The Fiscal Cliff thread.

[nonniey]

QUOTE=Larry;9291776]Not from where I sit.

From where I sit, the Democrats want to save SS.

The Republicans want to trumpet false claims about it being bankrupt, right now, and use those false claims to demand that the only solution is to get rid of it entirely, and replace it with a system that is tilted in favor of high-income retirees (as opposed to the present system, which favors the low-income) and the financial services industry.

Seems to be the Republican's standard political tactic for the last few decades. Yell real loud about a crisis that they created, and which they are refusing to allow anybody to solve. And then announce that the only solution you will permit for this crisis, is something that you've wanted to do, all along, but didn't have the votes for.

Well you sit in fantasy land then. But I think we all knew that already.:evilg:[

[Elessar78]

There's a lot of fear from the left-side regarding Obama wanting to show that he's middle of the road and throwing middle class entitlements under the bus. I stand by my prediction made a couple weeks ago that entitlement reform is not going to be part of the fiscal cliff solution. Did anyone hear anything from Obama on entitlement reform during the election? If the Democrats do agree to any major entitlement reform, I'll eat my shoe... I just can't see it happening when there was no framework for discussion and I really don't see a large part of the country clamoring for it. It wasn't even a major part of the campaign (well Ryan-Romney were trying to make it a major part but failed). If the GOP were smart they would make a fiscal cliff deal and continue to spend the next 2 years convincing the country for the need for "entitlement reform" (although even calling it entitlement reform is a polite way of saying "social safety net").

Entitlement reform needs to happen but really if we can just get the abuse and waste out of it. It really serves segments of the population with a genuine need. I was speaking with a case manager at the local welfare office and there are many households with healthy middle class incomes who collect some form of gov't assistance because their kid has, get this, ADHD. These aren't the poor and destitute either.

I think there are 20-30 % of the population that thinks our large national debt is a real problem. I don't understand why $18T or $15T or $10T is the magic number. Why wasn't $5T the magic number years ago? What's wrong with $30T? No one has explained this. Wall Street CEOS are talking about how "debt is bad".... yes these same CEOs that have been funding private debt like crazy.

15T–18T is the magic number because it represents 100% of GDP. America's GDP is about $16T annually. It's not an appealing number and we're getting out of the commitments (wars) and the bank/auto/insurance bailouts that necessitated jacking up the deficit. Entitlement spending was way up in the last 4 years because so many people were out of work. So it all goes hand in hand.

Compare it to a household though that grosses $200K annually—their household Gross Domestic Product (GDP). Living in the DC area, their deficit might be 200-300% of household GDP (from car loans, student loans, credit cards, and mortgage) but as long as their jobs are stable and they stop living beyond their means then the deficit is manageable and reduceable. As long as they have good credit, they can keep things rolling but as a long-term approach it IS unsustainable and they should work to develop a working budget.

What isn't out there is that welfare, cash assistance and food stamps and their ilk, are basically a form of CORPORATE Welfare. Where do you think this money they give out goes to? Ever been to a wal-mart on the first Friday of the month?

[Larry]

Well you sit in fantasy land then. But I think we all knew that already.:evilg:[

Really? I've imagined all of those Republican proposals to "privatize" SS? To replace Medicare with vouchers (and to promise to make the vouchers shrink)?

I've imagined Democrats proposing to eliminate the cap on the SS taxes? (A proposal that will make SS solvent for the next 75 years.) And Republicans rejecting the proposal, because well, 75 years isn't forever, therefore it can't be considered?

I've imagined Republicans claiming that SS went bankrupt 3 years ago? (Because, we all know, when spending exceeds income, than one if bankrupt. The fact that someone has money in the bank, and that their bank balance actually went up, is irrelevant, you know)

Gee, tell me more.

(Or just call me more names.)

