Fiscal Cliff

[bumper]

This one seemed like one to keep an eye on a it will effect the entire world. So far looks like business as usual. I believe it will come to the edge before an agreement will be met. If in fact one is completed.

GOP centrists split on plan to extend only middle-class tax rates
By Russell Berman - 12/01/12 12:57 PM ET

Several House Republicans say the party should consider extending current tax rates for the middle class — but not all of them agree with Rep. Tom Cole (R-Okla.) that a vote should come now.

Cole, a member of the GOP whip team, made waves earlier this week by disclosing that he had privately pushed party leaders to hold a vote on legislation locking in tax rates on annual family income up to $250,000. President Obama has insisted on the move.

Conservatives want all current tax rates extended and don't want to pass a bill that extends rates for most taxpayers while allowing them to rise for some.

A number of more centrist Republicans, however, have signaled they are open to the idea of extending tax rates only for the middle class.

The thinking behind the strategy is that Republicans will find themselves boxed in at year’s end if negotiations to avert the “fiscal cliff” have stalled and Democrats are pressuring the GOP to pass legislation to protect 98 percent of taxpayers from a marginal rate hike.

“I don’t want to be in a position, at the end of the month, where because of inaction, or I should say because of a breakdown in negotiations, the only thing the Senate is able to do is to send over what they send over, which will be extending the tax rates for everybody by whatever percent,” Rep. Charlie Dent (R-Pa.) said in an interview.

The Senate has already approved an extension of tax rates up to the $250,000 threshold. Obama has said he would veto any bill that keeps the current rate for income above that level.

“I don’t want to be in that position, and I think that was the point Cole was making,” Dent said. “That’s not my preference, but we’d rather not deal with that situation on Dec. 30.”

Cole said he stated his position during a private meeting of the whip team earlier this week, after Majority Whip Kevin McCarthy (R-Calif.) solicited opinions from lawmakers.

According to another person in the room, three other Republicans — Reps. Tom Reed (N.Y.), Jo Bonner (Ala.) and Dent — spoke up to support Cole’s position.

Dent and Reed both denied that was the case.

Reed said he was speaking up on the need to consider revenues so that the debate could move on to the question of entitlement reform.

Dent said he did not support bringing up the middle class tax bill now. But he was concerned that Republicans would find themselves in the same position as they were during the payroll tax fight a year ago, when they were forced to agree at the last minute to a two-month extension because the Senate had already left town.

“I don’t want to do anything like that right now. I want to give negotiations a chance,” Dent said.

Referring to last year’s payroll tax fight, he said: “I’m trying to avert that situation as much as possible.”

Bonner did not respond to requests for comment.

Reps. Robert Dold (R-Ill.) and Mary Bono Mack (R-Calif.) have also voiced support for Cole’s position in recent days.

Freshman Rep. Nan Hayworth (R-N.Y.), who was defeated in her bid for reelection, echoed Dent. She said the House GOP should not act now on the Senate bill but may need to do so in a couple of weeks.

“It would be nice if we had this resolved right now. But we still have a couple of weeks in which we are absolutely on the job,” she said.

Thus far, House GOP leaders have given no indication they are considering Cole’s suggestion.

Speaker John Boehner (R-Ohio) shot it down immediately. During a colloquy on the House floor Friday, Majority Leader Eric Cantor (R-Va.) said he did not intend to bring it up for a vote.

While the bill itself does not raise taxes, Republicans have long considered legislation that splits off the middle income rates from the upper income rates to be a de facto tax increase. It would allow rates for the wealthy to go up without further action.

Reps. Steve LaTourette (Ohio) and Mike Simpson (Idaho) — two Republicans who have been seen as among the most likely to agree to higher taxes in a fiscal deal — opposed Cole’s strategy.

“I think he’s wrong,” LaTourette said.

He added later that agreeing to Obama’s demand was “a chump deal” because it presumed that Republicans would still be able to extract concessions from Democrats on spending cuts and entitlement reform in future negotiations.

“It is a little bit like looking in the yellow pages, hiring somebody to remodel your kitchen, giving them a down payment and when you call back, the number's been disconnected and he's in Florida with your dough,” LaTourette said.

The Ohio lawmaker, who is retiring at the end of the year, said he had rebuffed a Republican who approached him with a proposal to find about 30 Republicans to join with House Democrats and pass the middle class tax bill.

He would not say who came to him with the idea.

“I said that’s stupid,” LaTourette said. “Maybe they are still working on it and they’ll find another pigeon."

