The political landscape following the election on November 6 has subtly changed, with both Republicans and Democrats seeing an advantage to at least pretending to want to avoid the massive tax increases and spending cuts that would automatically kick in on January 1, 2013, unless a deal to avoid the “fiscal cliff” is reached before then.
GOP leaders Speaker Boehner and Senate Minority Leader McConnell have promised that “revenue will be on the table,” while Senate Majority Leader Harry Reid told reporters: “We have the cornerstones of being able to work something out.”
How sincere are they? The GOP position on holding the line on taxes has weakened with the re-election of President Obama and the Democrats’ surprising showing in Senate races across the country. But Republicans can point to a good outcome in the House that currently shows them losing only six seats. With no mandate apparent for either side, it is in both parties’ interest to look for a way to avoid calamity.
While the negotiations to avoid sequestration will take place in a lame duck congress, the issue is already shaping Senate and House races for 2014. At the top of concerns for both parties is the desire to avoid looking like obstructionists in getting a deal done. The consequences of failure — a probable uptick in unemployment and another recession — mean that the potential that one side or the other will be blamed for the downturn will probably drive both sides to compromise enough to reach some kind of an agreement before the end of the year.
No one wants to be the last man standing when the music stops and the mad dash for the last empty chair ensues.
The trick will be to compromise without appearing to compromise. Reuters lists some of the possible outcomes:
Obama says tax rates on the wealthiest 2 percent of Americans must rise, while Republicans say they will not agree to any rate increase.
Republicans are also eager to rein in government health costs, which are projected to explode over the coming decade.
“We’re prepared to put revenue on the table provided we fix the real problem,” McConnell said, referring to Medicare and other government benefit programs.
There could be room for compromise.
Obama could agree to allow the top tax rate to rise to something less than the 39.6 percent he wants. Policymakers, for example, could also agree to limit the tax increase to households making more than $500,000 annually, rather than the $250,000 cap Obama is demanding.
Republicans have suggested generating more revenue by limiting tax breaks for the wealthiest, rather than raising their rates. Obama has said that would not raise enough money.
While the government may have a little flexibility in softening the full impact of the budget cuts, Treasury Secretary Timothy Geithner told Bloomberg TV on Friday the Treasury Department did not have the authority to delay the tax increases that would take effect at the start of next year if the White House and Congress fail to reach a deal.
Business leaders say the uncertainty is already weighing on the economy as employers postpone hiring and capital expenditures until they get a better sense of the tax and spending environment.
Pelosi suggested two sides might forge a temporary deal that would get them past the fiscal cliff and give them more time to work out a more lasting solution. Lawmakers will almost certainly not have time to retool Medicare and overhaul the outdated tax code before the end of the year, but a preliminary agreement could provide a framework for doing so later.
“The speaker spoke about a framework going into next year. I was focusing on how we send a message of competence to consumers, to the markets, in the short run, too.” Pelosi said.
Mr. Moran said: “…Democrats and Republicans can go back to business as usual; inventing new ways to spend money we don’t have on things we probably don’t need. ”
Yeah, that. That is the goal.
I don’t see a way the Republican House does not lose big in the next election. If they hold fast to principle they get the blame for Obama’s mess. If they cave, the Tea Party walks away. Either way, the establishment Republicans won’t mind, as long as they get a taste of the swag.
My thinking is that since they are bound to lose anyway they ought to stick to principle and retain the Tea Party and Libertarian base. That way in four years when even the lowest low information idiot has finally realised that free stuff costs too much there will be a viable alternative to the socialists and not another socialist lite choice.
The Republicans will cave in, as always. Boehner already signaled that the House will agree to revenue increases, which will end up being tax hikes. The Democrats will promise spending cuts in far off future years in exchange for immediate tax increases. The tax increases will be real; the spending cuts will be imaginary. Raising taxes on “the rich” will produce less revenue than anticipated and revenues will be nowhere near enough to offset the Democrats’ endless appetite for increased spending, growing government and getting more citizens dependent on government for basic necessities, like heath care. Obama has run up more than $1 trillion in NEW debt every year since his inauguration, and we won’t see an annual deficit less than $1 trillion so long as he’s in the White House.