[twa]

Anyone who thinks that either party establishment has any true desire to control debt and spending is naive at best and dumb at worst

well they do like to control certain spending.

the system does not reward restraint,nor do most voters

[thebluefood]

http://www.washingtonpost.com/business/economy/fiscal-cliff-talks-bogged-down-by-dispute-over-cost-of-retirement-programs/2012/11/29/99022ac0-3a2e-11e2-b01f-5f55b193f58f_story.html

President Obama offered Republicans a detailed plan Thursday for averting the year-end “fiscal cliff” that calls for $1.6 trillion in new taxes, $50 billion in fresh spending on the economy and an effective end to congressional control over the size of the national debt.

The proposal, delivered to the Capitol by Treasury Secretary Timothy F. Geithner, mirrors previous White House deficit-reduction plans and satisfies Democrats’ demands that negotiations begin on terms dictated by the newly-reelected president.

The offer lacks any concessions to Republicans, most notably on the core issue of where to set tax rates for the wealthiest Americans. After two weeks of talks between the White House and aides to House Speaker John A. Boehner (R-Ohio), it seemed to take Republicans by surprise.

Boehner quickly rejected the proposal and was trying late Thursday to decide how to respond, aides said. After meeting with Geithner for about 45 minutes Thursday morning, the speaker announced his frustration with a negotiation process in which nearly three weeks have lapsed since the election with “no substantive progress.”

So, when's the leadership of both parties gonna get serious about this whole thing?

[SnyderShrugged]

http://www.washingtonpost.com/business/economy/fiscal-cliff-talks-bogged-down-by-dispute-over-cost-of-retirement-programs/2012/11/29/99022ac0-3a2e-11e2-b01f-5f55b193f58f_story.html

So, when's the leadership of both parties gonna get serious about this whole thing?

Never, unfortunately

[AsburySkinsFan]

well they do like to control certain spending.

the system does not reward restraint,nor do most voters

On that we agree.

[thebluefood]

Never, unfortunately

Well, my friends, if that's the case, it looks like we're all screwed.

Looks like this is going to be Washington's graduation present to me.

"Hey, Chris! Congrats on finishing college. Here's a recession. Have fun finding work!"

[Thiebear]

Nah, the republicans will cave.. they always do.

Lets review:

We will pass a bill on the 250k and below. There will never be a bill for 250k+ that makes the Senate floor.

We will not cut anything

We will not (cut the growth) for anything that's not already been identified.

The Omnibus budget will come out in lieu of a real Budget on a Friday mid December and then they will go on vacation until Jan 15th or so the next day so we can forget about it over the next 30days.

Have a nice year.

---------- Post added November-30th-2012 at 09:55 AM ----------

Really? I've imagined all of those Republican proposals to "privatize" SS? To replace Medicare with vouchers (and to promise to make the vouchers shrink)?

I've imagined Democrats proposing to eliminate the cap on the SS taxes? (A proposal that will make SS solvent for the next 75 years.) And Republicans rejecting the proposal, because well, 75 years isn't forever, therefore it can't be considered?

I've imagined Republicans claiming that SS went bankrupt 3 years ago? (Because, we all know, when spending exceeds income, than one if bankrupt. The fact that someone has money in the bank, and that their bank balance actually went up, is irrelevant, you know)

Gee, tell me more.

(Or just call me more names.)

http://www.washingtonpost.com/blogs/fact-checker/post/updating-a-ruling-social-security-and-its-role-in-the-nations-debt/2012/11/29/1cd3e8aa-3a68-11e2-8a97-363b0f9a0ab3_blog.html

funny math keeps SS going well.

2013 projected:

Social Security Income (in billions of dollars)

Revenues 675

Interest 110

Other income 70

Total income 854

Outgo

Total outgo 819

This looks like surplus, worth about $36 billion after rounding.

But notice that fully $110 billion of the income was interest on Treasury securities. But that interest is simply paid with new Treasury bonds. So when that money is subtracted, the actual cash flow (what the CBO document calls “primary surplus/deficit”) is negative — and getting worse.

In 2012, the cash flow deficit was $58 billion. In 2013, it will be negative $75 billion — and then negative $82 billion in 2014. By 2016, the trust fund for disability insurance will be exhausted, so in theory, full disability benefits could not be paid.

