Obama’s asking for it; maybe the GOP should give it to him
It appears more and more likely that Washington’s new favorite drama, the fiscal cliff, will run as long as possible.
Passing new legislation before Christmas to avoid the cliff — the doomsday nickname given to the combination of across-the-board spending cuts set during last year’s debt-ceiling negotiations and the total expiration of income-tax rates that have prevailed since since 2003 — now seems unlikely. House Majority Leader Eric Cantor on Wednesday said lawmakers can expect to be in Washington during December’s final days.
The fatal conceit in this debate is that the economy will somehow be well-served, or at least survive, if it takes only a half-dose of what Democrats consider poison (spending cuts) and a half-dose of what the GOP deems deadly (tax increases).
If either party is correct, we are in for a rough 2013 at the very least. If both parties are correct, we could be heading for another recession. The irony is that we’re trying to avoid the fiscal cliff in order to prevent … a recession.
Only President Obama has proposed a pure version of his preferred course: A $1.6 trillion tax hike on upper-income earners over the next 10 years, recently reduced to $1.4 trillion, with no guarantee of net spending cuts. The House GOP’s opening salvo had much more of the “balance” Obama insists on.
Many observers have dismissed the president’s proposal as a mere negotiating stance. Perhaps they’re right. But one presumes he wouldn’t have made a proposal he wasn’t ready to accept.
That is, one presumes Obama really believes taking an extra $140 billion out of the economy each of the next 10 years — remember, he says the money is for deficit reduction, not to fund new government spending — would not be harmful to businesses, workers or the unemployed.
Members of Congress are supposed to do what they believe to be in the best interests of the country and their constituents. But if House Republicans cannot persuade Obama to agree to meaningful entitlement reforms, which along with more rapid economic growth are the only way to bring our fiscal house in order, they should consider giving Obama what he wants.
This is not a decision to be taken lightly. But Republicans might not win this policy argument in the long run if Obama can pin the blame for economic damage on GOP spending cuts, while continuing to demagogue the rich for not paying their “fair share,” without consequences.
And there would be consequences for following his plan. Today, $140 billion equals almost 1 percent of gross domestic product. When the economy is struggling to grow by an annual rate of even 2.5 percent, taking another 1 percent of GDP out of the private sector will not help matters.
But what about the 1990s? Didn’t Bill Clinton raise taxes back then, only to watch the economy boom?
Yes, but there are major differences between then and now. Clinton raised taxes as both the U.S. and world economies were stronger than now. He did it when state taxes were broadly lower than they are now. He did it when oil was closer to $20 a barrel than $90 a barrel. He did it before a record housing boom, not after its bust. He did it at the onset of the IT boom, which doesn’t figure to be replicated anytime soon. And before revenues really grew, he cut the capital-gains tax rate, rather than raising it as Obama desires.
Worse, Obama wants to get most of this $140 billion in part by raising marginal tax rates on “the rich” whether their earnings come from their labor or their investments. This has a significant impact on decision-making. For just one current example, look at the growing number of companies paying their anticipated dividends for 2013 out to shareholders now to beat a potential tax hike.
Some of these companies, Costco for example, are even borrowing money to pull off this switcheroo — committing themselves to pay back billions they only hope to earn as profits in the future. Talk about distorting economic behavior.
Obama says the people voted for these higher taxes. While I believe Obama’s proposal would be very harmful economically, congressional Republicans might find themselves with little choice but to allow his policies to prove him wrong in practice. Obama could hardly blame them for letting him entangle himself with the rope he’s demanding.
– By Kyle Wingfield
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504 comments Add your comment
Darwin
December 13th, 2012
9:21 am
The election is over and Obama won. Get over it.
Just Saying..
December 13th, 2012
9:21 am
What a comedy. Spend 5 weeks in Europe and Asia, ‘Pubs get trashed by American voters, return to find Lil Barry in the same spot, singing the same song.