If Boner had anything on the stick, he’d start proposing ‘revenue enhancements’ that hurt the liberal high and mighty, such as a movie tax reinstatement. It’s entirely possible to offer new taxes which 1) don’t have any chance of getting donkey support, and 2) show the donkeys to be flaming hypocrites. I could come up with a long list of “soak the rich liberals” proposals. The Tea Partiers would understand.
But Boner doesn’t have anything on the stick. Time to retire every Republican over the age of 55. The post-boomer generation have all the ideas and spine.
There is an established principle that could be expanded. Social Security benefits above a certain amount are considered taxable income. Unemployment compensation is considered fully taxable income.
Why not expand the idea and make food stamps, welfare, medicaid and other forms of largess taxable income?
… pretending …
It is not clear to me that Obama, Reid, or Pelosi is interested in any political compromise. None of them has a clue about actual numbers, they either don’t care or in Krugmanesque fashion think deficits are good, certainly Pelosi is on record with all sorts of hare-brained statements to that effect. Maybe little Miz “pass it to find out what’s in it” will win a Nobel for her wisdom so she can hang with Krugman, I’m sure he’d be thrilled.
Few thoughts:
This whole thing with Obama demanding tax hikes in the name of “fairness” is a laughable charade. It brings in what, $70 billion annually? Congratulations bozo, that solves a little less than 0.07 of the problem, assuming of course that the increased taxes have no deleterious economic effect reducing some portion of that revenue. The most infuriating thing is how the disingenuous press is taking the tax revenue out over 10 years and comparing it to the deficit from one year, saying: “this tax hike raises 700 billion over 10 years, a substantial step towards reducing our 1 trillion deficit” If you’re not sharp or paying attention (most people) you’d think this solves everything. That’s what they want you to believe. It is disgusting. The better more honest way to phrase it would be: “Over an entire decade this tax increase will raise almost enough money to offset the money wasted on the stimulus in the first year of Obama’s term”. The Republicans need to find the balls to start phrasing it honestly and pointing out how the dems are trying to sucker us into thinking they solved the problem, then sweeping the real problems under the rug.
My second thought is that the Republicans must not agree to any compromise that involves future promises by Obama or the Dems. They will not keep them. It’s the old Charlie Brown and Lucy football trick, pretty please don’t be dumb enough to fall for it again.
Finally they should go off the fiscal cliff, while passing a budget every month containing all the tax cuts, then screaming too loudly to be ignored when Obama refuses to sign it. Spending bills originate in the house, HE is being the obstructionist by refusing to sign it when he doesn’t get exactly what he wants. Our party needs to become better at putting forward real challenges to the MSM narrative instead of lame old talking points.
Yeah, except spending bills need to pass the Senate too. And there they would disappear, as Reid, Schumer, et al kept pointing their fingers at the House and shouting with the MSM chorus.
And then the donkeys own it. What the GOP needs to comprehend is that they have to win at politics before they can win at policy. Stop trying to do the right thing, and start trying to destroy the opposition. Then, and only then, can you actually get the right thing done.
Well said, you’ve hit the nail right on the head.
Yep. April 2009. Last time the Senate passed a budget.
Regarding your second thought, both Reagan and Bush Sr. fell for the same lie vis a vis tax increases versus spending cuts. No repeats!
Forgot to mention that the former case led directly to the S & L crisis, which cost the taxpayers billions, and the latter led directly to a mild recession, which gave Clinton his great lie of “worst economy in fifty years.” Liberal/progressive promises in such deals have absolutely no value!
It’s called focus testing.It’s done by the bent axel. We need to try it.
“It was all Bush’s fault”,or better yet, “We just want the top 2% to pay a little bit more. All this focus tested astroturfed bullshit,has nothing to do with any debt financial cliff!
The dems don’t care about balancing any budget or cutting spending! How the hell can you buy votes if you cut spending?
Besides just look at what they really spent by going to Spire Legal or checking out the video at site after site questioning why a mans nanny and two children were murdered after a cnbc executive ran a news story about the suit on the web.The story was taken down one day later. Check out their 43 trillion dollar law suit Spire has with many banks/movers shakers like little Timmy Geithner Erik the Holder etc., etc. Banks that forgot to back tarp even thought we were told it was all paid back,how Geithner/Bernanke backed loans to foreign govts.(thanks to Neal Barofsky for exposing their shenanigans) directly from Treasury without any congressional oversite other little goodies like that. All the laundering of drug money done over the years.