[88Comrade2000]

Frankly, the best thing to happen is to go off the fiscal cliff. Yes, short term we will fall back into an official recession. In reality, in alot of places; we never came out of recession.

I wouldn't do a thing. No tax cuts, no nothing. All they will be doing next year; is positioning themselves for the next election. Despite History saying it should favor the Repubs- being the party out of the white house; I think they could retake the house and get back to over 60 in the Senate.

[Elessar78]

There's no way of knowing what's going on behind the scenes. There are multiple ways to skin this cat with multiple considerations.

[Fergasun]

This was Bowles take on Wednesday:

1/3rd chance they get it done before January 1.

1/3rd chance they get it done within a couple weeks of going over the fiscal cliff.

1/3rd chance they play "small ball" and kick the can again.

I think the framework is there on the table; however as Boehner repeatedly said during the last negotiations "nothing is done until everything is done". These are the numbers I heard.

$800B in new revenues over 10 years (from the GOP)

$400B in entitlement cuts over 10 years (from the Democrats).

I think both of these numbers represent a minimum size... so I think the Democrats are asking for ~ $1.6T (maybe $1.2T) in new revenues over 10 years.

I believe the Democrats have said that the Republicans have not specified or layed out a play for the $800B in entitlement cuts they would like.

No one wants to own the entitlement cuts, hence pressure for Obama to "lead".

Really Larry, do you really think it's Obama's job to lay out the entitlement cuts when its the GOP asking for them?

I think it was Boehner who said he won't "negotiate with himself" yet, he wants Obama to "negotiate with himself"?

I think it is fair for the GOP to lead with a position on entitlement cuts first, just as the Democrats have lead with their tax plans. Incidentally the Democrats want to make sure the tax rates increase as well for the 2%. Obama seems firm on this (I think he has a decent enough mandate on this) and what has been leaked is that these tax cuts would actually be solid revenue versus other deduction reductions and tax code shenanigans which may not lead to the revenues he wants.

If we folow with what has happened in the past my opinion is that the GOP continue to play "small ball" until they think they have more leverage in the debates (which has been going on for the past 2 years). I have no idea what this means, other than I think Americans don't think "entitlement reform" is a big deal; but do feel raising taxes on the rich is, and cutting some spending (minus entitlements). I think the GOP should put forward some entitlement reform proposal and work on getting that accepted... and then in 4 years they can complain that it wasn't enough and try to convince Americans. Just my opinion on what I think is "good politics".

Neither party is really willing to go in front of the camera's with their true negotiating points; which is why the talks are at the Boehner-Obama level.... there's going to be a deal and a package they present to everyone as a "this is what the House GOP leader and President agree to".

[twa]

Why not a complete proposal from both parties ,then reconciling them?

If the Dems simply want more money the tax increases are already in place

[Fergasun]

Why not a complete proposal from both parties ,then reconciling them?

If the Dems simply want more money the tax increases are already in place

There's no comple proposal because both parties don't want to negotiate with themselves. We already pretty much would know the frame-work for the proposals.

Democrats: $1.6T in "new revenue" over 10 years. No entitlement reform.

Republicans: $1.6T in "entitlement reform" over 10 years. No increased revenue.

The first party that proposes entitlement reform will be accused of killing grandma and grandpa.

Personally as part of a massive plan I'd like to see a "net worth tax" to recognize that the government spending has increased the net worth of large number of individuals and corporations. Something like a 20% tax on net worth based on whether they've been a taxpayer for 30-40 years. I know it sounds very socialist, but it really galls me when folks like Bowles and Simpson say "it's our generation that did this!" without acknowledging that their generation has also massively benefitted from government spending and now future generations are going to be punished for it. If you are so ashamed by what your generation did, than allow a clawback of some of the money you benefited from it. And really it would probably be large corporations that pay this. Sure there would be cries against this based on the stock market dropping, but everyone cries about how government debt is out of control.... put some of your own skin in the game.

[Larry]

Nah, the republicans will cave.. they always do.

