The GOP Plan?
From the NYTimes: "In a letter signed by Speaker John Boehner and six other House leaders, Republicans didn’t even bother to assemble their own package of spending cuts and revenue increases; they did a simple copy and paste of a few proposals made extemporaneously at a hearing last year by Erskine Bowles, the Democratic co-chairman of a deficit reduction committee.
The proposal, which Mr. Bowles quickly disavowed on Monday, purports to raise $800 billion in revenue over a decade by ending deductions and loopholes, while allowing the Bush-era tax cuts for the rich to continue. It would cut $1.2 trillion in spending, half of which would come from Medicare, Medicaid, and other health programs, including an increase in the Medicare eligibility age to 67. Another $600 billion would be cut from other unspecified spending. "
And this:
"House Republicans would allow a vote on extending the Bush middle class tax cuts (the bill passed in August by the Senate) and offer the President nothing more: no extension of the debt ceiling, nothing on unemployment, nothing on closing loopholes.
Congress would recess for the holidays and the president would face a big battle early in the year over the debt ceiling. A top GOP House leadership aide confirms the plan is under consideration, but says Speaker Boehner has made no decision on whether to pursue it.
Under one variation of this Doomsday Plan, House Republicans would allow a vote on extending only the middle class tax cuts and Republicans, to express disapproval at the failure to extend all tax cuts, would vote “present” on the bill, allowing it to pass entirely on Democratic votes." --h/t dailykos
Be careful, Republicans, what you plan for in this game. The American people support President Obama. Elections have consequences:
"How dare he? President Obama, I mean: How dare he do what he promised during the campaign? How dare he insist on a “balanced approach” to fiscal policy that includes a teensy-weensy tax increase for the rich? Oh, the humanity." --Eugene Robinson
More HERE.
54 comments:
Didn't he promise to reduce spending at least 3 to one. Instead he asks for 1.6 trillion dollars in tax hikes, above the billions he has already enacted with Obamacare. He plans on throwing 400 billion at government jobs and extend unemployment benefits.
How can you say that is a balanced approach.
His lets raise taxes now and think about spending cuts later, good negotiating skills.
The democrats hate the Bush tax cuts, so let them expire and we can see where the fiscal curb takes us.
The Fiscal Cliff
Traipsing toward Perdition arm-in-arm,
Happy little morons fecklessly
Embrace ideas most apt to do them harm ––
False hope their wants could be supplied for free.
Imposing on society’s producers,
Soft-headed sycophants conditioned madly
Cast aspersions, ape their vile seducers,
And thus make sure our future will go badly.
Leaving hardship for the yet unborn,
Cleverly sidestepping Duty’s call,
Leaders weak, deserving of our scorn
Impel our once-great nation toward her fall.
Foolishness portrayed as wisdom fails us
Forever in the search to cure what ails us.
~ FreeThinke
Obama is trying to work within the fiscal reality of our situation. Something Republicans have not done since Ike.
The congress was also elected by the people if you recall to prevent excessive spending.
The American people also support the congress
It's called negotiating, Shaw. Ever heard of it?
So just what is the president's 'balanced budget approach?'
He's asking for 1.6 trillion in increased revenue over ten years, when the deficits are projected to be over 1 trillion each of the ten years.
Cut DoD to zero you we still don't meet this magical 'balanced budget approach.'
Perhaps you can enlighten us.
I do agree with you that the GOP needs to watch it. The president did with the election, and he has the majority on his side.
My advice to the GOP? Get the hell out of the way. They are so inept, that if they tried to turn the table on him, they would end up flipping it over on themselves.
I agree SF. The GOP should get out of the way. Let Obama do what he proposes. If it works, we all win. If it loses, we lose, but the republicans will win...and that is all they care about anyway. They will be set to take over everything in 2016.
Build yourself an ark. Hurry! It's time for another Great Flood.
----------> Katharine Heartburn
JC
Both sides need to read the Art of Negotiations. The raise taxes without cutting spending does no one any good.
Or we could take another approach and just increase the deficit and to h--- with our yet to born children's grandchildren. I favor going over the curb and see what happens. Obama would get his wish to raise taxes and the democrats would be able to cut defense. Works for all sides.
