Obama’s idea of compromise: All take, no give
I admit that I haven’t been paying too much attention to the certified vote totals from each state in the presidential election, but how did I miss the news that President Obama won 100 percent of the votes in every single state (not just select Philadelphia precincts)?
That’s the only explanation I can conjure for his reported “offer” on the fiscal cliff, via the New York Times:
Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal on Thursday to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, $50 billion in immediate stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.
The proposal, loaded with Democratic priorities and short on detailed spending cuts, met strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced the goal of finding $400 billion in savings from Medicare and other social programs to be worked out next year, with no guarantees.
He did propose some upfront cuts in programs like farm price supports, but did not specify an amount or any details. And senior Republican aides familiar with the offer said those initial spending cuts might be outweighed by spending increases, including at least $50 billion in infrastructure spending, mortgage relief, an extension of unemployment insurance and a deferral of automatic cuts to physician reimbursements under Medicare.
I can just hear Geithner making the offer now: “That’s none for you, a trillion for us; none for you, fifty billion for us; none for you, infinity for us.”
Even assuming the Medicare cuts were to transpire — and the key phrase about that in the Times’ story is “with no guarantees,” which is short-hand for “Democrats are always happy to agree to cuts they have no intention of making” — we are talking $4 in tax increases for, at most, $1 in spending cuts. That’s well past the opposite of the ratio, widely discussed since last year’s debt-ceiling negotiations, of $2.50-$3 in spending cuts for every $1 in tax increases.
If that’s what the American people wanted, we would be calling Nancy Pelosi “Madam Speaker” again. But we’re not. Instead, we have Speaker John Boehner, who has offered to raise revenues by capping deductions in exchange for concrete entitlement reform, and a number of Republican House members and senators who are sticking their necks out to talk about reneging on their no-tax-hikes pledge.
Note to Saxby Chambliss: As long as this is the way the president is talking, there’s really no sense in talking about compromise for the good of the country.
What would be a GOP equivalent to this kind of unserious nonsense? Reason’s Peter Suderman took a pretty good stab at it on Twitter:
Republicans hear Obama’s opening bid, counter with: Eliminate the federal government, except for defense.
Folks, no matter how much you earn, it might be time to sit down and figure out what your household finances are going to look like with Clinton-era tax rates. Because Obama is giving every indication he would rather go over the fiscal cliff than move in anything like the GOP’s direction.
– By Kyle Wingfield
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451 comments Add your comment
Finn McCool (The System isn't Broken; It's Fixed)
November 30th, 2012
1:10 pm
Next week is Hobbit week on the Colbert Show?
Rightwing Troll
November 30th, 2012
1:11 pm
“Let’s see some proof that deal was offered.”
Show me some proof it wasn’t.
Darwin
November 30th, 2012
1:11 pm
Ah, come on man!
BuckeyeInGa
November 30th, 2012
1:12 pm
President Obama has learned from his 1st term to play hardball this term. Good.
Black Label
November 30th, 2012
1:13 pm
“Next week is Hobbit week on the Colbert Show?”
Newt is going on Colbert, cool.
Stevie Ray...Clowns to my Left and Jokers to my Right here I am....
November 30th, 2012
1:16 pm
Sick of Progs
November 30th, 2012
12:45 pm
Agreed…give them what they want…
STEVE
The middle class will not get stronger if the taxes are increased on the rich? Is this going to create more jobs? I agree on DoD spending but think it should be wound down by 20% over time. Social Security and Medicare are collectively leave an unfunded liability for our kids of over $65 trillion..
They all say it’s good for x numbers of years but the CBO is horrid at projecting 10 years out…too many unexpected variables…
Clinton reduced cap gains tax which was costly..Reagan cut rates and a huge windfall of reciepts resulted…too bad spending wasn’t stable or cut during same period..
Rightwing Troll
November 30th, 2012
1:19 pm
“The middle class will not get stronger if the taxes are increased on the rich?”
