Fiscal Cliff Predictions

Right. Reform wasn't going to happen over a few days.

They could have used the last year and a half to right a reformed tax code and work back and forth until they had an agreement.

I didn't hear of any tax reform bill being introduced.

Though, it wouldn't have passed.

Major change where all parties do not agree will not happen in a divided congress.

(I see a poster was quibbling over rounding with a high level look that was just trying to show a perspective where some extra details were not going to change the picture much)

Guess that wasn't my last post. Again, the key sentence:

"These future negotiations will need to make the far more difficult reforms that bring spending further under control, make our entitlement programs sustainable and solvent, and reform our tax code to both promote growth and produce revenue."

Several economic studies have shown that raising marginal rates is contractionary policy. Raising taxes on capital will merely force it an exodus to safer havens. Reforming our tax code to "promote growth and produce revenue" (which is the byproduct of growth) means a pro-growth fiscal policy, which is one of broadening the base. Simpson-Bowles wanted a lower corporate rate too. I'm not conflating anything. I've said that a lower exemption on estates and other forms of taxation can be on the table IF they are part of a broader part of spending reduction, something that the president has not only shunned but has insinuated that he wants even more spending. Pure Keynesian philosophy.

Will we get at least $4 trillion in cuts over ten years, which was part of the first "grand bargain," until Obama botched it? And now, with the CBO scoring this bill as adding some $4 trillion to the deficit over ten years, spending and entitlement reform becomes even that much more pressing, although the CBO is notoriously inaccurate, generally underestimating the true costs. Simpson-Bowles spelled it out clear as day. Fiscal and entitlement reform. I bet if they reconvened, they would put forth a drastically different set of ideas.

Interesting that Boehner refuses to talk to Obama anymore and businesses say the bill will act as a growth-retardant.

http://thehill.com/homenews/house/275295-boehner-tells-gop-hes-done-with-one-on-one-obama-talks

“If you were to rank outcomes from 1 being the greatest to 10 being the worst, we’re about an 8.5 to a 9,” said Steve Bell, senior policy director for the Bipartisan Policy Center, which had pushed for a comprehensive deficit deal. “There’s nothing to compel action now ... it’s an extraordinary opportunity missed.”

"The deal “only just begins to address the scale of the fiscal and spending problems confronting our country and falls short as economic policy that could encourage a sustained and strong economic expansion,” said the Business Roundtable."

Tom Donohue, the president of the U.S. Chamber of Commerce, hit a similar sour note.

“The tax hikes that will take place will mean slower growth, fewer jobs, and less prosperity for all Americans,” he said in a statement. “And, when it comes to cutting spending and controlling the national debt, this deal does not even begin to address the serious fiscal challenges we face.”

http://thehill.com/blogs/on-the-money/domestic-taxes/275311-markets-rise-but-business-sees-missed-chance-in-cliff-deal

Why do I keep hearing "missed opportunity" over and over? You can believe in your pie-in-the-sky theories that Obama is serious about spending cuts, but "won't offer them up until negotiations are under way." The thing is, negotiations already were under way. Nary a spending cut or entitlement reform. I won't hold my breath, unless the GOP finds a way to really back this guy into the corner. We may need to burn down the village to save it. But that will require political suicide, and, unfortunately, our men and women of the military are far braver than our politicians and "placeholder president" to borrow a term.

Why can't legislators solve the big issues instead of putting in temporary measures and kicking the can down the road?

call me a wild optimist, but I think there is a solid chance that Obama and the GOP find a way forward in the entitlement crisis in 2013. Obama is a smart guy and he is done running. He understands the need to cut entitlements.

Last week he got his tax increase. So now he has cover to start hacking away at entitlements. Whatever lefties say to Obama now, he can point at how he got the GOP to raise taxes for the first time in decades.

So let's see. I foresee an easier route than you might think.

the risk is that there is a group of GOP reps who simply act in opposition to Obama - they just can't work with him. The intransigence of the tea party is my worry.