People can say they endorse one plan or the other, but I think that before endorsing a plan, they should examine each one from an economic POV. Economists have shown time after time that large spending cuts in a recession/depression prolongs them. They have also shown that tax cuts for the rich create neither jobs nor economic growth. I think if more Americans knew more about economics and our economic history, they wouldn't support any plan simply because they believe that spending cuts or tax increases are automatically good/bad for our economy. I taught economics for years before I retired in 2009 and could begin paying more attention to fiscal/budgetary policy, and boy, was I shocked to find that there are many politicians in Congress and people in the country who don't understand basic economics or fiscal and monetary policy!
What majii said ... plus the fact that interest rates are at an all-time low; so low, point of fact, the cost of servicing the national debt is virtually zero. Now is actually the best time to invest in infrastructure - and create jobs in due course - because the cost of money will never be cheaper.
What I don't appreciate: The politics of derision and scorn from commenters who 'thinke' they are superior to the rest of humanity, as in: "Happy little morons" to a doggerel beat. Yeehaaah! Klop, klop, hippity hop. How trite and inept !!!
George Orwell in paraphrase: "Some animals 'thinke they are more equal than other animals."
It can easily be said the election was about raising taxes on the 2% (won't be enough) the Republicans refuse. Screw them. Go over the cliff on the basis that Republicans refused to come to thew table with reality.
Getting more incredulous by the day. Give em an acceptable compromise replete with dire predictions and let the buffalo chips fall where they may.
Prediction... Things don't get much worse. They might get better.
@Aon << It can easily be said the election was about raising taxes on the 2% (won't be enough) the Republicans refuse. Screw them. Go over the cliff on the basis that Republicans refused to come to thew table with reality. >>
We agree on two parts of that statement: (1) it's easy to say and (2) go over the cliff.
Progressives have been against the Bush tax cuts from the beginning. The President wants to raise taxes on everybody. He always has and he will. Lets get it on.
In addition to what he is talking about now and his determination to go over the cliff he and Congress have already raised five taxes set to begin in four weeks:
The Obamacare Medical Device Tax – a $20 billion tax increase //
The Obamacare “Special Needs Kids Tax” – a $13 billion tax increase // The Obamacare 3.8% Surtax on Investment Income – a $123 billion tax increase // The Obamacare “Haircut” for Medical Itemized Deductions – a $15.2 billion tax increase // The Obamacare Medicare Payroll Tax Hike -- an $86.8 billion tax increase.
@Anon Why wouldn't an observer come to the conclusion that Obama is holding America hostage? He is demanding tax increases on those making over $250,000 and if he doesn't get it he will allow us to go over the cliff. The tax increase is no longer even meaningful other than a ideological tool. If he gets his way it funds the country for 8.5 days!
As far as the President doing what he campaigned on; he is not. He has done a bait and switch. He now is demanding double the tax increases he was before the election // adds billions in spending // and wants authority to borrow unlimited amounts of money from China when the constitution says the job of borrowing lies with Congress.
This is not a plan even Democrats will vote for. Like his budget proposal that went down in the Senate 99-0 the President is not negotiating in good faith.
The Prez wants to raise taxes on everyone, and is. As well, increased costs from Obamacare will be passed on to the middle class. You think big chain restaraunts won't increase costs to do business to customers? They will. So will other businesses.
Tell the truth. Then, lets do this.
What's next. A Detroit city council woman demanded (on tape) a quid pro quo for a Detroit bailout because her people voted for Obama. I guess that means Cali, who voted by 20 points for Obama also needs a bailout. And Illinois, which can't pay it's union promises, needs a massive bailout.
For the second straight year Cali was voted by 24/7 Wall Street as the worst run state in the country. Nipped RI. Bail us out!
Anymore ways we can debase the dollar? Keep the printer running 'cos those tax increases will only last eight days.
I don't have any skin in this game - i'm german and live in germany. I don't vote in US elections.
That said, i don't think the "welfare state" programs are the source of all evil as you make them out to be.
Let me just compare germany, which is the largest economy in europe and the 4th largest in the world, with the US:
Germany has:
* Much higher taxes than the US has (near 50% top income tax tarif, 21% VAT, and on and on)
* Much more built out and generous entitlement programs
i.e.:
Unemployment:
in germany you get 2/3 of your last income for 1 year and after that 800 Euro (~$1046) per month with no time or maximum payment limit. On top of that you are eligible for state funded training (carried out by private sector) to improve your ability to find a job
Illness:
In germany *everyone* gets free public healthcare. This system provides high quality care - i can personallly attest to that. It also works pretty well - the political discussion in germany these days is about how to spend the *profit* the public health insurer made last year..