What has happened to the middle class since 2000? Did they get “stronger” until Obama took office??? Because I missed that if they did…
Black Label
November 30th, 2012
1:21 pm
Fin
Please know they are serving the “whine” in boxes, not bottles, but there seems to be plenty of it.
Steve
November 30th, 2012
1:22 pm
The middle class has shrunk as tax policies now favor the rich. You and I pay 28% (or whatever) on income, the rich pay 15% or less thanks to loopholes and the lower rates on dividends.
The middle class has shrunk slowly since the 1980s, since “trickle down economics” has been introduced, fallacy that it is.
That is fact.
Lil' Barry Bailout - OBAMAPHONE!!!
November 30th, 2012
1:28 pm
Wrong. You and I pay the same capital gains tax rates as the rich.
Don’t fear facts.
Madmax
November 30th, 2012
1:32 pm
Cherokee
November 30th, 2012
12:44 pm
And exactly where are the cuts? So far, all he’s done is play class warfare (and if you don’t think his raise rates on the rich is not class warfare then there is no use talking to you) so he can point to it and tell the wannabees, see I got them for you (see his revenge ad during the campaign), then act all benevolent and condescending while talking about fairness and then make some vague promise about reducing spending in the future while asking for $50,000,000,000 in immediate spending, asking Congress to remove itself from it’s position of keeper of the vault and then jump on a plan while saying the Republicans arent going along with my mandate. NEWSFLASH: Uh, President Obama, over 46% of the nation voted against you and last I looked at my passport, we’re still citizens and we don’t have to roll over and play dead! Our debt is still soaring, people are still unemployed, the value of the dollar is still falling and you, Mr President are doing zilch to stop it and we will remember this and the pendulum will swing back.
Matz
November 30th, 2012
1:35 pm
Sick of Progs: “Would you like to see a list of Geithner’s buddy recipients of the great bailout or Obama donor paybacks under the green energy handout program? I though not…”
You think wrong, then. To think that only Republican congressmen benefit from their positions while throwing us all under the bus would be a gross generality. Sadly, most of our officials in Washington are on the same side: their own. It’s our duty as citizens to hold our representatives accountable, to educate ourselves through a variety of sources, and to not buy into the partisan rhetoric that grinds meaningful progress to a halt. They WANT us to fight with each other over ideals and principles; that way we’re not paying attention to what they do every day.
Regarding green energy companies, I can only say that I hope to see something better from them in the immediate future, and to remind you that oil companies started receiving subsidies nearly a hundred years ago, for the purpose of developing new sources. That’s what should be happening to the green energy industry as it reaches though its infancy toward adulthood. Meanwhile we continue to subsidize oil companies reaping huge profits. I think we can take the training wheels off Exxon now and let them ride on their own, don’t you?
Steve
November 30th, 2012
1:35 pm
Wrong. You and I don’t live off of dividends. The wealthy do. That is THEIR income.
Kyle Wingfield
November 30th, 2012
1:37 pm
Steve @ 1:22: You’re wrong about who pays what.
Here are the average effective tax rates, including all types of federal tax, by quintile for the latest year available (2009):
Highest: 23.1%
2nd-Highest: 15.1%
Middle: 11.1%
2nd-Lowest: 6.8%
Lowest: 1.0%
That’s what people are actually paying in taxes compared to the income they report, not the marginal rates they face on certain types of income. The effective tax rate for the top percentile (i.e., the highest 1%) was 28.9% of income.
Stevie Ray...Clowns to my Left and Jokers to my Right here I am....
November 30th, 2012
1:37 pm
JDW
November 30th, 2012
12:34 pm
I give you the one about corporate taxes which I should have factored in a actual 12% as opposed to figurative 35%.