Democratic Minority Leader Nancy Pelosi (Calif.) said Friday she would launch a discharge petition to force a vote on the Senate bill if Republicans did not bring it to the floor.

LaTourette acknowledged that Obama had the upper hand because he was seen as protecting 98 percent of taxpayers from a tax hike, while Republicans were guarding the other 2 percent.

“Yeah, we’re on the wrong side any time we got a fight with 98 people on one team and two on another,” he said. “The ‘two’ team is probably not going to win. But we’ve got to keep that in play.”

Simpson said he could be persuaded to raise tax rates on the top 2 percent, but not without a simultaneous agreement of spending cuts from Democrats. “It’s got to be a united deal. They’ve got to be tied together,” he said.

— Erik Wasson contributed.

--This article was originally published at 11:37 a.m. and last updated at 12:57 p.m.

[bumper]

For those who have an interest this is a good site. Seems to be publish daily. You can get emailed to yourself. One at article indicates a possible vote next week:

http://us-mg6.mail.yahoo.com/neo/launch ... r75sl64due

[stoneman]

Bumper...Yes I agree, they will a compromise next week...but it will not be a solution...They are merely "kicking the can" down the road to get past the cliff..And the new Congress that meets in Jan will still be facing the same problem ...
IMHO this is not a problem that can be solved by politicians...Politicians remain in office by getting "stuff" for their voters...not by taking things away from the voters...And as long as the takers are bigger than the givers, the takers will always win until the givers have no more money and then class warfare in its classic form will make the changes necessary...

[farlong68]

no real agreement until the chinese quit buying our debt. then it will be ugly.... sell your dollars buy beans bullets and band aids....its gonna get ugly sooner than later just my thoughts....

[bumper]

Sadly America is in the barrel this time around and has been many times before. Should take a bit of heat off the E.U for awhile. They will be back in the barrel again. This is not going away anytime soon. Markets seem to be doing OK at least in Thailand. But, I can't help but think of a house of cards.

So far I don't see anything done that would not qualify for the house of cards. lots of paper moving but not much l else.

This actually may become the lost decade before this is over.

[stoneman]

As Farlong 68 pointed out, the Chinese are a major player, but they have been consistently reducing their US debt and the Fed has been picking up the slack...It is called "monetizing the debt"...The Treasury issues notes and the Fed prints new money and buys the notes...But the real dangerous part will be when the rating agencies downgrade the US debt and the interest rate will increase...Even a 1% increase in the interest rate will add BILLIONS to the deficit and inflation is a real possibility...Not a happy scenario, but no one has the Chutzpa to tackle the problem...

[parrot]

On 'Meet the Press' last night, Tim Geithner gave the administration's side of the bargaining.......tax hikes absolutely essential to any deal. While, representing the Republican side later in the show was Grover Norquist, the promoter of the "Taxpayer Protection Pledge", of which most all Republicans have signed.
I'm opposed to any 'pledge'........as in, never say never. But listening to Norquist talk about the thought of tax increases as 'impure thoughts' brings to mind the politicians and preachers who are homophobic or talk about marriage as an institution while running off to South America to meet up with their choice of dessert, be it another man or another woman.
Anyone who preaches thusly gets my immediate channel switch on the remote. JMHO

[JimboPSM]

Having considered the implications of the fiscal cliff on the international value of the USD there is no doubt in my mind that the medium to long term prospects for the USD will be served far better if the US goes over the fiscal cliff.

It will certainly cause some short term pain, but the kick in the b*lls and the grief that taxpayers will (hopefully) give to politicians in Washington for their dysfunctionality will be well worth it.

Politicians of both sides need to learn that in a democracy, once elected, they are there to serve all of their constituents and all US citizens and that they have to find ways to work together for the benefit of all of the people.

Looked at in PC terms, Washington has blue screened and the fiscal cliff is a reboot – as with a PC a reboot doesn’t solve all the problems, but the intelligent user will become more cautious about which porn sites they choose to visit in future

The last time that the budget was balanced was well before the baby boomer demographic time bomb went off and the tax revenue then as a percentage of GDP was approximately 20%, over the last three years this rate has been less than 16% - see chart below:

• 

I believe that with the increasing healthcare and social security demands of the ageing demographic that the US has going forwards and even with some pretty heavy spending cuts the total tax percentage of GDP required to get anywhere near balancing the budget is in the order of 25%, without that degree of tax revenue the USD will inevitably fall in value - so in a nutshell it is higher taxes or a lower USD, it is the cost of all the "free" lunches the US has put on the credit card over the last decade or so

Now the boomer bomb has gone off (which is 10,000 boomers retiring every day for twenty years), this means that the demands for social security and medical services is increasing at a rate never experienced before.

