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
Loves Me Some Obama Kool-Aid
December 13th, 2012
2:16 pm
If a Republican Congress hadn’t made Bill Clinton go along with all the policies that worked during his Presidency, he wouldn’t have the record that he does.The Clinton economy was fueled by a GOP Senate and House that forced Clinton to cut spending, cut rules and regulations, lower capital gains taxes (to encourage investment- thereby creating jobs), and end welfare as we know it. And the GOP Congress killed a government-run health care proposal, too. The Clinton economy boomed because government, spending, and entitlements were much smaller than they are today. Each time Obama demands Clinton era tax rates, then Boehner should say, “Let’s go back to the size of government, spending, and entitlements under Clinton. Let’s eliminate all the rules, regulations and mandates since Clinton. Then we can compromise and raise rates to Clinton levels.” Yes Bush’s economic policies were more that of a Liberal than a Conservative. Liberals are intellectually dishonest.
Liberals are so intellectually dishonest.
Reality
December 13th, 2012
2:19 pm
Tiberius – You are a very sad person in my book. You twist facts to fit your way of thinking. You cannot look at facts and THEN think about things.
For example, your post on unemployment. You post the numbers next to the years and force fit them into your way of thinking. You cannot or refuse to realize that as already pointed out, unemployment is a lagging indicator of the economy.
Why cannot you do this? Because if you first look at facts and THEN think about what they mean it will entirely shake the foundation of your glass house.
This makes you a very sad person to me.
Del
December 13th, 2012
2:21 pm
They overwhelmingly went to Obama
As did the uninformed voters AKA the stupids who the Democrats have to bribe and bus to the pools to get their vote.
HDB
December 13th, 2012
2:21 pm
Tiberius – pulling the tail of the left AND right when needed
December 13th, 2012
2:12 pm
Tibbi….I know that tax rates aren’t the SOLE determinant to economic growth….but they are a corollary to such!!
Having LIVED thru the Reagan years in Washington, I know that the size of government GREW because Reagan increased government hiring to REDUCE the effect of a recession……I understand the nuances more than you think….I’m not as obtuse as you think…….
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
2:22 pm
Reality, you’re a very pathetic person to me, as I made no post whatsoever as to unemployment figures.
The fact that you cannot pay attention to who is posting is what makes you a very pathetic person to me.
Del
December 13th, 2012
2:22 pm
Liberals are so intellectually dishonest.
Amen to that and your post is spot on.
Reality
December 13th, 2012
2:23 pm
@ Love Me,
LOL! Seems that you are the one that twists facts and refuse to see reality.
Under President Clinton, the Country enjoyed a great economy. Okay, fine, the dot com bubble certainly fueled it. And, we had a budget surplus.
It was BECAUSE we had a surplus that ALLOWED President Clinton do to those other things. It is not the other way around as you post.
Get your facts straight!
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
2:23 pm
The Clinton economy was fueled by a GOP Senate and House that forced Clinton to cut spending, cut rules and regulations, lower capital gains taxes (to encourage investment- thereby creating jobs), and end welfare as we know it.
And directly led to the economic collapse of 2007-2008. Thanks Cons!
Also, you folks still can’t see how the lowering of the capital gains tax turned the stock market into a casino, can you?
Lil' Barry Bailout - OBAMAPHONE!!!
December 13th, 2012
2:23 pm
I’ve asked this question of our lib friends before and have never heard an answer.
Can you explain how tax increases cause an economy to grow?
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
2:24 pm
“I know that tax rates aren’t the SOLE determinant to economic growth”
And yet, that’s all you post about when making your economic arguments – go figure.
“I know that the size of government GREW because Reagan increased government hiring to REDUCE the effect of a recession”
And yet, that wasn’t the reason. Go back to history class. You’ve failed again, HDB.
Del
December 13th, 2012
2:24 pm
oops…polls not pools @2:21
Pizzaman
December 13th, 2012
2:24 pm
L I’ll B! I agree with Lil Barry @ 1:56. No deal is the best deal. Let what’s going to happen happen. And the voters will decide in “14 who’s right. Other than that Lil Barry’s wrong on everything.