Retiring:
In germany everyone gets state funded pension. This pays you 2/3 of your median income over your worklife.
We are currently discussing if we should afford rolling back the age of eligibility for retirement benefits from 67 to 65..
Also these payments are unaffected should there be a financial crisis - unlike 401k they are independent of capital markets.
Getting sick when old
Additionally there is a state funded insurance ("Pflegeversicherung") that pays for a nurse to come to your home, or your living in a retirement home if you are too old to care for yourself
Germany has lower unemployment (6,5%) than most of europe and also lower than the US (7,9%)
Germany and the US have, at the sime time, quite similar levels of debt:
US: 74% of GDP
Germany: 80% of GDP
It is a bit higher in germany largely due to extra outlays for integrating the ex-communist eastern part in germany.
So to recap:
Germany is an economic powerhouse even with a much better built out welfare state than the US has.
So from my perspective it's not imperative to cut the welfare state in the US to get the economy going again.
Other measures are needed.
KP
Good response but you didn't include the 2.3% medical device excise tax.
We have seen little of the cost of Obamacare because it will be staggering to everyone, except the 7% who had no healthcare and wanted it.
I am at a loss where they came up with 250,000 a year is rich and don't pay enough income taxes. Even though that seems like a large sum, most people who earn 250K are taxed as earned income. It is not until you get to the million earners that passive income kicks in. If you earn 250k you are paying in the 30% range.
Obama is all about raising taxes and although he targets the "rich" he is turning into an equal opportunity taxer.
PhillippeD: Americans enjoy a higher standard of living and more freedoms that Germans.
I lived there and continue to have many German friends, some who have emigrated and some who continue to live there. There is nothing wrong with your system and I do not criticize it. Based upon voting patterns, it is what Germans want.
There is another critical difference you fail to mention. Germany enjoys honest and efficient government. Ours is grossly wasteful and criminally corrupt.
"The German government is failing to tighten up laws that crack down on illegal party funding and bribing parliamentarians, say anti-corruption watchdogs at the Council of Europe. In a compliance report, they single out Germany for having made no progress on implementing reforms.
Usually, the Group of States against Corruption (GRECO), established by the Council of Europe in 1999, politely refrains from criticizing its member countries. The anti-corruption watchdogs always stress that they work with their members, not against them.
ANZEIGE
In its reports, the group, set up in 1999 to monitor adherence to the Council's anti-corruption standards, tends to highlight even the tiniest progress.
But its patience with the German government appears to be wearing thin."
Germany More Corrupt Than Thought
@PhilippeD Thanks for your input, PD.
1) How does Germany's defense budget stack up against America's?
2) Does that influence what Germany can spend on it's "Welfare State"?
3) How would Germany's defense budget change (if at all) if America decided to drastically reduce our perceived responsibility to help defend Europe? In other words, do we indirectly help fund Germany's "Welfare State"? I don't mean this to be a rhetorical question and am not passing judgment. I value your opinion in this matter and am eager to hear your views, even if they are anti-military or critcal of our defense spending and/or foreign policy. Thanks in advance.
@PD We might agree more than disagree, so let it fly.
Anon:
Thank you for the link. It shows that the German government is perceived to be less corrupt than the US government.
Please don't tell us you don't think political payoffs happen here?
Now, why don't you go dig up some information showing how beautifully efficient the US government it.
only a dewy-eyed naif would believe governments aren't corrupt...or would even pley the childish game of who's more corrupt that who...what is the point...and what does silverfizzle plan to do about it other than whine...and pretend he and his libertaricans are somehow above it all...given the chance the libertaricans would find awesome ways to rip off the American people as do all politicians...to not understand that is to be hoplelessly living in a dreamworld with unicorns and rainbows...lol
KP,
We are 16 trillion in debt and counting, yet, both campaigns major policy was tax cuts.
Just to bad Americans won't pay their bills, suck it up. We already spent it, we must pay it.
This is a one generation (selfish) debt. It was not given to us by the WW II generation.
