got was a measly $600 billion over 10 years. This is barely a wiggle on the revenue line and does nothing to change the overall fiscal picture.
As a result, health care spending, which people really appreciate, is squeezing out all other spending, which they value far less. Spending on domestic programs — for education, science, infrastructure and poverty relief — has already faced the squeeze and will take a huge hit in the years ahead. President Obama excoriated Paul Ryan for offering a budget that would cut spending on domestic programs from its historical norm of 3 or 4 percent of G.D.P. all the way back to 1.8 percent. But the Obama budget is the Ryan budget. According to the Office of Management and Budget, Obama will cut domestic discretionary spending back to 1.8 percent of G.D.P. in six years.

Advocates for children, education and the poor don’t even try to defend their programs by lobbying for cutbacks in Medicare. They know that given the choice, voters and politicians care more about middle-class seniors than about poor children.

So far, defense budgets have not been squeezed by the Medicare vice. But that is about to change. Oswald Spengler didn’t get much right, but he was certainly correct when he told European leaders that they could either be global military powers or pay for their welfare states, but they couldn’t do both.

Europeans, who are ahead of us in confronting that decision, have chosen welfare over global power. European nations can no longer perform many elemental tasks of moving troops and fighting. As late as the 1990s, Europeans were still spending 2.5 percent of G.D.P. on defense. Now that spending is closer to 1.5 percent, and, amid European malaise, it is bound to sink further.

The United States will undergo a similar process. The current budget calls for a steep but possibly appropriate decline in defense spending, from 4.3 percent of G.D.P. to 3 percent, according to the Congressional Budget Office.

But defense planners are notoriously bad at estimating how fast postwar military cuts actually come. After Vietnam, the cold war and the 1991 gulf war, they vastly underestimated the size of the cuts that eventually materialized. And those cuts weren’t forced by the Medicare vice. The coming cuts are.
As the federal government becomes a health care state, there will have to be a generation of defense cuts that overwhelm anything in recent history. Keep in mind how brutal the budget pressure is going to be. According to the Government Accountability Office, if we act on entitlements today, we will still have to cut federal spending by 32 percent and raise taxes by 46 percent over the next 75 years to meet current obligations. If we postpone action for another decade, then we have to cut all non-interest federal spending by 37 percent and raise all taxes by 54 percent.

As this sort of crunch gradually tightens, Medicare will be the last to go. Spending on things like Head Start, scientific research and defense will go quicker. These spending cuts will transform America’s stature in the world, making us look a lot more like Europe today. This is why Adm. Mike Mullen called the national debt the country’s biggest security threat.

Chuck Hagel has been nominated to supervise the beginning of this generation-long process of defense cutbacks. If a Democratic president is going to slash defense, he probably wants a Republican at the Pentagon to give him political cover, and he probably wants a decorated war hero to boot.

All the charges about Hagel’s views on Israel or Iran are secondary. The real question is, how will he begin this long cutting process? How will he balance modernizing the military and paying current personnel? How will he recalibrate American defense strategy with, say, 455,000 fewer service members?

How, in short, will Hagel supervise the beginning of America’s military decline? If members of Congress don’t want America to decline militarily, well, they have no one to blame but the voters and themselves.

http://www.nytimes.com/2013/01/08/opinion/brooks-why-hagel-was-picked.html?hp&pagewanted=print

BBMW
January 9th, 2013, 12:21 PM
Really, I'm hoping the budget cruch will finally force the gov't to put a big shrink on entitlements. These were a terrible idea to begin with, because it got the public hooked on the concept that they's could get benefits that other people had to pay for, and gave them the fallacy that they don't have to deal with their own problems and provide for their own needs (retirement, healthcare.) For the last 50 years, everyone could see the demographic time and fiscal bomb they were becoming, and now it's exploding. Hopefully the explosion will kill off, or at least pin back these programs.

As far a defense, I admit there are parts that are out of control, and we need to stop playing world cop. At the same time we need to be able to defend the the country, and our interests around the world. I think it's foolish to believe the world has become any safer, and that there aren't both major powers and shadowy but large and well established groups (including but not limited to Al Qada and it's spin-offs and decendents) that threaten our safety and way of life. In the end we need to spend what we need to prevent those threats from actualizing.