Del
December 13th, 2012
9:24 am
I disagree with giving Obama what he wants. While going over the so called fiscal cliff will be painful it won’t be anywhere near as painful as it would be going over the looming fiscal mountain. Obama has been campaigning and playing politics with the non-negotiations on avoiding the fiscal cliff. He wants to show off for his base while thumping his chest and telling the Republicans that they’ve lost, so they should cave to his demands. His behavior is not atypical for a narcissist who believes they’re in a position of power over their opposition. Of course Obama is a narcissist who lacks true leadership ability. Refusing to cave into Obama’s grandstanding demands thus either causing him to backdown or go over the cliff will force him to lead. His inability to lead will therefore expose him as a failure to the entire public including those who will see their government financial asstance significantly reduced. Successful presidents have been those with leadership ability. Obama’s only success has been fooling a small majority of the electorate that his campaign skills translate into presidential leadership skills. The Republicans should call his bluff and force him into a position where campaigning won’t mask his inability to lead.
Don
December 13th, 2012
9:26 am
This is simple.
First, since both sides agree to increased revenue (aka “taxes”) and spending cuts, agree on a ratio of the two. The 2:1 Bowles plan is a good starting point.
Then, let Obama get the taxes in any amount and any fashion he wants and then let the Bohner get the spending cuts anyway he wants.
The Dems get the blame for taxes, the Reps get the blame for program cuts. Dems can claim “fairness” in taxation. Reps can claim “limited government”.
Done.
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
9:32 am
“The election is over and Obama won. Get over it.”
The election is over and the GOP still controls the House. Deal with it.
In case you missed it, Darwin, we don’t live in a monarchy or a dictatorship.
Whirled Peas
December 13th, 2012
9:38 am
As bad as the Republicans are, the Democrats are far worse. As a matter of fact, when the Republicans last controlled Congress and the Democrats controlled the White House, (Bill Clinton) was the last balanced budget we had. If we now had Republicans in control of both Houses of Congress, it would be our best chance to cut the crazy spending.
East Cobb RINO, Inc (LLC)
December 13th, 2012
9:38 am
Discharge petition to force vote in Congress on extending tax cuts for all but the highest 2% now up to 182 signatures. There is an easy way out for Boehner in the fiscal cliff negotiations. There are enough lame duck republican congressmen who would have little or no repercussions to getting on board and supporting this bill. House GOP leadership can continue with their public stance while quietly allowing the discharge petition to get enough signatures to allow a vote where it would pass. Once this bill has passed, GOP can gain leverage by telling Obama & the dems they got what they wanted now let us talk about spending cuts.
An old friend of mine who was a judge once told me he always knew he had ruled correctly when both lawyers were unhappy with the ruling.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
9:40 am
His behavior is not atypical for a narcissist who believes they’re in a position of power over their opposition.
Yeah, kinda sounds like Obama is holding all the cards, no? LOL
clem
December 13th, 2012
9:41 am
but obama won a national contest vs gerrymandered congressional contest…so tie goes to national
clem
December 13th, 2012
9:42 am
ps dems had more votes in congressional races cumulatively i believe.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
9:44 am
a small majority
LOL
Lil' Barry Bailout - OBAMAPHONE!!!
December 13th, 2012
9:44 am
Why doesn’t Obozo just go ahead and pass everything he wants through the House, since he won?
ATL Tiger
December 13th, 2012
9:45 am
The “Fiscal Cliff” is the best option on the table right now. It guarantees both increased revenue and descreased spending.
President Obama’s proposal only raises taxes on the top 2% of income earners. His plan has no spending cuts. His proposal sounds like he wants more tax revenues so that the governement can spend more.
Del
December 13th, 2012
9:45 am
“Once this bill has passed, GOP can gain leverage by telling Obama & the dems they got what they wanted now let us talk about spending cuts.”
Talk about spending cuts? Please say you were only kidding and that you realize the Democrats wouldn’t feel any need to engage in real spending cuts or entitlement reforms.
Lil' Barry Bailout - OBAMAPHONE!!!
December 13th, 2012
9:45 am
It’s really a shame how our public schools have so completely failed to teach kids what the Constitution means.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
9:47 am
It guarantees both increased revenue and descreased spending.
PEOPLE, LISTEN CAREFULLY, there is NO GUARNATEE of decreased spending. If we go over the cliff, Congress can just stop the cuts from going into effect. VERY VERY EASY.
clem
December 13th, 2012
9:48 am
atl tiger, you don’t know what you are talking about…try reading
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
9:51 am
“dems had more votes in congressional races cumulatively i believe.”