However, this could be ameliorated if all those boomers, now they are no longer productive, would just do the decent thing and die off quickly so they don’t become a burden on healthcare, social security or the people who made so much money out of them while they were productive

[nkstan]

IMO,Obama is so focused on being the ''saviour''of the lower income class and his race,turning the USA into a Nanny state by redistributing the wealth,that he is trying to squeeze those that disagree with him(ME)with a power play!

I think the House of Reps should pass a bill mandating that spending cuts should be 10 times any tax raises,send it to the Senate for Obama's majority to deal with,therefore shifting the burden on them whether or not we go over the ''Fiscal Cliff''!

[newtovillagelife]

Just my thoughts but I think the rich feel they are entitled to pay lower income tax, and use the tax breaks given to them to do so. Maybe its time they looked into the mirror, its just plain GREED is all, the more you have the more you feel you are entitled to, you feel superior to the middle class. Sad.

[bumper]

Well will keep riding the motorcycle and see if can do my part.Interesting discussion

[gudtymchuk]

Hopefully the fed will continue to borrow and print [-o< , borrow and print [-o< , borrow and print [-o< as long as necessary so my piddling Soc Sec "Entitlement" will continue to magically appear each month in my bank account until I am no longer upright. Selfish I know......

[bumper]

"Soc Sec "Entitlement"

Here in lies a major problem, never meant to be a entitlement. It started a Social Security fund seperate from all other funds. During the Vietnam War Johnson made it a part of he General fund, to finance the war. That my friends is why the fund is in such a mess. A promise broken to million of working Americans.

Haven't they been putting people in jail for misuse of funds. So starting some 51 years ago paying into a retirement and insurance fund to have entitlement shoved down my throat now. I don't know about the rest of you. But, that really pisses me off.

[TJ]

This "fiscal cliff" being discussed is more of a political struggle than financial. It centers about whether to and how to take action or not in response to avoid the looming tax-rate rises and automatic spending cuts set to take effect on Jan. 1.

"Democrats want to extend the Bush-era tax rates for middle class families, while allowing the current lower rates for those with income over $250,000 to expire.

Republicans, though, say they want to extend the rates across the board, claiming any rate rise would hurt the economy. GOP lawmakers want new revenue to come from closing loopholes and deductions in the tax code, instead of from tax-rate rises."

As expected the Democrat-controled Senate offers a deal which increases spending.

The White House “has responded with virtually nothing, they’ve actually asked for more revenue than they’ve been asking for the whole time,” Boehner said. “At the end of the year, they wanted to extend unemployment benefits, they wanted a new stimulus program for infrastructure, they wanted to extend some other tax breaks and all of this new stimulus spending would literally be more than the spending cuts that he was willing to put on the table,” Boehner added.

In the past when Republicans made a deal with Democrats to increase taxes with the Democrat promise that there would be significant cuts in spending those cuts in spending never happened. This was especially true during the Reagan administration where spending skyrocketed mainly because the promised cuts were never made.

While the media will vilify the Republicans if they don't go along with greater spending and higher taxes on the wealthy, they should IMO never surrender to the Democrat higher spending and taxing policy. If not negotiating a total lower level of spending they should do nothing and let the "Bush" tax rise and spending cuts go into effect.

[parrot]

"they should IMO never surrender"

Never say 'never'.........
A half-trillion dollar cut in defense spending......the Republicans will never allow it to happen.
I feel pretty comfortable saying 'never' in that case.

[TJ]

"A half-trillion dollar cut in defense spending," is part of the automatic spending cuts you say. That is indeed one serious objection to allowing the Bush cuts to be implemented. However, some defense cuts should be made.

I have read a book describing the failures of the Reagan administration in cutting programs and spending. It boiled down to that fact that there was always some conservative Republicans that objected to and derailed the many proposed cuts. In the end almost no cost cutting occured. The failure to eliminate the Department of Education was the principal failure of that administration.

Still it may be possible for the Republicans to hold the fort, telling the voters that it was out of the individual politician's hands. Spending cuts can always be restored later on or at least be promised to be funded.

[bumper]

Political yes. What could happen to the credit ratings might be very important. Like everyone else I would want to see defense reductions, in the world we live in today. That being said I would like to see money directed properly to the needs of today.

I see today Cypris is now needing bailout as they financed some of Greece's money needs, which were defaulted on.