The boomers built this debt, they should pay it before they die off. They have had their free ride, now it's time to pay.
Going over the cliff means a tax hike and cuts in spending. Just what a 16 trillion dollar debt needs (not enough).
The cost of doing business and living in America. When we voted for all these "tax cut" politicians the debt kept climbing, simple Math. Selfish Americans accepted that continuous debt, to the harm of future America.
Talk all the little details you want. Unless you support higher taxes to pay the debt we (our generation built, you are not serious about national finances.
How did previous generations pay their debt without passing it on to future generations? They taxed themselves enough to pay their bills, like the WW II generation who taxed themselves at twice the rate we tax ourselves.
I have no time for those who over 40 years built this debt. Tax yourself and pay it.
Anon: I'm not whining, just giving you the facts. Not my fault you can't handle it.
Here's more:
http://www.weforum.org/issues/competitiveness-0/gci2012-data-platform/
Germany's government institutions rank pretty high in efficiency, trust and not wasting people's money.
The US is somewhere south of Botswana.
Our government has turned into a wealth destruction machine.
What will I do about it? Continue to provide facts from trusted sources in a perhaps futile effort to push back the frontiers of ignorance.
Giving government more money is the solution?
I can't believe in this day and age that such simple-minded drivel still has currency.
President Obama wants $1.6 trillion in new taxes over 10 years. Fine. Screw the rich. Half of them voted for him anyway, so they get what they deserve.
More importantly, this amount is just a drop in the bucket. Deficits are projected to be $10 trillion over the next ten years. So where does the other $8.4 trillion come from?
Defense? Zero it out and you save around $6 trillion.
The math does not add up.
People earning $250,000 per year will not have their taxes increased. If they earn more, the tax increase will be on the amount OVER $250,000.
@Anon - December 5, 2012 12:37 PM
Did you read my comments or are you so much in a rush to answer you missed my point?
Bottom line, you agree with me. Implement the changes on January 1st. EVERYBODY pays more.
My second point was that Obama ought to quit lieing about negotiating in good faith. He is not. Like you, I think he should just tell the truth and get on with it.
I didn't miss your point, you missed mine.
Raise taxes much higher to pay off the debt we built up, by not paying our bills.
Talk about going back to Clinton tax rates? Go back to Ike tax rates and pay off the debt.
That's right, again, it's Obama's fault. He's lying.
How about the Republicans accepting what the American people voted for?
The details you mention are BS. None of it pays the debt.
Today's Left:
Exultant. Ruthless. Vile.
They have more wind than we. They are too strong for us. We've been hunted down and killed our remains stored in their meat locker . Once we've been devoured, they will turn on each other, of course. Now, isn't that cold comfort?
----------> Katharine Heartburn
@Anon << How about the Republicans accepting what the American people voted for? >>
Hold on. I am not defending Republicans. I am suggesting we raise tax rates, as you are. I would even be willing to pay more than Clinton tax rates, as you suggest, if we rolled back spending to Clinton era numbers. I think that was 18% of GDP. I am focused on paying off the debt.
<< The details you mention are BS. None of it pays the debt. >>
I am not sure what you are referring to. I didn't give a plan to pay off the debt in prior posts. Having said that, I am very interested in paying off the debt through higher taxes and decreased spending. Are we in agreement or do you want to pay off the debt through taxes hikes only?
Here is another reason to support the President's proposed taxes on "the Rich:"
They will fall overwhelmingly upon his voters in deep blue areas
I am all for giving voters what they want and allowing people to suffer the consequences of their actions.
More information, preemptive...
http://www.forbes.com/sites/joelkotkin/2012/07/09/the-cities-where-a-paycheck-stretches-the-farthest/
It's clear (40 year history) Americans don't want to cut spending. They don't want to eliminate SS, Medicare, etc. Fine, they pay for it.
It's clear you blame Obama and went out of your way to list your reasons.
Good luck with that
I don't think KP is blaming Obama, and neither am I.
President Obama comes in for blame, but he shares it with those who came before him.
I think we do agree that we have been living in a fantasy land. Where we differ is that KP and I can see that Obama continues us on the candyland path. He is not talking responsibly.
So, how do we close the gap?
Without spending cuts, you need an additional $1 trillion in taxes per year.
One trillion only balances the yearly budget.