Lets review:

We will pass a bill on the 250k and below. There will never be a bill for 250k+ that makes the Senate floor.

Untrue. There already has been such a vote. Months ago.

Senate Bill S 3412 was a proposal to extend the Bush tax cuts, for all Americans. But the proposal caps the cuts. Everybody would get a tax cut (as in, they would pay less taxes than if the tax cuts expire). But the guy who makes $250K and the guy who makes $10M would get exactly the same cut. (Same dollar amount, not same percentage.)

The Republicans attempted to attach more tax cuts, for income above $250K only, to the bill. (They wanted to make it so that people above $250K got bigger tax cuts (relative to "if nothing gets done") than everybody else.) (Or, they wanted to extend all of the current Bush tax cuts. Depending on whether you're comparing the proposals against "what taxes are now", or "what taxes will be, next year, under currert law".)

Vote on the attempt to attach the "tax cuts for the rich" to the bill. (Pretty much, the R's voted in favor of it, and the D's voted against it.)

The measure was then voted on. (Without the "tax cuts for the rich" attached to it.)

Vote on passing the actual tax cut. (The R's unanimously opposed the tax cut.)

The measure was passed, (on July 25th, I will point out), and was sent to the House. The House has refused to allow it to be voted on.

We will not cut anything

There have been cuts. Further cuts have been agreed to, and are currently scheduled to take place.

My opinion, of future events, is that there will be more cuts agreed to.

Now, if you want to claim that there won't be big cuts? I completely agree with you.

http://www.washingtonpost.com/blogs/fact-checker/post/updating-a-ruling-social-security-and-its-role-in-the-nations-debt/2012/11/29/1cd3e8aa-3a68-11e2-8a97-363b0f9a0ab3_blog.html

funny math keeps SS going well.

Republican definition of "funny math": Math that recognizes that Treasury bills exist, and that they pay interest.

"But look! If you pretend that SS has no assets, and pretend that these assets aren't paying interest, and ignore the fact that SS's bank balance is actually going up, then it's bankrupt. (Therefore, we absolutely must implement this proposal, right now, which is guaranteed to make (the thing that I'm falsely calling bankruptcy) worse.)"

---------- Post added November-30th-2012 at 11:07 AM ----------

Really Larry, do you really think it's Obama's job to lay out the entitlement cuts when its the GOP asking for them?

I think it was Boehner who said he won't "negotiate with himself" yet, he wants Obama to "negotiate with himself"?

Yes.

IMO, when the President makes a proposal, it's his job to make a complete one.

When he submits a budget proposal, it's his job to say how he intends to pay for it.

IMO, that's the way it's supposed to be done: The President makes a proposal. And Congress "improves" it.

To me, that's one of the real powers of the Presidency. The President gets to "establish the baseline", so to speak.

For example, with the annual budget debates: The President makes a full, detailed, line-item proposal. Congress then creates dozens of alternative proposals. But every one of those alternates gets compared against the President's proposals. The Presidential plan is the yardstick, against which all other proposals are measured.

I refer to this as "leadership"

[GSF]

Frankly, the best thing to happen is to go off the fiscal cliff. Yes, short term we will fall back into an official recession. In reality, in alot of places; we never came out of recession.

I wouldn't do a thing. No tax cuts, no nothing. All they will be doing next year; is positioning themselves for the next election. Despite History saying it should favor the Repubs- being the party out of the white house; I think they could retake the house and get back to over 60 in the Senate.

I am far from an expert on this subject, but I have been wondering if this could be the answer. Take the medicine now for the sake of the future.

They showed the President's proposal on CNN this morning. The amount of spending cuts aren't near enough to really solve the problem from what I understand.

---------- Post added November-30th-2012 at 04:47 PM ----------

Also, what if they just did a small increase on everyone from middle class up. Wouldn't that be something that would raise more money than just taxing the wealthy?