Reality
December 13th, 2012
2:25 pm
Tiberius = Lil’ Barry
Same person, different handle.
HDB
December 13th, 2012
2:27 pm
Loves Me Some Obama Kool-Aid
December 13th, 2012
2:16 pm
Actually, the economy began to grow in Clinton’s first term when he passed the tax INCREASE to raise the optimum rate to 39.6%. Also, what Clinton did and that Bush eliminated was PAYGO…..those two aspects were the beginning of spending controls that the Republicans in Clinton’s second term piggybacked upon. If this nation had enacted universal health care (a REPUBLICAN idea…under Teddy Roosevelt), our economy would be in better shape……it’s a current lack of vision that’s keeping this economy at bay……
JDW
December 13th, 2012
2:28 pm
@Tiberius…”Fixed your typos, JDW.”
O’ Dear bit of trouble with reality today…or maybe just your run of the mill temper tantrum. Not surprising when bested those with the emotional maturity of a 5 year old do have that problem. Are you holding your breath too?
Reality
December 13th, 2012
2:30 pm
@Pizzaman,
The voters have already decided who’s right. The recent election clearly showed this.
In addition, the current polls clearly show that the American people do want the most wealthy to pay more taxes. And, the American people do not want the middle class taxes to increase.
However, the idiot conservative republicans only represent the most wealthy and don’t give a rat’s behind about the middle class. They are willing to go over the fical cliff to drag the middle class over it.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
2:30 pm
Likewise, giving rich people a tax cut (putting more money into the hands of people who don’t need to immediately use it to pay bills, eat, etc) also turns the stock market into a casino.
suddenly you’ve added millions of new $’s that want desperately to be invested. But, at the very same time, you haven’t added any new investment vehicles. So, more dollars chasing fewer “good, safe” assets. Prices go up and, eventually, the unsafe, sleazy investment vehicles start to increase in value as well so they begin to look better and better. All of a sudden you’ve got a full-fledged “crappy asset” market going on with companies creating new versions every day.
And……you know the rest of the story.
Ronald Reagan
December 13th, 2012
2:31 pm
Wingfield is a better writer than copy & paste Bookman!
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
2:31 pm
“Same person, different handle.”
Not so, Reality. That has already been debunked by Kyle a few days ago.
Right before someone else who tried to make that case was booted off the blog permanently.
carlosgvv
December 13th, 2012
2:32 pm
Barry – 1:51
1. Obama inhereted two useless wars, Iraq and Afghanistan, from Bush and has spent large amounts of money trying to get them completed sucessfully.
2. Obama also inhereted the great Bush recession, which has proved to be incredibly costly to fix.
Bush was like some out of control kid who comes into the China shop and trashes it and then leaves. Obama is the new owner who has to work and pay to clean up the mess.
HDB
December 13th, 2012
2:34 pm
Tiberius – pulling the tail of the left AND right when needed
December 13th, 2012
2:24 pm
You’re going to bring out the idea of Reagan’s spending was to bring the military levels up….but what many DON’T remember that tehe military buildup….particularly in weapons systems started under Jimmy Carter!! R&D spending in the Pentagon went UP and the weapons systems that went online under Reagan started under Carter…………..
Carter kept government spending FLAT because of the economy he was given after Nixon/Ford…….and that’s when the credit markets went offline and interest rates climbed……
I know the history, Tibbi…I was IN Washington at that time………..
Lil' Barry Bailout - OBAMAPHONE!!!
December 13th, 2012
2:35 pm
The voters have already decided who’s right. The recent election clearly showed this.
——————-
House Republicans? Got it.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
2:35 pm
Can you explain how tax increases cause an economy to grow?
They don’t directly work that way. Do you need someone to explain that to you? Likewise, tax decreases don’t directly cause an economy to grow either.
Reality
December 13th, 2012
2:36 pm
@Lil’ Barry,
“Can you explain how tax increases cause an economy to grow?”
I will take a shot at answering this. But, promise to stay with me and to use the few brain cells you might possess to think about it….
