Fiscal Cliff Predictions

Sagarin wrote:

and the Republicans can say they didn't vote to raise taxes.

I think that is going to be the key phrase that actually causes the raises in taxes that will go into effect for everyone.

And the Democrats can say the same thing about the taxes that go up on the lower 98%.

They actually voted for a permanent tax cut for that group, but the House has not put it to a vote on their side.

They all voted for these tax increases in 2003 when they made the cuts temporary.

They have to decide by tomorrow or there will be issues.

Nothing is going to happen on Christmas or the day before.

If payroll companies go to work on the 26th without a new deal in place, they will have trouble changing systems in time for pay periods with January pay dates.

Note: Last year's payroll tax cut extension was signed on December 23 (which was a Friday).

The first extension of the current tax rates plus the addition of the payroll tax cut was signed on December 17, 2010.

Both of these agreements didn't lead to any changes in the tax code, and the payroll tax change in 2010 was a pretty simple one to administer for payroll.

Any compromise that they are working on now would lead to a change in the tax code that payroll companies do not have cued up.

It's going to be a mess.

According to the Joint Committee on Taxation, Speaker Boehner’s alternative to the still-in-progress fiscal cliff negotiations with President Obama would permanently extend the 2001/2003 tax cuts for incomes up to $1 million and provide a total tax cut of $3.9 trillion over the next 10 years.

http://waysandmeans.house.gov/news/documentsingle.aspx?DocumentID=315670

At least it deals with AMT and makes marginal tax cuts permanent on 99%+ of taxpayers, while leting rates increase on those making $1 million or more. It borrows from some of the Democrats former platform, one that Pelosi endorsed. It does not include anything on the debt limit or other non-tax policy items, but, Boehner’s rule on the debt limit still applies, i.e. spending cuts must exceed any debt limit increase.

It's down to power and ego and saving face at this point.

And who is more willing to let all of the rates go up as scheduled.

In my original post I guessed they would go past the deadline.

They may be stubborn enough to do that.

kaaaa-blooooey!! GOP absolutism has reached DEFCON 1 of unintentional hilarity.

Yep, they are buffoons. Boehner had the table set up about as imperfectly perfect as he could get it to put all of the pressure on Reid and, ultimately, Obama, but the TEA party loons decided to hold him hostage anyway. Frankly, I wish we could vote them all out.

it surprises me to hear you disparage the TEA party or anyone pointing out the rather obvious fact that our problem is 100% a spending issue and not a tax/revenue isssue.

Not to mention a tax hike has always hisorically resulted in less revenue collected..

Indeed, we have a spending problem. But, more importantly, we have an intractable Senate and President problem. Boehner getting plan B through the House would've put the ball in the Dem's court, and Oblama said he would've vetoed it anyway. The GOP already procured $1.2 trillion in cuts as part of the last debt-ceiling negotiation. This would've forced Obama's hand, and, either he would've had to bargain, or, if he chose to veto it, automatic tax hikes and spending cuts would've kicked in anyway, hindering growth even further, which he WOULD ultimately own, even if not in the short term.

It may happen anyway, but at least Boehner had extended cuts on 99% of the population, had addressed the AMT issue, had barely nudged the rate on capital up, and would've set the table for the next debt ceiling negotiation in a manner that required more spending cuts. Now, who knows what's going to happen? Hopefully, nothing, because as much as I don't like tax hikes, we need to get the process of cutting spending started, even if it means a recession (which we are very near to anyway as government spending and an inventory ramp accounted for half of the Q3 GDP print, while capex and real final sales were anemic).

We need to cut and reform meaningfully, but it can't be done all at once. I think they missed an opportunity here. But maybe the president won't be able to get out of his own way.

CHRIS MATTHEWS wrote:

it surprises me to hear you disparage the TEA party or anyone pointing out the rather obvious fact that our problem is 100% a spending issue and not a tax/revenue isssue.

Not to mention a tax hike has always hisorically resulted in less revenue collected..

I agree with the thrust of your post as I've asserted here and on may other threads, but I am not disparaging "anyone pointing out the rather obvious fact that our problem is 100% a spending issue and not a tax/revenue issue." That would be disparaging myself.

The only other possibility, and I think it's remote but not completely implausible, is that Boehner floated the plan as a ploy, never intending to get it passed, because the president dug in his heels on spending, by and large.

Huh? When did a tax hike result in less revenue? I have no doubt you can cherry pick data to rationalize your assertion. Heck, I don't even necessarily disagree with you that spending cuts are the way to go. I would just point out that Reagan had some major tax increases himself. Tax revenue went down by maintaining the Bush tax cuts. I would also point out that a good tax policy that includes tax increases is the very thing that helps reduce government spending.