We have a criminal enterprise in charge of govt. and we are worried about a financial cliff! That’s the least of our problems We need to learn what power politics are really all about.
Meanwhile, zero is so concerned about the financial cliff he’s out in Burma telepromptering yet another very forgettable speech with his good buddy hillary/bob.
Yeah the financial cliff,big worry.
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Too much of our electorate believes it is possible to get something for nothing because they’ve achieved it. What they don’t believe is that the gravy train won’t always run. Their thinking is that it always has, why should it ever stop?
The people who know that trouble is coming are hunkering down and trying to get their families out of the way of the impending collapse. We’ve already got a Federal government that no one on the right trusts any farther than they can throw the Washington Monument lefthanded. We also have a division into ethnic tribes that is well advanced, trillion-dollar deficits as far as the eye can see, and patriotism is a dead issue. How anyone could see the situation as anything but a disaster in steadily increasing progress is beyond me.
The people who elected Obama wanted to see something taken away from other people and given to them. They got what they wanted in the election. Let’s see how well it works in the real world. I suspect that as things get worse, being a Federal employee is about to become a very unpopular thing in a lot of places.
Thanks to all those people who decided to stay home, decided that voting just wasn’t all that important, the Republicans are certainly in the weaker position.
Realistically, what can they do?
But as we were told by those who didn’t bother to vote, the people who decided this election through nonparticipation, there is no difference in the two sides. Right?
We could point out the many ways Obama’s position is irresponsible, but since irresponsibility won the election, why bother? Obviously the majority either want irresponsible policies or they are too indifferent to vote.
I only wish the Republicans would stop hinting that they want to compromise while making it appear they are standing firm. The minority of us who actually pay attention are not impressed. The rest either prefer irresponsibility or, by not voting, really have no right to complain. So fiscal sanity is a minority opinion. The marching call is Forward.
While I don’t agree with Ron Paul on much, I do believe his assesment that we went over the fiscal cliff a long time ago is correct.
So if that be true, we should also accept that we are now in a war of survival that also puts us in a life boat situation. We should then demand that republicans must give the worst president ever who presides over the the most corrupt party of all time in charge of wealth redistribution what it wants.
Then every month when the jobs report comes out, make The One and his minions explain the Obamavilles.
Both sides profess optimism … deal to … fiscal cliff.
How sincere are they?
They’re politicians.
However much they mess things up for other peoples’ lives with their vaunted “compromise” the only thing they lose is their seats in government if even that with immediate perks and their creepy sycophants. But none of the lifelong inflation linked pensions, medical insurance, and security for themselves and their parasites on the government gravy train – cynically called service to the nation – paid for by the ingenuity, creativity and labours of productive citizens of the nation whether they like it or not.
Politicians, from bottom to top, still in their jobs even with evidence they manifestly failed to do the job consistent with contract of employment. That archaic and irrelevant oath to uphold and defend the Constitution
in representing all citizens not only their symbiotic hangers-on.
Then their payoffs,when caught with hands in cookie jar, or pants down, in TV shows and highly paid consultancies for other members of the club. Or as Mark Twain noted,”there is no distinctly American criminal class except Congress”.
How sincere are they, these politicians in Congress and elsewhere? It looks very like this present gangster government is American traditional brought into the twentiety century.
How relevant, how modern, now new-age is that?
So the present gangster government is American traditional.
Definition of a “good deal” is where both parties think they screwed the other guy.
So…conservatives and Republicans are for balanced budgets, smaller government and fiscal responsibility.
The US is borrowing 40% of every dollar it spends.
We’re spending $3.6 trillion per year….or around $300 billion per month… while borrowing approx. $120 billion per month …so that we can spend that $300 billion per month.
D.C. can’t pass a budget, balanced or otherwise. (Here, both parties bear responsibility.)