Increasing tax rates results in more income. More income means ability to do a number of things. One might be to reduce the federal deficit. Reducing the federal deficit would mean many things – hopefully to improve our rating if nothing else. This in turn means a better economy.
Another possible use for this increased income might be to provide more and/or cheaper student loans. In turn, this means a better educated work force for the better jobs. This in turn fuels the economy.
Shall I go on?
carlosgvv
December 13th, 2012
2:36 pm
Barry – 2:23
The Bush tax cuts have been in place for years now.
Why hasn’t the economy grown?
There’s your answer. Neither tax increases or cuts, in and by themselves, will cause an economy to either grow or shrink. It takes intelligent financial leadership from the political and business community. Unfortunately, all we’ve gotten from them is selfishness and greed.
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
2:38 pm
“You’re going to bring out the idea of Reagan’s spending was to bring the military levels up”
No, I’m not. Once again, you are dead wrong, HDB.
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
2:39 pm
“Increasing tax rates results in more income. ”
Not intended to be a factual statement.
Which further dismisses your follow-on uses, Reality.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
2:39 pm
Unfortunately, all we’ve gotten from them is selfishness and greed.
Give Senator Warren an axe and lets watch the Wall Street heads roll.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
2:40 pm
Reality:
But, promise to stay with me and to use the few brain cells you might possess to think about it
You lost Tib at that statement.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
2:42 pm
Intelligent folks come in here everyday and try to put some learnin’ into these Con heads but to no avail. Maybe you folks just like banging your head against the blog walls?
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
2:45 pm
Elizabeth Warren is a liar and and idiot. Just another marginal human being elected from the Commonwealth of Massachusetts who wouldn’t be elected dog-catcher in just about any other state except maybe California or Illinois.
HDB
December 13th, 2012
2:46 pm
Tiberius – pulling the tail of the left AND right when needed
December 13th, 2012
2:38 pm
Tibbi…..Reagan’s level of military spending went UP in order to foster military competition with the Soviet Union with the point of collapsing the Soviets. NOT wrong in that aspect!!
Reagan also CUT domestic spending in order to increase his military budget…..Reagan also changed how the VA worked….he cut educational spending for veterans and changed the GI Bill….
Check it, Tibbi……as I said, I was IN Washington at that time…..
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
2:47 pm
“Maybe you folks just like banging your head against the blog walls?”
That would never happen to you, Finn.
You’d have to have an independent thought on your own to post here before you could get to the frustration part.
Good thing THAT will never happen.
Cheesy Grits is gone but not forgotten
December 13th, 2012
2:49 pm
House Republicans? Got it.
The Republican lost seats in the House and Senate.
They will lose the House altogether in 2014.
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
2:51 pm
HDB, as usual, you’re missing the point.
But again, I’m not going to waste my time (again) in schooling you on the Reagan Presidency.
And I was serving in the military in Washington when Reagan was President. Your point?
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
2:51 pm
That would never happen to you, Finn.
Hence the use of the second person plural form, Tibby.
Lil' Barry Bailout - OBAMAPHONE!!!
December 13th, 2012
2:52 pm
Thanks for at least trying, Reality. Of course, you’ve completely failed. Taking the income from one person, sending it to the government, and having a bureaucrat decide how to spend it is naturally going to be less efficient and productive than allowing the person who earned the income to decide how to spend it.
As an aside, are you aware that it’s possible to get a college education without demanding that your fellow taxpayers pay for it. No, really, it is!
HDB
December 13th, 2012
2:53 pm
Tiberius – pulling the tail of the left AND right when needed
December 13th, 2012
2:45 pm
Elizabeth Warren is FAR from being an idiot……her vitae speaks volumes……moreso than Scott Brown…….
Cheesy Grits is gone but not forgotten
December 13th, 2012
2:53 pm
But again, I’m not going to waste my time (again) in schooling you on the Reagan Presidency.
It was a disaster wasn’t it.
Quadrupled the National Debt.
And when the Marine barracks were bombed in Beirut what did he do ?
He cut and ran like a coward pulled out all the troops.