Ninjahedge
January 9th, 2013, 02:23 PM
BBMW, a big part of that problem was when the funds hat were accrued in order to PAY for all this were raided for other programs with promises that "we will pay it back!!" (See Christine Whitman, NJ).

ALL politicians see money that is just "sitting there doing nothing", even if it is earmarked for later use, as "free money" because they never have to directly answer for spending it.

In addition, they can spend more at "no cost" to the taxpayer and even "lower" their taxes.

You site entitlement programs as being a problem when the real problem is a lack of connection. We would have no problem with them if we also kept in mind that they have to be PAID FOR, and that keeping the status-quo on a higher tier than playing in polio infested waters brings a net benefit on ALL levels.

Your workers don't know how to read, you get sweat-socks.
Your workers know Calculus, you get semi-conductor design and development.


As for Al Queda, you can't fight a terrorist group with an army. It just does not work that way. So bringing them up as a reason for keeping a large, technically advanced, mobile military force on active duty is not valid. China, maybe. A guy in fatigues may help stop a tank, but they do not stop a "believer" with a bomb strapped to his chest.

And, pardon if I re-iterate, we need to make sure that we know HOW the money is spent, not just that it IS spent. Pharms should not be able to charge "what the market will bear" when the majority of that market is government subsidized. Time to stop paying them 100% legal paybacks using our insufficient debt funds.

stache
January 9th, 2013, 02:41 PM
^ This this this -

BBMW
January 9th, 2013, 03:05 PM
BBMW, a big part of that problem was when the funds hat were accrued in order to PAY for all this were raided for other programs with promises that "we will pay it back!!" (See Christine Whitman, NJ).

ALL politicians see money that is just "sitting there doing nothing", even if it is earmarked for later use, as "free money" because they never have to directly answer for spending it.

In addition, they can spend more at "no cost" to the taxpayer and even "lower" their taxes.



Medicare and Medicaid have been running deficits for years, and those are getting exponentially larger. Social Security was supposed to have a reserve component (the trust fund.) But they made the mistake of allowing that to be invested in only treasury securities, so the gov't lent that money back to itself, and spent it. So now, when we're getting to the point that we need the trust fun money, it really isn't there.






You site entitlement programs as being a problem when the real problem is a lack of connection. We would have no problem with them if we also kept in mind that they have to be PAID FOR, and that keeping the status-quo on a higher tier than playing in polio infested waters brings a net benefit on ALL levels.

Your workers don't know how to read, you get sweat-socks.
Your workers know Calculus, you get semi-conductor design and development.



And how does this have anything to do with entitlements? In point of fact, if we cut entitlements, and invested that in research and eductioni, we'd be better off.





As for Al Queda, you can't fight a terrorist group with an army. It just does not work that way. So bringing them up as a reason for keeping a large, technically advanced, mobile military force on active duty is not valid. China, maybe. A guy in fatigues may help stop a tank, but they do not stop a "believer" with a bomb strapped to his chest.



From what I can tell, the army has sent a lot of "believer" to meet Allah over the last decade or so. But in point of fact your correct. Fighting something like Al Qaeda with a standing army is not the most effective way to do it. You fight them with intelligence assets and special operations forces, and now, apparently drones. But I consider all of this part of defense, and none of it is cheap.

And don't think China isn't looking take advantage of our shrinking strength. They're building up their military like crazy. They're already getting close to a shooting war with Japan, and how long before they take a shot at Taiwan? Now maybe we shouldn't give a damn. But I'm sure they'd like to get ahold of the assets we've been using.







And, pardon if I re-iterate, we need to make sure that we know HOW the money is spent, not just that it IS spent. Pharms should not be able to charge "what the market will bear" when the majority of that market is government subsidized. Time to stop paying them 100% legal paybacks using our insufficient debt funds.

IrishInNYC
January 9th, 2013, 03:05 PM
As far a defense, I admit there are parts that are out of control, and we need to stop playing world cop. At the same time we need to be able to defend the the country, and our interests around the world. I think it's foolish to believe the world has become any safer, and that there aren't both major powers and shadowy but large and well established groups (including but not limited to Al Qada and it's spin-offs and decendents) that threaten our safety and way of life. In the end we need to spend what we need to prevent those threats from actualizing.