I’ve have made money off cap gains as well as dividends so I have an understanding of these issues. Despite that the federal government collects 44.75% of each dollar of income earned by the corporation and paid as a qualified dividend, the dividend recipient appears to “enjoy” a 15% qualified dividend rate because the first round of taxation occurs before it reaches the investor’s hands. Were the dividend-paying enterprise organized differently, it might lawfully pay zero taxes at the corporate level, and allow investors to receive the enterprise’s taxable income pre-tax so that they pay taxes at the investors’ own tax rates – which would range from 0% to nearly 40% depending on the taxpayer’s own tax situations and the tax character of the enterprise’s income. In theory, of course, some of that income might itself be characterized as qualified dividends subject to the 15% cap – in which case yet another entity would have already paid a marginal tax rate up to 38% on the pre-dividend taxable income.
In Buffets case, Berkshire Hathaway has not paid a dividend since 1967, but last year authorized repurchase shares at prices below 110% of book value.
Its also worth noting that Berkshire and related entities are in distasteful battles with IRS…they want money back while the IRS thinks they are due…issue is around $1 billion..
CC
November 30th, 2012
1:37 pm
“The proposal, loaded with Democratic priorities and short on detailed spending cuts, met strong Republican resistance”
Let the democrats take us over the “fiscal cliff”. At least it might provide a quick death for the U.S. instead of the slow torture that Obama and the other elected democrat idiots are torturing us with now. Fools elected by fools on a fool’s errand will produce nothing but foolish results.
Madmax
November 30th, 2012
1:37 pm
Steve
November 30th, 2012
1:35 pm
So do retirees
Sick of Progs
November 30th, 2012
1:38 pm
Rightwing Troll
November 30th, 2012
1:11 pm
“Let’s see some proof that deal was offered.”
Show me some proof it wasn’t.
Lazy non producing lib. You want someone else to do the task asked of you! Loser
Finn McCool (The System isn't Broken; It's Fixed)
November 30th, 2012
1:40 pm
All take, no give
He does represent the “takers”, right?
Steve
November 30th, 2012
1:41 pm
Kyle – yes, you are correct about the effective tax rates, however..
“On the highest end of the income scale, the average effective tax rate is much higher — 18.9% for households making more than $1 million. But that’s still far below the 35% top tax rate much of their ordinary income would be subject to.
Why? Because a lot of households at that level — like Romney’s — make a lot of their money from tax-advantaged investments, such as capital gains and tax-free bonds. And they tend to have a lot of itemized deductions, which can greatly reduce how much they owe the tax man.”
http://money.cnn.com/2012/01/18/news/economy/Romney_effective_tax_rate/index.htm
Stevie Ray...Clowns to my Left and Jokers to my Right here I am....
November 30th, 2012
1:41 pm
Rightwing Troll
November 30th, 2012
1:19 pm
Check out tax reciepts after cuts in personal taxes per JFK, Reagan, Clinton and Bush…tax INCREASES will not in any way shape of form help the middle class…unless of course President Trillions increases the Income Tax Credit…you know that free give away…he can also spend more money “creating jobs” for the middle class…oooops, that didn’t work so well before.
Big Question…why did BO extend tax cuts just a few years ago? Why is it ok now?
Black Label
November 30th, 2012
1:43 pm
Kyle
How do those percentages look when taking into account all taxes paid, not just Federal?
Kyle Wingfield
November 30th, 2012
1:43 pm
Troll @ 1:11: I’ve never even heard of that offer being made. I’m not asking for the proposal Obama handed to Boehner. I’ll accept a credible news report from a reputable source.
Otherwise, I’m assuming you just made that up, since it’s so far out of line with how the discussion has generally gone.
Finn McCool (The System isn't Broken; It's Fixed)
November 30th, 2012
1:44 pm
The effective tax rate for the top percentile (i.e., the highest 1%) was 28.9% of income.
We can do better than that. I say we push it to 35%.
Madmax
November 30th, 2012
1:45 pm
Steve – a lot of those deductions already get phased out under income thresholds or are offset by the AMT.