I was unaware that was how we voted in a Constitutional Republic, clem.
Lil' Barry Bailout - OBAMAPHONE!!!
December 13th, 2012
9:52 am
clem went to public schools.
Del
December 13th, 2012
9:54 am
” VERY VERY EASY.”
Sorry tool, it wouldn’t be very very easy, it would be a dogfight and Obama’s inability to provide leadership would be center stage.
clem
December 13th, 2012
9:54 am
tib, i understand. i also understand the electoral college which says it was a rout and we know that is not true. give me a break. you are probably a proponent of current filibuster practice too. if you are pulling both left and right it seems the people have spoken.
right to free speech.
December 13th, 2012
9:55 am
curious
December 13th, 2012
8:16 am
Kyle,
Good thing you have Lil Barry posting, otherwise you’d only get a few dozen comments per article.
At least he keeps his comments civil. Right?
Curious, Actually, if you look at Jay’s bloogers there are about 2 dozen uber left wing nuts that each post around 25 to 30 times a day.
Most of them are posting from work aand then they wonder why they don’t get raises.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
9:55 am
Here is how it will play out:
Step 1) We go over the cliff
Step 2) on January 2nd Dems sponsor a bill cutting taxes on middle class. Republicans go for it cause they aren’t all complete idiots.
Step 3) As spending cuts come due, congress acts to stop them from taking effect.
See, we “don’t need no stinkin” Rrepublicans.
clem
December 13th, 2012
9:56 am
lil barry, partially true, public in north until 4th grade, private when moved south. public colleges.
East Cobb RINO, Inc (LLC)
December 13th, 2012
9:58 am
Talk about spending cuts? Please say you were only kidding and that you realize the Democrats wouldn’t feel any need to engage in real spending cuts or entitlement reforms.
There is the debt ceiling needing to be raised in Feb or Mar. The public perception would be OK you got your revenues to avoid the cliff now give up some spending on the debt ceiling. Right now House Republicans are polling worse than Obama in this stalemate. They can move these polls in the other direction this way.
Pizzaman
December 13th, 2012
10:05 am
Neither side is wrong or right. It’s going to take a comprehensive and large tax increase and spending cuts to accomplish anything. The Repubs want to make the President look bad for the next 4 years since they were unable to make him a one term President. But they’ll have to come to the table sometime or face losses in 2014. Come on folks lets get off the pot and govern.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
10:14 am
There is the debt ceiling needing to be raised in Feb or Mar.
Neither Dems nor Cons hold any cards in this. Business leaders would trash the lot of them if they defaulted.
Congress has raised the ceiling as needed without any questions through the years. Now the Cons want to grasp at this straw.
Pizzaman
December 13th, 2012
10:17 am
It’s apparent from a lot of comments here (Obama has proposed no spending cuts, we need drastic cuts in the crazy DC spending, etc.) that a lot of you have no idea what is going on. Thanks to the President the Federal Government is smaller now than any time in recent history and getting smaller. Using what little actual power over spending he has the President has made cuts (somewhere between 1 and 2 billion) by decreasing the work force. At least he’s trying. The Repibs are obstructing.
ATL Tiger
December 13th, 2012
10:19 am
Spending cuts need to go into effect Jan 2 with the fiscall cliff. Spending is at historical highs compared to GDP. We also have historical lows for tax revenue, but that’s because the economy is stagnate and we only have 62% of the workforce actually working. Until the economy recovers, the tax revenue will remain low.
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
10:20 am
“you are probably a proponent of current filibuster practice too.”
As you are wrong on so many other things, clem, so you would be wrong on this one as well.
“if you are pulling both left and right it seems the people have spoken.”
Yes, and they have voted for divided government. Because they saw what happened the last 2 times we had one party rule.
carlosgvv
December 13th, 2012
10:20 am
Tiberius – 9:32 “we don’t live in a monarchy or a dictatorship”
He didn’t say we did.
Are you taking up mindreading to make up for your utter lack of reading comprehension?
oops
December 13th, 2012
10:20 am
“Yes, but there are major differences between then and now. Clinton raised taxes as both the U.S. and world economies were stronger than now. He did it when state taxes were broadly lower than they are now. He did it when oil was closer to $20 a barrel than $90 a barrel. He did it before a record housing boom, not after its bust. He did it at the onset of the IT boom, which doesn’t figure to be replicated anytime soon. And before revenues really grew, he cut the capital-gains tax rate, rather than raising it as Obama desires.”