The US government roughly spends 65 billion a year on the so called "war on terror"...if there were 100 US citizens who died last year, globally, as a result of "terrorism" I'd be surprised.

450,000 US citizens died from heart disease last year....the US government spent about 3 billion on that problem. (I'll cite the sources when I can find them again).

The US government doesn't give a fiddler's fart about you, me or any other bothersome citizen. They care about globalization and the ever popular bottom line.

The same as a half dozen shark attacks will keep swimmers out of the ocean better than thousands of drownings..."terrorism" is the MO for the US to keeps it's hooks in foreign, sovereign countries and line the pockets of governemnt buddies (controllers) like Bechtel, Halliburton et al.

If you're worried about your safety, avoid McDonald's rather than fretting about "terrorists" and realize your way of life will be manipulated as and when Uncle Sam pleases.

BBMW
January 9th, 2013, 03:22 PM
Seems like there are 2500+ people, most from around here, some who were friends of mine, who would probably disagree with you (if they were alive to do it.)


The US government roughly spends 65 billion a year on the so called "war on terror"...if there were 100 US citizens who died last year, globally, as a result of "terrorism" I'd be surprised.

450,000 US citizens died from heart disease last year....the US government spent about 3 billion on that problem. (I'll cite the sources when I can find them again).

The US government doesn't give a fiddler's fart about you, me or any other bothersome citizen. They care about globalization and the ever popular bottom line.

The same as a half dozen shark attacks will keep swimmers out of the ocean better than thousands of drownings..."terrorism" is the MO for the US to keeps it's hooks in foreign, sovereign countries and line the pockets of governemnt buddies (controllers) like Bechtel, Halliburton et al.

If you're worried about your safety, avoid McDonald's rather than fretting about "terrorists" and realize your way of life will be manipulated as and when Uncle Sam pleases.

IrishInNYC
January 9th, 2013, 03:52 PM
That's a cheesy response. 9/11 has zero to do with the hundreds of billions spent on a fictitious war on terror 12 years later. How long can that stick be used to beat up other countries and cultures who had nothing to do with it, to design and build planes, drones, boats, bombs and guns to rule with? Come on, be real.

stache
January 9th, 2013, 06:04 PM
^ Truthin'. 9/11 does not equal 2012 budget in any way.

eddhead
January 9th, 2013, 06:05 PM
It is a typical response though. When you talk to conservatives about cuts to defense spending the first thing you hear about are the people we lost on 9/11. Maybe the issue on 9/10 wasn't how much we were spending, but where we were spending it. Maybe if our National Security team would have taken the time to read briefings on how bin-Laden was determined to fly a plane into a building, we could have prepared for that. Maybe we should have been more focused on dealing with what were real threats to national security, rather than reliving the cold war and the exploits of Dessert Storm. Maybe someone should have listened to Richard Clarke who was running around with his hair on fire screaming about bin-Laden and Al Qadea. Instead the likes of Chaney, Rice, Romsfield and Bush were focused on the Russians and the Iraqis of all things. Welcome to the new millenium

We were led by war criminals and traitors.

The biggest threat to this country is not the direct threat of terrorism, it is the military industrial complex,and its association with the defense deparment and Congress. Bin-Laden objective wasn't as much the destruction of US property and the massacre of innocent lives (as despicable as that was) as it was the bankrupting of our country through expenditures of blood and treasure.

Well, mission accomplished (irony intended) .

Yet another legacy of the Bush administration, led by one of the worst presidents in our country's history.

Ninjahedge
January 10th, 2013, 09:43 AM
Cockpit doors that lock =/= $1B (or whatever the actual number is).

Odd that for a country that cannot seem to disagree with Israel about anything we are so reluctant to, even AFTER 9/11, implement one of its simplest "counter terrorism" measures.... a secure cockpit door.

And calling out the wolf, China, as our responsibility instead of encouraging a GLOBAL MILITARY COOPERATIVE to handle it.... is just plain silly.