I cant blame the last 2 years on him because I dont think he was even lucid at that point.
Tiberius - pulling the tail of the left AND right when needed
December 13th, 2012
2:53 pm
“They will lose the House altogether in 2014.”
Nope. Due to redistricting in many red states, the GOP will likely retain control of the House for the next decade, barring any galactically stupid performances.
In addition, Americans don’t like what happens with one-party rule.
From EITHER side.
Cheesy Grits is gone but not forgotten
December 13th, 2012
2:54 pm
Thanks for at least trying, Reality. Of course, you’ve completely failed. Taking the income from one person, sending it to the government, and having a bureaucrat decide how to spend it is naturally going to be less efficient and productive than allowing the person who earned the income to decide how to spend it.
Thats what southerners do everyday.
They get far more back from the Feds than they ever send in taxes.
Red States = Moochers
td
December 13th, 2012
2:55 pm
Finn McCool (The System isn’t Broken; It’s Fixed)
December 13th, 2012
2:39 pm
Unfortunately, all we’ve gotten from them is selfishness and greed.
Give Senator Warren an axe and lets watch the Wall Street heads roll.
Yes, we have seen what all these college eggheads have done for the country for the past 4 years. Let us bring in another and believe things will change.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
2:57 pm
barring any galactically stupid performances.
And how many of those occurred on the Con side in just a matter of months?
Here’s a hint: “the party of rape”
We’ll be redrawing those lines after the 2020 census too. Which will handily occur at the end of President Elizabeth Warren’s first term in office.
Cheesy Grits is gone but not forgotten
December 13th, 2012
2:57 pm
Nope. Due to redistricting in many red states, the GOP will likely retain control of the House for the next decade, barring any galactically stupid performances.
Nope. They will hold on to most Southern seats but big losses elsewhere.
The majority got thinner in 2012 and its gonna keep going in that direction
Cheesy Grits is gone but not forgotten
December 13th, 2012
3:00 pm
Republican will mantain pockets of power in this country in certain areas etc.
But Nationally they are in big big trouble.
They have moved so far to the right they cant win on the big stage anymore.
I dont see another Republican winning the White House in my lifetime.
And im not old.
getalife
December 13th, 2012
3:00 pm
How many times did reagan raise taxes?
td
December 13th, 2012
3:03 pm
Cheesy Grits is gone but not forgotten
December 13th, 2012
2:49 pm
House Republicans? Got it.
The Republican lost seats in the House and Senate.
They will lose the House altogether in 2014.
If the American people wanted the Dems back in charge of the house then why did they not put them back in in Nov?
Paul Ryan’s district voted for Obama by 53% but then put him back in office by a 55% margin. Wonder why this happened? There were 6 house districts in Pa, 4 districts in Ohio and 4 districts in FL that did the same thing in voting for Obama put putting their Republican house member back in office.
So what is your conclusion about these facts? Mine is that the American people did not want Dems to control the WH, Senate and HOR’s.
getalife
December 13th, 2012
3:05 pm
President Obama owns the gop.
His second term will be fun.
If you can’t beat him join him.
Finn McCool (The System isn't Broken; It's Fixed)
December 13th, 2012
3:06 pm
So what is your conclusion about these facts?
They like Ryan better than the other guy? I don’t see a large group of voters deciding to vote for a certain House Rep because “they don’t want to lose the house” when even Nate Silver was telling everyone that the House would stay Republican.
td
December 13th, 2012
3:08 pm
Cheesy Grits is gone but not forgotten
December 13th, 2012
3:00 pm
Republican will mantain pockets of power in this country in certain areas etc.
But Nationally they are in big big trouble.
They have moved so far to the right they cant win on the big stage anymore.
I dont see another Republican winning the White House in my lifetime.
And im not old.
You are dreaming my friend. We only have one national race in this country and it is for the President. Republican’s control 30 governorships, 29 state legislatures and 6 partial chambers.
Reagan won 48 states in 1984 and Clinton won the Presidency just 8 years later. The American people are fickle and do not like one party to be in charge for too long.