Actually what I'm reading is that we are right back where we were a year ago. If the U.S. could get the politics aside, might even be able to pay some debt down in the next decade. I see very little chance of a significant reduction in any less time.

Whats that saying a recession when your neighbor looses his job, a depression when you lose yours.

On the positive side of the coin my daughter finally got a job as a LVN. In Costa Mesa at a mental hospital. I wouldn't want to do it. But, sometimes you have to take what you can get. Doesn't sound like one anyone will try to take for her.

Infrastructure should have been done years ago. There is a lot to be said for turning inward in tough times just a Thailand is doing now.

Enough, of propping up the markets and banks.

Of course the fastest way to have a little money is give it to the government to take care of. All this money flowing and still 2,000 miles of the U.S. Mexico border not covered.

Well I can bitch moan a groan. But, I sure don't know how to fix it.

[bumper]

This from Kelives Strategy Post today. Thought it was interesting:


03 Dec 11:13 AM
Monthly Strategy December,2012

mail Email divider pdf PDF (256kb)

Research by: MBKET Research

December 2012 Monthly strategy

At the end of November, the SET Index closed at the year high at 1,324.04 level, up 1.93% from October. The 11M12 SET generated 29.13% return, highest compared to other Asian markets and Philippines of 29.01%. However, the SET was volatile as expected, especially after the end of the US election on 6 November as President Obama was elected to continue his duty for another term. The Democrat gained majority seats in the Senate, while the Republican party gained the majority seats in the House of Representatives. Nothing has changed much after the election, both House and Senate are controlled by different parties, raising concern over the Fiscal Cliff pressuring the US market to drop over 6% after the election. For the EU, Greek creditors had to hold 3 meetings to approve the bailout package in late November. The above 2 factors were keys issues pressuring the market sentiment through the month. However, worldwide markets later recovered, driven by the better-than-expected October US and Chinese economic numbers and the progressing Fiscal Cliff solution.

[akwoodworker]

Ron Paul speaks of a fiscal cliff that will make the current one seem like a bump in the road. 10 million jobs outsourced, 92 billion in corporate welfare, less than 30 billion to the poor. 700 billion military spending, of course this does not include our secret wars. G Edward Griffin has a great video and Ron Paul's farewell speech to congress is also excellent. Both sides pretending to hate each other. Reminds me of my divorce, both attorneys scowling at each other in the court room, caught them outside congratulating each other for a good performance as the decided where to have lunch.

[KHONDAHM]

Let's be clear about what transpired during the Reagan Aministration: Spending under Reagan tripled the National Debt. It was an obscene amount at the time. HW Bush followed with more spending and (read my lips) MORE new taxes. Clinton had to clean up the mess using a balanced approach of more taxes and spending cuts.

Revisionists have been working overtime to distort the facts just as GOP supporters are working overtime to distort Obama's balanced approach. Be naive, but don't be fooled.

Obama's approach to cleaning up the mess created by Republicans (again) is to simply go back to what worked under Clinton. Let's be clear that had Bush not scrapped Clinton's plan and if he had not sent our warriors off to invade sovereign countries (Iraq) and commit us to stay unnecessarily long (Afghanistan), the ENTIRE National Debt was projected to have been PAID IN FULL by 2012.

Obama is going back to the rates that worked AND is eager to make that part of a Grand Bargain of $4 Trillion in spending cuts. However, the GOP - despite the clear demands of the American People as evidenced by the election and Democrat gains in both Houses - is refusing to accomodate the Will of the People. They are holding the 99% hostage to protect the ridiculously low tax rates of the millionaires and billionaires.

"Give the stuff" arguement holds zero credibility. If one argues that, then you must also acknowledge that Republicans want to give stuff to the gazillionaires, but OOPS! This time around The People were paying attention unlike in 2000 when the Clinton economy had everyone so relaxed about their future that they were not paying attention when Bush GAVE "stuff" to his supporters.

Promising and giving "stuff" has always been and will always be how politicians campaign. Nothing about it is new and nothing about it is news.

As for the so-called "cliff", if it was Europe, it would be called what it is: Austerity. Austerity is painful, but ultimately it is good. Obama should not and does not fear it because his supporters don't fear it. If Boehner fails (again!) and forces the country into austerity, voters will remember a POTUS who was willing to negotiate and the Republicans who let the economy tank to save tax cuts for the 1%. Boehner is in a no-win position. Taxes for the rich are going up whther he acts or not.

As for the world economy, it will get a whole lot worse before it gets a whole lot better. Those with insurance are rooting for the cliff.