Iraq should have been a clue to us that we ARE the worlds military right now and most of the rest of it is ready willing and able to let us pay for it.

ZippyTheChimp
January 15th, 2013, 07:13 PM
So after parachuting over the Fiscal Cliff, we land on the roof of a building.

Inside the building, we have the Debt Ceiling, which in a parody of the old movie serials, will begin to descend, threatening to crush us all. Ironically, the last scene before the suspense is played out in the next episode is called the cliffhanger.

This would be Hollywood fantasy if certain House members weren't serious about letting it happen.

ZippyTheChimp
January 15th, 2013, 10:17 PM
Today was Reading of the Constitution Day in the House. It wasn't packed like the first image in the video. Only 74 members were in attendance.

Rep Dennis Ross (R) FL drew this presently relevant phrase:


http://www.youtube.com/watch?v=_7OgymkTxAM&feature=player_embedded

Go to 54:20. The reading of Section 4 of the 14th Amendment. "The validity of the public debt of the United States...."

BBMW
January 15th, 2013, 11:54 PM
Without the automatic tax increases hanging over their heads, I think the Republicans will be MUCH tougher about allowing an increase in the debt ceiling without big entitlement cuts. They can essentially force the cuts my just blocking the debt ceiling increase.

ZippyTheChimp
January 16th, 2013, 12:05 AM
What if the Democrats don't back down? Who takes the hit for the result, which is much worse than automatic tax increases. A government default would actually raise the deficit.

There are already cracks in the GOP ranks. http://www.washingtonpost.com/blogs/plum-line/wp/2013/01/15/another-gop-senator-recognizes-the-inevitable/

ZippyTheChimp
January 16th, 2013, 09:31 AM
Here's What Happened the Last Time the U.S. Defaulted on Its Debt

Matthew O'Brien
Jan 16 2013, 8:45 AM ET

Once upon a time, Congress didn't want to raise the debt ceiling, and sent the country into default. It was bad, and we shouldn't do it again. The end.

Oh, you wanted to hear the rest of the story? Okay, here it is. Back in 1979, Congress waited, and waited, and waited to lift the debt ceiling, because Congress never likes taking responsibility for the tax and spending decisions it's already made. Now, Congress usually does the right thing after it's exhausted every other possibility, at least when it comes to paying our bills, and this debt limit increase was no exception. Congress did raise it right before defaulting on our obligations would have been unavoidable ... but that didn't let us avoid defaulting on our debt. At least not $120 million or so of it. That's because the logistically and technologically-challenged Treasury couldn't get the checks out in time on such short notice. As Donald Marron of the Tax Policy Center explains, the Treasury got swamped with an inordinately high demand for Treasury bills, which it couldn't meet due to a word-processing error. So we defaulted on some of them.

The government eventually paid back everyone what it owed with interest, but that didn't erase this accidental default from the market's memory. Short-term interest rates shot up 0.6 percentage points after the Treasury missed its payments, as you can see in the chart below from Terry Zivney and Richard Marcus, and remained higher than they otherwise would have been for a few months at least. It wasn't the end of the world, but it wasn't exactly something we want to repeat either.

http://cdn.theatlantic.com/static/mt/assets/business/1979-treasury-default.jpeg

But it would be much, much closer to Armageddon if we did this today. Blame the shadow banking. The past few decades, there's been a shift in the financial system towards things that, economically-speaking, look like a bank, act like a bank, but technically aren't banks. Institutions like hedge funds, structured investment vehicles, and money-market funds all borrow short and lend long, just like a bank, but do so outside the web of regulations that control, and safeguard, regular, old banks. In other words, they trade FDIC insurance and access to the Fed window for complete financial freedom.

They are the shadow banking system, and they didn't really exist back in 1979. At least not in anywhere near today's scale. They, along with conventional banks that have gotten into the game, use Treasury bonds as a kind of money. They use Treasuries as collateral for cash in repurchase agreements (repos) to fund their daily trading, with those same Treasuries often getting "rehypothetecated" -- that is, reposted as collateral by whoever first got it as collateral -- in a dizzying chain of financial connections. It's almost impossible to predict what would happen to these collateral chains if there was any kind of default on Treasuries, but it would almost certainly be 1) bad, and 2) very bad. Think about it this way. Treasuries are supposed to be the safest of safe assets, and as such are the lifeblood of the financial system, which has been running low on safe assets since mortgage bonds turned out not to be so. Removing the system's blood is not something we want to try. The last time something like that happened was, of course, back in 2007-08, and it set off and old-fashioned bank run on the uninsured assets of the shadow banking system that nearly brought down the world economy.