CHRIS MATTHEWS wrote:

it surprises me to hear you disparage the TEA party or anyone pointing out the rather obvious fact that our problem is 100% a spending issue and not a tax/revenue isssue.

Not to mention a tax hike has always hisorically resulted in less revenue collected..

Time to start watching the stock market.

It is gearing up to drop today.

This is where the wealthy are really going to start losing wealth, not through tax increases.

You do realize that many public pensions have moved into high-risk hedge funds and Calpers has half of their assets in equities?

http://unionwatch.org/public-sector-pensions-investing-in-hedge-funds/

CHRIS MATTHEWS wrote:

it surprises me to hear you disparage the TEA party or anyone pointing out the rather obvious fact that our problem is 100% a spending issue and not a tax/revenue isssue.

Not to mention a tax hike has always hisorically resulted in less revenue collected..

Chris, read this and then explain to me, despite all of the Democratic obstructionism that got us to this point. why plan B was such a bad deal after all. The far right may have won the battle but could very possibly end up losing the war. If we do go over the cliff, which I hope we do, the Pubs will end up getting castigated and vilified by the media, and Obama will fully exploit the situation as is his M.O. BUT, in the end, no president wants to preside over a recession.

CHRIS MATTHEWS wrote:

you're smoking crack, bro'. As is anyone who claims the fed govt is spending less now than before, whether you're comparing 2012 to 2011 or whatever. Tax cuts have nothing to do with deficits. Tax cuts always increase revenue. Whether politicians make wise use of the additional revenue or not has nothing to do with tax cuts.

Since tax cuts always increase revenus than we should cut taxes to 0. That would cause revenues to go to infinity and all out problems will be solved.

Sagarin wrote:

Indeed, we have a spending problem. But, more importantly, we have an intractable Senate and President problem. Boehner getting plan B through the House would've put the ball in the Dem's court, and Oblama said he would've vetoed it anyway. The GOP already procured $1.2 trillion in cuts as part of the last debt-ceiling negotiation. This would've forced Obama's hand, and, either he would've had to bargain, or, if he chose to veto it, automatic tax hikes and spending cuts would've kicked in anyway, hindering growth even further, which he WOULD ultimately own, even if not in the short term.

Plan B is a joke. It replaces the currently in place 1.2 trillion in cuts w/ 217B in cuts. Just kicking the can further down the road.

We are much better off going over the cliff than if Congress actually agrees to any of this crap.

Yup, it's going to hurt.

Yes, it was kicking the can to an extent, which I predicted, but do you really think the Democrats were going to offer or accept anything better? Reid said they would block it and Obama said he would veto it. May as well have called his bluff and backed him into a corner of his own making for a change. I agree with going over the cliff as far as getting spending cuts started, but they are still a mere pittance in the grand scheme of things. The debt-celing negotiation would've come later, when the GOP could've demanded more cuts and capped spending at a much lower level of GDP. The political optics don't look very good for the conservatives right now. Not to mention, cutting spending and raising taxes on capital and small business is hardly the optimal mix for economic growth. They are all buffoons.

Sagarin wrote:

Yes, it was kicking the can to an extent, which I predicted, but do you really think the Democrats were going to offer or accept anything better? Reid said they would block it and Obama said he would veto it. May as well have called his bluff and backed him into a corner of his own making for a change. I agree with going over the cliff as far as getting spending cuts started, but they are still a mere pittance in the grand scheme of things. The debt-celing negotiation would've come later, when the GOP could've demanded more cuts and capped spending at a much lower level of GDP. The political optics don't look very good for the conservatives right now. Not to mention, cutting spending and raising taxes on capital and small business is hardly the optimal mix for economic growth. They are all buffoons.

The best deal they are going to get on spending cuts is what is already in the fiscal cliff bill. Even that, you are right, is a mere pittance compared to what is required, but the cuts are at least real and immediate, as opposed to any deal, which would have the cuts in the illusory years 8-10 of a 10 year spending plan. The democrats are not going to offer anything better. Let's go over the cliff.

Yes, tax cuts will hurt. There is no solution to our budget that will not hurt.

As I said, the optics of this are being characterized very unfavorably for the Pubs.

http://www.washingtonpost.com/blogs/plum-line/wp/2012/12/21/the-morning-plum-in-plan-b-implosion-house-conservatives-exit-the-conversation/

Boehner has a much weaker hand now. Do you think the president is going to oblige him? You automatically assume that we will go over the cliff. You assume the Pubs won't cave later under public pressure.

One can only hope we go over the cliff.

Mr. Obvious wrote:

Plan B is a joke. It replaces the currently in place 1.2 trillion in cuts w/ 217B in cuts. Just kicking the can further down the road.

Lastly, my point is that there is NOBODY on the left who doesn't want to kick the can. Plan B would've given the Pubs some leverage to address spending in a more meaningful way as part of the next debt-ceiling negotiation.