Kyle, he also did it before other countries had developed their labor forces to become attractive, combined with lower international tax rates. Ireland and Singapore, and even Canada come to mind.
American has the second highest corporate tax rate, and with Obama’s tax increase and state taxes, we will have almost the highest personal tax rate too.
Obama is the dumbest idiot in a dumb crowd of Democrats. But yes, maybe he should just be given what he wants. Higher rates, more deductions, a less efficient tax code, more regulations. Let them drive America over the cliff. And one day Republicans will be called upon to pick up the pieces.
JamVet
December 13th, 2012
10:24 am
More than ever the self-destructive neocons are operating from a position of trickle down weakness.
And if things go south with the economy, most Americans are going to hold the GOP takers and mooches responsible.
The ongoing legacy of the Bush Depression.
“And one day Republicans will be called upon to pick up the pieces.”
Hysterical…
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
10:24 am
Well, well, well. Looks like you Cons and your “media personality getting a beat down by union thugs” was a doctored video created from multiple cameras and across multiple hours:
Unfortunately for Mr. Crowder, a look at the video broadcast on the Sean Hannity show appears to show quite clearly that he left out an important section of the footage when he put together his edit. A section of the Fox News broadcast preserved by the Web site Mediaite shows that Mr. Hannity’s producers at Fox News started the clip five seconds earlier than Mr. Crowder did. What the extra footage reveals is the man who punched Mr. Crowder being knocked to the ground seconds before and then getting up and taking a swing at the comedian.
Mackey adds that there’s another problem: “The still frame he used for the clip’s title image on YouTube, which offers a much clearer image of the man punching him, was obviously shot by a second camera, from an entirely different angle than the rest of the footage he presented of the man hitting him.”
http://www.salon.com/2012/12/13/fox_news_revealed_selective_editing_of_punched_fox_news_contributor/
Busted! Our “media people” are just a lot smarter than your Fox News media people.
clem
December 13th, 2012
10:25 am
oops, that is good name you :
http://topics.nytimes.com/top/news/international/countriesandterritories/ireland/index.html
East Cobb RINO, Inc (LLC)
December 13th, 2012
10:28 am
Spending is at historical highs compared to GDP
As are tax revenues at historical lows compared to GDP.
62% of the workforce actually working
Please show where this comes from. If unemployment is currently at 7.7% that would suggest 30.3% are discouraged or underemployed. There is no way the discouraged or underemployed are at 30.3%. Even at the peak of the recession, the “real” unemployment rate was only estimated in the low 20% range.
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
10:31 am
carlos, when a lib repeats that Obama won the election and says, “Get over it”, the transparency of the comment is clear – submit to his authority and just do what Obama wants.
The transparency of liberal thought would be much easier for you to grasp if you weren’t so thick-headed.
MarkV
December 13th, 2012
10:31 am
Kyle first repeats the myth he has been proclaiming for some time: “The House GOP’s opening salvo had much more of the “balance” Obama insists on.” If he wants us to believe that, why doesn’t he spell out exactly which loopholes and deductions the Republicans want to eliminate, so that we can see who will be affected?
Kyle pretends to be worried about Obama wanting to take an extra $140 billion out of the economy for deficit reduction as harmful to businesses, workers or the unemployed. (Pay attention, Dusty! The deficit and national debt are no longer the biggest problems.) But the real essence of Kyle’s arguments, what is really behind all those dire predictions is the same as always: “Obama wants to get most of this $140 billion in part by raising marginal tax rates on “the rich” whether their earnings come from their labor or their investments.”
What we have here is just a lot of words, but the same basic fallacy: Taxing the high income people more will hurt the economy, cutting entitlements and social programs will not.