There's one last lesson from 1979. It might seem funny, at least in retrospect, that we defaulted on our debts in part due to a word-processor glitch, but it's not clear things would be any better now. As Brad Plumer of the Washington Post points out, it would be a technical, and not just legal, nightmare for the Treasury to prioritize payments if the debt limit isn't increased and we have to immediately cut 40 percent of spending. The Treasury's computers are set to pay bills as they come in -- because why would they do anything else? -- and it's no sure thing it could reconfigure them without a costly hitch. In other words, we could default this time because of a faulty program instead of a faulty word-processor.

This story has three possible endings. Either Congress lifts the debt ceiling, and we all live happily ever after, at least until the upcoming battle over the continuing resolutions; or Congress doesn't, and we only get a massive dose of austerity; or Congress doesn't, we get a massive dose of austerity, and then we default, with interest rates shooting up and the financial system melting down. This shouldn't be a difficult choose-your-own-fiscal-adventure.

Copyright © 2013 by The Atlantic Monthly Group.

eddhead
January 16th, 2013, 12:08 PM
There is an important point here that many people miss. In authorizing raising the debt ceiling, Congress is not authorizing new spending, they are instead authorizing funding for programs that have already been legislated. We already spent the money, so that ship sailed. What we are doing is financing the debt we already incurred.

Failing to raise the debt ceiling would be akin to charging something on your credit card and refusing to pay the bill on its due date.

BBMW
January 16th, 2013, 02:49 PM
The problem is that many of the big programs are on autopilot (look up non-descretionary spending.) They were authorized decades ago, and are now untouchable. This in and of itself is wrong. Every federal program should have to have it's budget authorized every year.

The fact that they hit the debt ceiling evey once in a while is a good time to force these non-descretionary programs back into play.

eddhead
January 16th, 2013, 07:34 PM
Many of those non-descretionary programs were authorized during the Bush administration including two costly unfunded wars. It was the only time we ever went to war while cutting taxes.

Yet GOP types can't understand why Obama is having such a hard time getting the deficit under control. Go figure.

But that is besides the point. Congress really has no choice but to raise the debt ceiling because the programs they implemented are already underway, and the dollars they are funding have already been spent. We bought the programs on credit and we have to pay the bill.

eddhead
January 18th, 2013, 01:24 PM
http://assets.amuniversal.com/fd552ef03cd701300d00001dd8b71c47 (http://wirednewyork.com/forum/#mutable)

BBMW
January 22nd, 2013, 10:58 AM
Why? Those programs could be cut by a simple act of congress (which was how they were created.)

Last I looked, the gov't spent about a third more than it took in. So cut the budget by a third, and the debt ceiling wouldn't need to be raised. Or, taking in in reverse, if the debt ceiling isn't raised, it would force a 1/3 budget cut.


Many of those non-descretionary programs were authorized during the Bush administration including two costly unfunded wars. It was the only time we ever went to war while cutting taxes.

Yet GOP types can't understand why Obama is having such a hard time getting the deficit under control. Go figure.

But that is besides the point. Congress really has no choice but to raise the debt ceiling because the programs they implemented are already underway, and the dollars they are funding have already been spent. We bought the programs on credit and we have to pay the bill.

eddhead
January 22nd, 2013, 11:57 AM
That is the cart leading the horse.

The debit ceiling is about paying for budgetary items that have already been legislated and agreed to. As you put it previously, these programs are 'non-discretionary', in that they have already been legislated, were included in the federal budget, funds have been alloted, and the programs are underway

ZippyTheChimp
January 22nd, 2013, 12:01 PM
The GOP finally came to terms with the above argument at their three-day conference.

stache
January 22nd, 2013, 12:53 PM
They're not what one would call a 'quick study'.