Fiscal Cliff

[Dylan]

[Kane]

[Kane]

[BrownOG]

The same thing thats happened for years will happen again. They will come up with some half baked compromise that will achieve nothing in the big scheme of things.

[The Dude]

I think there's some misconceptions that need to be brought to light.


1. The Fiscal Cliff is not a cliff. It is a slope.

A. Taxes go up but they can be fixed retroactively and you don't pay your federal taxes daily. So the tax rises on everyone won't have an effect right away

B. The spending cuts are also drawn out. It's not like the Gov't spends everything it has on January 1st. The cuts will be gradual.

Hence, this is a slope. We won't enter a recession on January 1st and they can make a deal weeks later where we won't see much real bad outside of what uncertainty does


2. The spending cuts are 50% military/defense.

3. The other cuts are not social security, medicaid, SNAP, or other safety nets. medicare gets a 2% max cut to provider payments. Most of the cuts will be on just gov't function stuff.

4. Over $200 billion of the sequester is assumed interest savings from less spending, so it's really $1 trillion in cuts over 10 years roughly.



The Republicans have no leverage, here. Like, at all. Taxes are going up on the wealthy come January 1st. I'd love to see the GOP reject a middle class tax cut on January 2nd, though. Their party will go down in f**k flames. No one will buy this as the Democrats fault as Obama publicly continues to send them a bill cutting taxes on everyone (even those over $250k get a tax cut when rates are cut for those below that number). They keep talking about deductions (not enough) and it won't pass muster. Voters largely said they wanted wealthy rates to rise.

Obama's proposal is basically this:

1. $1.6 trillion (10 years) tax raises.

A. top marginal rate rises back to 39.6%
B. Estate tax bad to $3.5 million exempt at 45% after
C. Capital gains back to 20%
D. Dividends back to income tax rates
E. Close some loopholes and cap some deductions as well as getting rid of BS like carried-interest
F. AMT and other stuff extended

2. Medicare and SS are largely off the table

3. Extend the payroll tax cut

4. $50 billion in stimulus (he's basically split up his Jobs act into the proposal). Personally, this should be $500 billion but whatever

5. UE benefits extension

6. Medicare Doc path

7. Mortgage refinance reform

8. remove debt limit from Congress' control

9. Entitlement cuts/everything else part of Obama 2013 budget already. Nothing much new added in.


there's other smaller things in there but that's most of it.


Obama will get all of the tax stuff come January 1st regardless and then can propose the tax cuts below $250k and payroll tax cut and watch the GOP compromise or eat itself alive.

The sequester hurting mostly military and actual jobs rather than entitlements make it hard for them to negotiate with any strength. This will hit their base harder and piss people off more. They could kiss 2014 goodbye if they drag it out.

How much of the non-tax stuff Obama will get is to be seen. I think he should be going even harder on infrastructure spending, but that's me. Regardless, it's obviously Obama is no longer going to compromise with himself anymore. Last time he tried that the GOP just moved more right. The Tea Party is holder Boehner hostage in this way.

There are only two outcomes for the GOP is they go over the "cliff." Either they will have to compromise even more or they will lose their standing on the national stage completely in 2014. And then Obama will get everything he wants.

The GOP has asked Obama to give a better offer. This time Obama is asking the GOP to give an offer and waiting for it. Here's the dirty secret: The GOP has no offer, they have no plan, they never did. They put all their eggs in winning the WH this year and don't know what to do (which is why they set up a sequester that gives them no leverage should they lose cuz they bet they'd win). They DON'T want to cut medicare, SS, or entitlements. But now they can't be seen as the group that compromised or lose their seats to far right idiots as has been happening.

It is just another step in the death of the GOP in its current form.

[Spider]

^Spot on.

I've got to agree with Obama on this one. Sit and wait for a counteroffer. Force them to actually put a number and a name tag on their "fiscal responsibility", rather than nebulous talk built on nonsense mathematics.

The best thing that can possibly come of all this is a hatchet in Grover Norquist's forehead. So to speak.

[OGPhilly]

Lots of good analysis Dude, though I'm pretty certain that for matters of perception, failing to work out an agreement in a timely manner could be very harmful to our economy.

Yes, technically it's a slope, not a cliff, but if it's more than a couple days into January and we don't have a solution, it's gonna feel like a cliff.

[The Dude]

[John Galt]

i do think that republicans should put forth the bill. after all, they are in charge of the house and all tax bills must originate from there.

and they should put in whatever the f**k they want. they can play hardball to. yeah taxes will go up, and they'll play their little game and then they'll retroactively change it like in march so taxes wont go up. but then they can play hardball too. why don't they have any leverage? the president doesn't make ANY bills. an the senate can't originate this. the house is majority republican

[John Galt]