Sister Sarah
December 13th, 2012
10:32 am
@curious
I’d like to think that Kyle Wingfield isintelligent and man of conscience. I cannot help but wonder if he rolls his eyes at some of his faithful posters that come out here daily and serial post the same delusional madness day in and day out, all under the guise of “Conservatism”. In fact, it’s one of the things in my opinion that brings his blog in particular down. This is why I peek in every so often to see what’s going on and not frequent this place. One can only take so much. I get the whole freedom of speech thing, but geez. If I were a blog moderator regardless of political position I would be quick to call people on their BS. In fact I think it aids in the debate when you challenge people who are even on the same side of the political aisle as you, esepecially if you see they hurt the cause by perpetual bombasticity, crackpot propaganda and those things.
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
10:33 am
“And if things go south with the economy, most Americans are going to hold the GOP takers and mooches responsible.”
Yeah, the idiots who voted President Incompetent in not once, but twice are going to hold the GOP responsible.
Pardon me if I don’t shake in my boots once they no longer have Joe Cool on a ballot.
ATL Tiger
December 13th, 2012
10:34 am
East Cobb
http://data.bls.gov/timeseries/LNS11300000
It’s actually 63.6%, I was approximating
Lil' Barry Bailout - OBAMAPHONE!!!
December 13th, 2012
10:35 am
Pizzaman: Thanks to the President the Federal Government is smaller now than any time in recent history and getting smaller.
—————-
False.
Thanks to Obozo, the federal government is larger than it has been since WWII.
It’s the spending, stupid.
Don't Tread
December 13th, 2012
10:36 am
“congressional Republicans might find themselves with little choice but to allow his policies to prove him wrong in practice”
In this case, the only choice might just be the best choice. Let him jack the taxes up and we’ll see how far offshore the money goes.
JF McNamara
December 13th, 2012
10:37 am
The money, by and large, will end up back here. Our debt payments will go to pay off bonds. Those bonds belong to Chinese, Middle Easterners and U.S. citizens. They will turn around and reinvest those payments (guess where) back into our economy.
Even if they they invest it in China or the middle East, the money will end up back here when they buy U.S, products or a Chinese bank will use the money they put into saving to buy U.S, assets. the money isn’t just going to disappear into thin air.
The whole basis of your argument is simply wrong.
Lil' Barry Bailout - OBAMAPHONE!!!
December 13th, 2012
10:38 am
MarkV: Kyle pretends to be worried about Obama wanting to take an extra $140 billion out of the economy for deficit reduction
————————-
Obozo isn’t applying the new tax revenue to deficit reduction. He’s spending most of it on new “stimulus” and other programs.
Don’t fear facts.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
10:38 am
submit to his authority and just do what Obama wants.
“submit to his authoriti”
~Cartman
clem
December 13th, 2012
10:39 am
warming up outside, thanks for all the nonresponses to banter. chow
Lil' Barry Bailout - OBAMAPHONE!!!
December 13th, 2012
10:48 am
75 Percent of Obama’s Proposed Tax Hikes to Go Toward New Spending
10:04 AM, DEC 11, 2012 • BY DANIEL HALPER
Seventy-five percent of the new revenue pulled in by President Barack Obama’s “fiscal cliff” plan would go toward new spending, not toward deficit reduction.
http://www.weeklystandard.com/blogs/75-percent-obamas-proposed-tax-hikes-go-toward-new-spending_666067.html
—————————————-
Obozo agreed to spending cuts in return for the last debt ceiling increase. Why is he trying to go back on his word now? Other than that he’s an America-hating liar, I mean.
JDW
December 13th, 2012
10:54 am
@Tiberius…”The election is over and the GOP still controls the House. ”
And if they sit there with their thumb up thier @$$ then taxes go up for all on Jan. 1. While I don’t mind my guess is that strategy will mean fewer Republicans in the House in 2014. YAHOO!
East Cobb RINO, Inc (LLC)
December 13th, 2012
10:55 am
Thanks for the link ATL Tiger. I noticed this chart is for ages 16 and older. Younger workers tend to suffer more during periods of economic turmoil. The Bush years (2002-2008) showed this number to be 66 – 66.5%. So the while the statement of 62% of workforce is working can be supported by this chart, it is important to look at it in proper context.
Saying only 62% of workforce is working can get the desired response of OMG!! until it is compared against historical trends where it tells us what we already know. There are more unemployed people now than there were prior to the Wall Street induced recession of 2008. We also know there are fewer unemployed now than there were last year and the year before that. So the trend has been reversed and is moving in the right direction.