Milrose wrote:

Why can't legislators solve the big issues instead of putting in temporary measures and kicking the can down the road?

Here's why:

agip, I'm calling you a wild optimist. Whatever entitlement reform comes will be meager and won't come without more tax hikes. But, we can all agree to disagree.

X-Runner wrote:

They could have used the last year and a half to right a reformed tax code and work back and forth until they had an agreement.

I didn't hear of any tax reform bill being introduced.

actually, i'm pretty sure dave camp (the republican chairman) and the ways and means committee have been putting tons of time into tax reform over the past 2 years. they've held numerous hearings with academics and economists, as well as with business leaders. it may be the case that they have done much more on corporate tax reform than on individual tax reform.

agip wrote:

Whatever lefties say to Obama now, he can point at how he got the GOP to raise taxes for the first time in decades.

Since the votes came after 12 AM on Jan 1, the yea votes were actually for a tax CUT for the 99%.

Sagarin wrote:

Interesting that Boehner refuses to talk to Obama anymore ...

That's not quite what he said. He's done with one-on-one negotiations with the President. But that's because his own inability to control his caucus. Anything Boehner brings to the House from his private negotiations with Obama is immediately deep sixed by the Tea Partiers. It makes more sense to work in the opposite direction - come up with something in the House to bring to Obama - than the way he was doing it before. That's no guarantee of success, but at least he'll have the backing of his own party and he won't appear quite as inept.

agip wrote:

call me a wild optimist, but I think there is a solid chance that Obama and the GOP find a way forward in the entitlement crisis in 2013. Obama is a smart guy and he is done running. He understands the need to cut entitlements.

i'm between you and sagarin in terms of optimism. i think there's a reasonably good chance that the debt ceiling / sequester / budget resolution in about 2 months will include some reduction in expected future entitlement costs. however, i think it will only happen if there are further tax increases (because such a deal would need to add up to close to 1:1 cuts and tax increases, taking into account this most recent tax increase and maybe taking into account the 2011 spending cuts), and those are difficult to picture at the moment. we have already raised the marginal rates on high income to close to their practical maximum. so the revenue would need to come from the (upper) middle class to a large extent, and i don't know if either party would vote for that.

my concern about entitlement cuts is that the proposals i've seen tossed around are dumb from a policy perspective. we need to be cutting health care costs in an intelligent way - changing the way doctors are reimbursed, for example, or finding some way to reduce the amount spent during the last few months of life - but instead we talk about raising the eligibility age by a year or two. doing that would have some impact on the amount spent by the federal government, but it would actually increase overall private/public spending on health care, and that doesn't seem like a good policy result.

similarly, reducing social security benefits across the board by adopting a different CPI/inflation measure seems like a bad policy. instead, we should be ensuring that those who really need social security benefits to get by continue to receive them, while those who do not need them as much have their benefits trimmed in some manner (while simultaneously trying to avoid creating a situation where saving for retirement is discouraged).

X-Runner wrote:

I am sure plenty of work has been done on tax reform research but have any bills been introduced to congress?

if you're interested, the ways and means committee page has the current discussion draft here:

i believe you are right that no bill has formally been introduced.

kaitainen wrote:

[quote]agip wrote:

call me a wild optimist, but I think there is a solid chance that Obama and the GOP find a way forward in the entitlement crisis in 2013. Obama is a smart guy and he is done running. He understands the need to cut entitlements.

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my concern about entitlement cuts is that the proposals i've seen tossed around are dumb from a policy perspective. we need to be cutting health care costs in an intelligent way - changing the way doctors are reimbursed, for example, or finding some way to reduce the amount spent during the last few months of life - but instead we talk about raising the eligibility age by a year or two. doing that would have some impact on the amount spent by the federal government, but it would actually increase overall private/public spending on health care, and that doesn't seem like a good policy result.

_____

...but raising the medicare eligibility age is actually possible, while I am not aware of a way to reduce end of life care. Who is going to make that call to not try the last thing? I'm not sure I even want the gov't making that kind of decision.