[SnyderShrugged]

http://www.reuters.com/article/2012/11/30/us-usa-fiscal-offer-idUSBRE8AT02C20121130

Obama's opening "fiscal cliff" bid seeks debt limit hike, stimulus

(Reuters) - The Obama administration's opening bid on Thursday in negotiations to avert a year-end fiscal crunch included a demand for new stimulus spending and authority to unilaterally raise the U.S. borrowing ceiling, a Republican congressional aide said.

Is the bolded section true?

[twa]

Is the bolded section true?

Yes, and expected

[Tulane Skins Fan]

http://www.reuters.com/article/2012/11/30/us-usa-fiscal-offer-idUSBRE8AT02C20121130

Obama's opening "fiscal cliff" bid seeks debt limit hike, stimulus

(Reuters) - The Obama administration's opening bid on Thursday in negotiations to avert a year-end fiscal crunch included a demand for new stimulus spending and authority to unilaterally raise the U.S. borrowing ceiling, a Republican congressional aide said.

Is the bolded section true?

It is true, and it should be the law. Its in the constitution. The part the tea party doesn't like to read.

[SnyderShrugged]

It is true, and it should be the law. Its in the constitution. The part the tea party doesn't like to read.

Its in the constitution for the President to have unilateral control of debt limits? Please show!

[Tulane Skins Fan]

Its in the constitution for the President to have unilateral control of debt limits? Please show!

Ah, the old change the entire premise of the argument and argue that trick.

14th Amendment section 4: Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

(I know, the GOP hates the 14th amendment, but its still part of the constitution).

The debt limit you are speaking of is a congressional act that gives them authority to question the U.S. ability to pay their debt. That is, the law that there is a limit when the government will forfeit on its debt is totally unconstitutional. Its really not that close a call.

That does not mean that the President has "unilateral control of debt limits." No, the congress has a ton of spending power and they can propose and pass laws that control the debt. But what is unconstitutional is for them to pass a law that says the government will default at a certain debt limit.

there you go.

[Larry]

Also, what if they just did a small increase on everyone from middle class up. Wouldn't that be something that would raise more money than just taxing the wealthy?

I haven't seen any hint that we aren't going to see the expiration of the payroll tax cut.

If that pans out, and that tax cut expires, then we're looking at every person in America with earned income taking a 2% pay cut on all of their income, up to $110K.

If that tax cut expires, and if Obama gets his "tax hike on the rich", then what we're looking at is:

A hike of 2%, on earned income (but not interest, pensions, and so forth) on the first $110K of income.

And a hike of 3%, on all income (but not capital gains) on everything above $250K.

That's rather close to a 2% tax hike, on everybody. Not quite. But, "close enough for government work", I would think.

[GSF]

I haven't seen any hint that we aren't going to see the expiration of the payroll tax cut.

If that pans out, and that tax cut expires, then we're looking at every person in America with earned income taking a 2% pay cut on all of their income, up to $110K.

If that tax cut expires, and if Obama gets his "tax hike on the rich", then what we're looking at is:

A hike of 2%, on earned income (but not interest, pensions, and so forth) on the first $110K of income.

And a hike of 3%, on all income (but not capital gains) on everything above $250K.

That's rather close to a 2% tax hike, on everybody. Not quite. But, "close enough for government work", I would think.

That might be the best thing at this point, but I don't really know. I do know I'm dissappointed with the proposal the White House put out. I agree with Boehner, it doesn't seem like a serious proposal to reduce the debt.

[Larry]

http://www.reuters.com/article/2012/11/30/us-usa-fiscal-offer-idUSBRE8AT02C20121130

Obama's opening "fiscal cliff" bid seeks debt limit hike, stimulus

(Reuters) - The Obama administration's opening bid on Thursday in negotiations to avert a year-end fiscal crunch included a demand for new stimulus spending and authority to unilaterally raise the U.S. borrowing ceiling, a Republican congressional aide said.

Is the bolded section true?

Well, considering the source (an unnamed Republican congressional aide), I would assume that it might have some exaggeration. But I also assume that it's at least partially true.

[twa]

Tulane....a debt limit is not a default nor action to not to pay their debt ...it is the inverse in fact