Sequestration cuts about $1.2 trillion over ten years. That’s a cut of $120 billion per year, or $10 billion per month. …when we need to cut $120 billion per month just to stay even…and just so we can stop borrowing money we don’t have. We’re not *even* talking about paying down the past debt, here.
…but conservatives think that sequestration, which cuts future spending by a comparative infinitesimal amount, is a bad thing? …because it cuts too much? (It’s not cutting military spending on current conflicts, either.)
If you look at it, sequestration’s not much different, except in detail, from several of the less than stellar budgets proposed by some popular conservatives and Republicans over the last couple of years. It doesn’t really cut the baseline spending. It seems to me that it only cuts the automatic increases in y/o/y spending. I could be wrong on that one.
Now, if these cuts don’t include getting rid of government employees, bureaucracies and red tape, yeah. That’s a real problem and needs to be addressed. These cuts need to be dramatic and across the board. Left, right or center, politician, ideologue or pundit, everybody’s ox gets gored.
We’re not even close to getting serious about this, whether we’re politicians, voters, liberals, independents or conservatives.
One way or the other, its time to stop the insanity. If we don’t, the result will be a tragedy that will visit each and every one of us.
In the end its all BS. No one is really serious about paying down or cutting the debt.
Its always someone else’s job. Just leave it to the next guy. It doesn’t poll well or focus test either.
Until the dollar is worth even less than it is now or interest rates go through the roof,little will be done.We have crisis mgmt. in play, never preventative.
The people who would double down on this insanity control the Executive Branch and the Senate. They have all the cheerleaders they need in the media. Voters chose to give them even more power. Voters chose to let the media decide who should govern. The chance of doing anything meaningful this year is about zero.
Elections have consequences.
Until both parties – and ideologues on both sides – accept responsiblity for the mess, we’re going over that fiscal cliff.
The right doesn’t want to cut the military budget. The left doesn’t want to cut entitlements. On and on and on with the exceptions and the special cases, on both sides. When in power, both sides merely add to the fiscal insanity and to the size of government, just adding ever more spending to the problem.
When will you -liberal or conservative, Democrat or Republican – stop blaming anyone, everyone and everything else but yourselves…and get serious about addressing the fiscal crisis in America?
btw, if you wanted to win the last election cycle? Demeaning, demonizing and dehumanizing one hundred and forty-seven million Americans wasn’t the way to go about it, which is what you did, whether you know it or not…or admit it or not. …but most of you folks can’t see that. It’s everyone and everything elsel’s fault…but yours.
I doubt the left is willing to compromise anything. Their main goal is to make conservatives look as bad as possible so they can reclaim the house in 2014. Keep your eye on kalifornia where we now have a liberal super majority in both state legislative bodies. It will give you some idea where the country is headed. One of the first pieces of legislation proposed was to triple the license fees for automotive registration. Pretty cool, huh?
I’m from the gub’mnt and I am here to **** (add your own “expletive deleted”)… I mean help you.
I’ve been long convinced that the only way to “solve” the problem of government irresponsibility is to adopt of term limits. Neither party really gives a hoot about the fiscal cliff and since they love their “jobs,” and make the rules, elections are essentially fixed in favor of incumbents so term limits will be off of the table eternally. Our so-called “leaders” only care about themselves, the next election and increasing their power over us. The two parties only exist to provide manufactured “opposition” to each other, not to represent the people.
Dr. Paul is correct. The fact that we borrow 40% of what we spend is stark evidence that the fiscal cliff has long ago been breached. There is no sane way out of this mess when the politicians who are addicted to power do what they have always done to to remain in power. The lead up to the negotiations will look like the hype before a WWF wrestling match. The result will be a contrived “fix” to the fiscal dilemma that will merely kick the can down the road again. Spending will inexorably increase. Huge “Cuts” will be merely minor slowdowns of growth and of course, will occur in out years. Taxes will increase on everyone who actually works. More of us will willingly give up liberty to become dependent upon the state. Congress will congratulate itself and the government will continue to grow.
kick the ball down the road .
ENJOY THE $20K PORTRAITS YOU BOUGHT THE RULING CLASS FOR CHRISTMAS By: John Hayward 11/21/2012
http://www.humanevents.com/2012/11/21/enjoy-the-20k-portraits-you-bought-the-ruling-class-for-christmas/