Steve
November 30th, 2012
1:45 pm
Don’t forget that we all pay a disproportionately higher amount on our payroll taxes, too, then the rich, who are capped off at some amount way below their income.
Kyle Wingfield
November 30th, 2012
1:45 pm
Steve @ 1:41: You are mixing marginal tax rates and effective tax rates. Your effective tax rate will not be the same as your marginal tax rate, by definition.
Kyle Wingfield
November 30th, 2012
1:46 pm
Black Label @ 1:43: You mean including state and local taxes? I don’t know. But that’s irrelevant to a discussion about what to do with federal taxes.
Kyle Wingfield
November 30th, 2012
1:47 pm
Steve @ 1:45: Those effective tax rates include payroll taxes.
Black Label
November 30th, 2012
1:47 pm
Kyle
This might be a start. While the upper end still pays more, the total effective rate average is a much truer picture than just looking at Federal rates….. well if you attempting to be intellectually honest it is a much truer picture.
http://en.wikipedia.org/wiki/File:Total_Effective_Tax_Rates_2011.jpg
Sick of Progs
November 30th, 2012
1:48 pm
Finn McCool (The System isn’t Broken; It’s Fixed)
November 30th, 2012
1:44 pm
The effective tax rate for the top percentile (i.e., the highest 1%) was 28.9% of income.
We can do better than that. I say we push it to 35%.
I say we put all welfare recipients into work camps and have them rebuild the infrastructure of the country and leave the margins where they are at!
Kyle Wingfield
November 30th, 2012
1:49 pm
Black Label: As I said at 1:46, I don’t see how state and local taxes relate to the federal debate. Take it up with your city, county or state.
Black Label
November 30th, 2012
1:50 pm
Kyle
It might be “irrelevant” to the discussion of the fiscal cliff that your boy Newt says doesn’t even exists (I grant you that), but put in context, it does provide a much more clearer picture than the deception that is played out about how all these people pay no taxes….
Kyle Wingfield
November 30th, 2012
1:50 pm
Well, they do relate in the sense that lower-tax jurisdictions (such as Georgia) effectively subsidize higher-tax jurisdictions through the federal deduction for state/local taxes. But I don’t think that’s the point you were trying to make…
CC
November 30th, 2012
1:50 pm
“I say we put all welfare recipients into work camps and have them rebuild the infrastructure of the country and leave the margins where they are at!”
This is an idea I could wholeheartedly support!
Black Label
November 30th, 2012
1:51 pm
No problem Kyle
Thanks for the response. Look forward to much more rhetoric and hyperbole from you as the debate continues.
Kyle Wingfield
November 30th, 2012
1:52 pm
Black Label: Act that way if you wish, but you have yet to explain why, in the context of debating what to do with federal taxes, we should take into account state and local taxes.
Finn McCool (The System isn't Broken; It's Fixed)
November 30th, 2012
1:53 pm
“I say we put all welfare recipients into work camps and have them rebuild the infrastructure of the country and leave the margins where they are at!”
Well, that’s what Jesus would do with the poor.
Black Label
November 30th, 2012
1:57 pm
Kyle
Point I was making is very clear, even if it doesn’t fit directly into the “fiscal cliff” and Federal tax rate debate.
When looking at all taxes paid, the disparities that many on the right love to point out, dissipate. We can debate and argue all day who pays what or doesn’t pay what, but for it to be factual that the disparity shrinks when looking at all taxes then on a local and state level it appears that the lower income folks are paying a good portion of their incomes. If this were not true and the same held as for the national level, mathematically you would have a shrinking of the percentage differences.
Either way.
Thanks for the reply.
Alter Ego
November 30th, 2012
1:58 pm
Good blog Kyle. Some fodder for perhaps a future one, for those who think unlimited spending and entitlements are the panacea for all economic woes. Could very well be a microcosm for the US, long term.