When do we tackle the 16 trillion?
Tax rates should be floating, according to our level of deficit and debt.
We should not expect only the rich to have their taxes raised, they were not the only ones who benefited from tax cuts. Like Jefferson, I support a progressive tax system.
It is not a sin, or the end of America, if taxes go up, way up. It is in fact rational given our debt and deficit level.
Yes, it's a sacrifice. It's not like we have to spill blood, or die, we just have to put up our money, which we should have done all along.
We have a more progressive tax system that European countries do.
I do agree with you that all this government needs to be paid for.
Government collects around 17% of GDP in revenue, but spends around 23%
Closing the gap will stop the bleeding, but as you ask, how do we pay down the debt we have incurred.
My suggestion is to lock congress inside the capitol until they balance the budget. If they cannot, then the gap is bridged 1/2 by tax increases, and 1/2 by across the board spending cuts.
Don't be too quick to eliminate the federal deficit. "...federal deficits are the ultimate source of all dollars, and despite economically suicidal efforts to reduce deficits, if there were no deficits there would be no dollars."
JC
You are correct but what about the 47% who pay nothing. Do they not get anything from the federalists?
Raise taxes for everyone to bring down the debt. Those who pay taxes on 250K probably use less government services than those who pay zero federal income tax. Shouldn't everyone contribute something.
Everybody does contribute, even those who pay no federal income tax. Believe me, the vast majority of those people would prefer to earn enough money to pay federal income tax, except maybe for the retirees on SS who don't have enough additional income to pay federal income tax. The vast majority of those 47% (actually it is 46.4% but who's counting) do pay SS and Medicare taxes.
JC, talking about revenue; The Hobbit movie, December 14th; that will raise revenue!!
How dare President Obama do what he campaigned on doing? Good question, since all presidents come to office having made promises. So, let's see how Obama stacks up in this regard against some other presidents.
Richard Nixon came to office assuring one and all he had a plan to end the Vietnam War. However, our war effort there didn't end until after Nixon had resigned in disgrace. To the contrary of what he said, on his watch the war expanded greatly, extended interminably and augmented with illegal bombing campaigns in Laos and Cambodia, and illegal ground operations in Laos.
St. Ronald Reagan promised smaller, less-costly government. Reagan did fire a bunch of air traffic controllers, but he also ballooned the budget, grew the bureaucracy and raised taxes several times.
George Herbert Walker Bush promised a thousand points of light and no new taxes. He delivered stagnant economic growth and wages, told a needy New York City to go to hell, and raised taxes.
George W. Bush ran as a downright humble, self-proclaimed compassionate conservative and fiscal conservative. Once in office he became The Decider. One of his early decisions came at the start of an especially stiff winter. He deliberately sat on appropriated and ready to be disbursed winter home-heating assistance funds until winter was almost over. Four elderly women in Chicago died in their unheated quarters. Countless other very poor people nationwide suffered for lack of enough heat that winter. Oh, and George W. ran up more debt (and faster) than all preceding presidents combined. Even without the 2007-2008 economic meltdown, U.S. finances would've been in shambles when he left office.
President Obama came to office promising change you can believe in. He's delivered change for working women who expect fair pay; for same-sex-oriented military people, and for all Americans in the form of health-care reform a half century overdue. Now, he's delivering on his promise the wealthy will have to pay a fairer share of the tax burden, and that he won't let himself be rolled by Republican bullies who care above all about their wealthy patrons.
So, to answer the question, Obama dares because he's an honest, earnest president. I'll admit, that's change I want to believe in. :)
". . . You think big chain restaurants won't increase costs to do business to customers? They will. So will other businesses."
OMG — a revelation!
Ancient Chinese secret: You can't get out of this life alive or rich.
<< ". . . You think big chain restaurants won't increase costs to do business to customers? They will. So will other businesses."
OMG — a revelation! >>
Thanks. It wasn't meant as condescending. It's been repeated here before; voters often unknowingly call for action that hurts them. Readers of this blog are far more attune to the ramifications of tax policy than most. My point wasn't meant to be a revelation; just a reminder that by making the cost to run a business owned by the relatively affluent more difficult we may actually make life more expensive and difficult for middle class and poor consumers.
"The vast majority of those 47% do pay SS and Medicare taxes.