___

similarly, reducing social security benefits across the board by adopting a different CPI/inflation measure seems like a bad policy. instead, we should be ensuring that those who really need social security benefits to get by continue to receive them, while those who do not need them as much have their benefits trimmed in some manner (while simultaneously trying to avoid creating a situation where saving for retirement is discouraged).

____

there is a serious fairness issue here - a rich person has been paying into SS for his whole life and then doesn't get it back? I can understand that really he hasn't been saving into an account...but still it doesn't seem fair. I don't see that. I think the CPI adjustment is fine and fair - is is so gradual that few would feel much of a sting.

And of course we have to keep rising the SS eligibility limit - should go up corresponding to life expectancies.

(although Krugman has an interesting point on the fairness of increasing eligibility ages - poor people actually have declining or static life expectancies. It is only well off people who are living longer. So increasing eligibility ages is a subtle form of taking more money away from poor people. Classic unintended consequence)

you're an idiot if you actually believe the POTUS doesn't have more influence on fed govt spending than anyone else..

Who was Congress "negotiating" with on the "fiscal cliff" nonsense - legislation that obviously has a lot to do with 'purse strings'? Were they negotiating with themselves? Was barry sitting this one out, since "congress controls the purse strings'?

I'll blame the fed govt nanny & whine & bitch about it until they promise to take care of me & wipe my as$ for me, since I'm a typical totally dependent p-u-s-s-y, like you & most other Americans.

Ever heard of 'seek responsibility and take responsibility for your actions (and retirement)'? No? You spent 12-16 years being brainwashed in govt skools I guess. Not your fault..

Implying? I'm not implying barry is a freak, I'm telling you he is. Based on his actions - he has genuine disdain for America and is trying to 'correct' America and punish America for coming into existence & prospering - in his distorted view - by exploiting blacks. The enemy is rich whitey.

If you'll believe a politifact blurb instead of doing s little research on your own, there's no hope for you.

If spending was an out of control $3T in 2008 & grew to an insane $3.8T in 2012 - of which we're borrowing more than ever to sustain - how is that 9%??

And if spending was a huge problem under Bush - which it was - why use Bush as your standard for spending?? We're much deeper in debt now than we were during W's regime - and he is partly to blame - but the idiot in the WH now is just pouring gas on the fire while you people clap.

please tell us you're such a friggin' moron that you believe no costs were incurred for the Iraq war until March 2003! What - you think we weren't ramping up for the prior 18 mos?? You think all the planes, ships, armored divisions, missles, etc. just showed up the day before? Do you have any idea how expensive it is to pre-position a force that large and how long it takes?

Besides - we weren't exactly doing nothing in Iraq prior to our invasion, were we? And the invasion of Afghanistan was not just "1 war" anyway. The neocons advertised the whole thing as a 'war on terror' and there were many targets in many countries

Nice. The emotional core argument onto which all others get attached. You from the South or Midwest?

My name is Lance wrote:

Implying? I'm not implying barry is a freak, I'm telling you he is. Based on his actions - he has genuine disdain for America and is trying to 'correct' America and punish America for coming into existence & prospering - in his distorted view - by exploiting blacks. The enemy is rich whitey.

Anyone know what happened to POMPATUS OF LOVE who was making a lot posts earlier in this thread but seems to have disappeared?

Lance, do you know?

X-Runner wrote:

Anyone know what happened to POMPATUS OF LOVE who was making a lot posts earlier in this thread but seems to have disappeared?

Lance, do you know?

They are one and the same.

My name is Lance wrote:

I'll blame the fed govt nanny & whine & bitch about it until they promise to take care of me & wipe my as$ for me, since I'm a typical totally dependent p-u-s-s-y, like you & most other Americans.

Ever heard of 'seek responsibility and take responsibility for your actions (and retirement)'? No? You spent 12-16 years being brainwashed in govt skools I guess. Not your fault..

Ever hear of the Great Depression? No? Then you are doomed to repeat the mistakes of history. Too bad your mom didn't home school you better.