Detroit ponders bankruptcy:
http://www.newsmax.com/US/detroit-bankruptcy-mayor-pain/2012/11/30/id/465980
JV
November 30th, 2012
1:59 pm
If a majority of the country elected Obama to four more years in the White House, then let them have it their way without GOP support. The tax increases that happen will be the Obama tax increases. When spending spikes, it can be the Obama tax and spend plan. And we slide into recession as the non-partisan Congressional Budget Office (CBO) predicts will happen, it will be the Obama recession.
Sick of Progs
November 30th, 2012
1:59 pm
Finn McCool (The System isn’t Broken; It’s Fixed)
November 30th, 2012
1:53 pm
“I say we put all welfare recipients into work camps and have them rebuild the infrastructure of the country and leave the margins where they are at!”
Well, that’s what Jesus would do with the poor.
What does Jesus have to do with anything related to this blog tool?
Black Label
November 30th, 2012
2:00 pm
And for the record I am phased in rates back to the Clinton era……..
Cut in all departments including the holy grail called the DoD………..
Granted my point wasn’t directly related to the “fiscal cliff”, however it does put into context what many of your bloggers do not know or wish to ignore
Black Label
November 30th, 2012
2:02 pm
@ 1:57
meant to say “wouldn’t have” as opposed to “would have”
Madmax
November 30th, 2012
2:03 pm
Black Label, then you should be putting in personal property taxes which does disproportionately hit the middle and upper income earners regardless of where their income comes from.
Kyle Wingfield
November 30th, 2012
2:04 pm
Black Label @ 1:57: If you want to look at the whole picture, then look at transfer payments, too.
Here’s one look at the average effective tax rates by quintile including federal taxes and all transfers (federal, state and local):
Highest: 22%
2nd-Highest: 10%
Middle: Minus-5%
2nd-Lowest: Minus-42%
Lowest: Minus-301%
Now, those numbers are for 2009 and yours are for 2011, but I think it’s safe to say between the two that our system is extremely progressive when the top quintile is paying, on net, something in the neighborhood of 33%, the middle quintile is about 6%, and the bottom quintile is about minus-289%.
Black Label
November 30th, 2012
2:04 pm
Kyle
And I do take it up on a state and local level by not voting for any clowns with D or R on by their name.
Old School Girl
November 30th, 2012
2:11 pm
To my republican friends…and I call you that, even though many in your ranks act like “what the bird left on the bush.” Remember that war that you overwhelmingly approved back in 2002? You know the one that you did not increase taxes to pay for? Remember the second war that you also approved? We didn’t see any tax increase to pay for that one as well. Remember that bogus tax rebate that we received…stupid doesn’t define it so I will move on. Oh yes, let’s not forget, that YOU forgot that all of the baby boomers…(you know the ones whose parents did not use birth control) are retiring. Well, the check for your lack of planning, and gullible greed has come due. So if you want to start talking entitlements….let’s stop Social Security, and Medicare and let all of you tax haters take care of your parents without any assistance from Uncle Sam…tell me how it feels,..and I will let you know how the budget deficit is improving….
Black Label
November 30th, 2012
2:12 pm
Kyle
Transfer payments skew the numbers……… The avg percentage of what is paid and is a much clearer picture on the micro level.
When looking at the income disparities, it is easy to float the transfer number and stay on the macro level. That is why many on the right love to tout that percentages of total Fed Inc taxes paid, but rarely mention the growing income disparity over the last 40 years. Looking at the disparity leads anyone to see that more taxes are being paid from the top on a Fed level. And of course we could throw in the EITC that both parties have implemented and increased over the years.
Overall you bring good game to the table, but did want to point out the total taxes in terms of how it gets presented by many, not necessarily this article per say.
Thanks again.
GO DAWGS.
Finn McCool (The System isn't Broken; It's Fixed)
November 30th, 2012
2:12 pm
You proggies are the drain on society and must be eradicated!
Yes, Jesus approves of extermination.