I was not referring to SS and Medicare, which is prepaid retirement and medical. I was referring to the punitive income tax, as of course you know.
Cost increases are not automatically passed on to the consumer. (I know you did not say automatically.) They are passed on only if the market will bear it. The cost increase will be born by some combination of product cost and profit margin.
Some revelations:
Business profits at record high
Employers fire employees due to the cost of Obamacare, which hasn't been implemented yet
Health insurance cost money
47% to poor to pay federal taxes
American infrastructure needs over a trillion in maintenance, repair and new construction
Republicans kill infrastructure jobs bill
Americans and American leaders to afraid to invest in America
How about
Citigroup cheers massive layoffs
It means more profit for them
A BIT of TRUTH:
Nixon Doctrine / Vietnamization
Severe communist losses during the Tet Offensive [1968] allowed U.S. President Richard Nixon to begin troop withdrawals. His plan, called the Nixon Doctrine, was to build up the ARVN, so that they could take over the defense of South Vietnam. The policy became known as "Vietnamization". ...
Nixon said in an announcement, "I am tonight announcing plans for the withdrawal of an additional 150,000 American troops to be completed during the spring of next year. This will bring a total reduction of 265,500 men in our armed forces in Vietnam below the level that existed when we took office 15 months ago."
On 10 October 1969, Nixon ordered a squadron of 18 B-52s loaded with nuclear weapons to race to the border of Soviet airspace to convince the Soviet Union that he was capable of anything to end the Vietnam War.
Nixon also pursued negotiations. Theater commander Creighton Abrams shifted to smaller operations, aimed at communist logistics, with better use of firepower and more cooperation with the ARVN. Nixon also began to pursue détente with the Soviet Union and rapprochement with the People's Republic of China. This policy helped to decrease global tensions. Détente led to nuclear arms reduction on the part of both superpowers. But Nixon was disappointed that the PRC and the Soviet Union continued to supply the North Vietnamese with aid. ...
Beginning in 1970, American troops were being taken away from border areas where much more killing took place, and instead put along the coast and interior, which is one reason why casualties in 1970 were less than half of 1969's totals.
The United States [under President Nixon] began drastically reducing their troop support in South Vietnam during the final years of "Vietnamization". Many U.S. troops were removed from the region, and on 5 March 1971, the United States returned the 5th Special Forces Group, which was the first American unit deployed to South Vietnam, to its former base in Fort Bragg, North Carolina.
Under the Paris Peace Accords, between North Vietnamese Foreign Minister Lê Ðức Thọ and U.S. Secretary of State Henry Kissinger, and reluctantly signed by South Vietnamese President Thiệu, U.S. military forces withdrew from South Vietnam and prisoners were exchanged. North Vietnam was allowed to continue supplying communist troops in the South, but only to the extent of replacing materials that were consumed. Later that year the Nobel Peace Prize was awarded to Kissinger [Nixon’s man] and Thọ ...
The communist leaders had expected that the ceasefire terms would favor their side. But Saigon, bolstered by a surge of U.S. aid received just before the ceasefire went into effect, began to roll back the Vietcong. ...
Source: http://en.wikipedia.org/wiki/Vietnam_War
~ FreeThinke
K.P., I was having a little fun, although I shouldn't have done it quite so sarcastically.
Typically, businesses do tend to pass along cost increases to customers. Although, as Jerry notes, it's not a hard, fast rule, and not always a complete pass along when it happens.
This isn't necessarily a bad thing unless it gets out of hand, resulting in outright inflation. How do you tell when increasing wages and prices are getting out of hand? Economists generally gauge it against increases in productivity and by checking competitive pressures.
Regular wage increases are helpful, even though they tend to increase prices. The reason is that there is usually ongoing inflation, even if low level as it's mostly been in recent years. If paycheck workers' wages stagnate, demand suffers. Eventually, that impacts business activity, profits, investments (capital formation), employment and government revenues negatively. If it gets bad enough, long enough, wage stagnation can tip the economy into recession.
Thanks JC and S.W. Anderson. Good stuff!
The people responsible, who need to change their ways, are the ones who have supported cutting taxes without supporting cutting spending for 40 years. That's the Republicans and those who voted their backwards thinking in office. That includes those here who all of a sudden want to talk rational about our national finances.
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