How the present fiscal ‘crisis’ rolls right into the next one

I don’t know about you, but I haven’t had any pieces of sky falling on my head today.

The automatic spending cuts known as sequestration take effect beginning today. It’s a little early to gauge whether doom is truly upon us, but the way Americans sense the cuts have affected them — or not — will help determine how the next serial “crisis” is teed up.

We already know what that crisis will be: the debate over a new continuing resolution (CR) to fund the federal government. Because congressional Democrats have given up on the budgeting process, which would force them to commit in black-letter documents to the kind of tax-and-spend plans they desire for the coming years, the government ends up being funded for a few months at a time. The latest CR expires later this month, so it would seem the debate will now shift to that fight.

It would seem so, except that that fight is the one the White House has been waging for a couple of weeks now.

The intent of the scare stories about sequestration, in all likelihood, were only partly about sequestration. President Obama no doubt would have loved for congressional Republicans to back down and either kick the cuts down the road a bit further, as they did in the “fiscal cliff” deal, or even agree to some new taxes in place of, say, defense cuts. But he was also fully aware that leverage was ultimately on Republicans’ side if they were resolved to let sequestration proceed — as was the case for him in the fiscal-cliff talks, when taxes were scheduled to go up if no one did anything.

So, it’s altogether likely that Obama wanted to talk up the effects of the sequestration cuts not just to pressure them to cave now, but also to build leverage for the CR discussions. After all, if Americans do feel pain from sequestration, he can argue for higher spending in the CR. If they don’t, he can claim to have taken all possible measures to avoid pain now — but to be without any such protective options if spending falls further in the CR.

The talk about “balance” — i.e., raising taxes — will become even louder when the CR is debated. Never mind that the tax hikes in the fiscal-cliff deal are double the spending cuts under sequestration.

The question now becomes: What do most Americans think about the changes wrought by both deals? Will they feel more affected by the tax hikes or the spending cuts? And will they then balk at going further down one road or the other — or maybe find themselves willing to keep going down both?

One would think the fact that everyone’s payroll taxes went up would trump the far less universal spending cuts. But there will be a lot of argument-by-anecdote about spending cuts in the coming weeks to try to negate that.

– By Kyle Wingfield

499 comments Add your comment

Cheesy Grits is gone but not forgotten

March 1st, 2013
10:26 am

One would think the fact that everyone’s payroll taxes went up

Did they go up. Or was a always meant to be temporary cut allowed to expire ?

Old Timer

March 1st, 2013
10:27 am

It would be nice if we had a Real President.

Cheesy Grits is gone but not forgotten

March 1st, 2013
10:30 am

It would be nice if we had a Real President.

One like Reagan

Who tripled our National Debt and cut and ran like a coward from Beirut.

Or like George W. The coward who had his daddy open every door for him and get him out of Vietnam

Real men like that ?

Dusty

March 1st, 2013
10:32 am

Ah, Kyle, we will suffer death by a thousand cuts while paying the highest taxes ever. If that doesn’t get us, then we will die from suffociation by the huge debt upon us.

There is no “road less taken”. All roads lead to nowhere as far as moving forward.

We have here liberal leadership at its finest. Miasma! They cannot do any better!

Dusty

March 1st, 2013
10:38 am

Poor Cheesy! Still doddering over Reagan and Bush. I guess he doesn’t even want to think about Obama.

Neither do the rest of us. It is too depressing.

Cheesy Grits is gone but not forgotten

March 1st, 2013
10:38 am

In 1965 the top tax rate on 200,000 dollars was 70 percent

We did not have a debt issue

Somehow the Union survived.

Centrist

March 1st, 2013
10:39 am

The liberal media is backing Democrats demands not to really cut government waste, fraud, and duplication in government budgets – along with yet more taxes. We will have to wait for weeks to see if Democrats’ and media tactics work, and if not there will have to finally be negotiation on spending cuts.

Republicans might be open to revenue increases via expanding the tax base to include the untaxed underground economy. Unreported income that allows for greater government transfer payments and eligibility for welfare programs is rampant. At least taxing it via a VAT, FAIR, or sales tax would gain revenue – but the trick would be to keep it from being a tax increase on honest taxpayers. Such a reform would take the rest of the year, and next year is impossible because of mid-term elections that trumps such legislation.

Cheesy Grits is gone but not forgotten

March 1st, 2013
10:39 am

Poor Cheesy! Still doddering over Reagan and Bush. I guess he doesn’t even want to think about Obama.

Neither do the rest of us. It is too depressing.

Notice he doesn’t deny any of the facts.

Conservative outrage tends to be very selective.

And therefore meaningless.

Finn McCool (The System isn't Broken; It's Fixed)

March 1st, 2013
10:40 am

Boehner is right on the verge of whipping out his blank check book and tearing one off for Pres O.

Aquagirl

March 1st, 2013
10:40 am

The tax increase was mostly an expiration of the temporary SS rollback. The 2% temporary cut was going on our national credit card, conservatives should applaud this. But fake conservatives don’t give a damn, hanging blame on “libs” and Obama is priority #1.

The other increases were mostly on incomes of $250,000 and up, those rich folks must be keeping their Gaultian hideout real quiet. They’re still here and working, despite the horrible trauma of a 3.8 percent surtax on investment income.

ND

March 1st, 2013
10:42 am

Lucky you. A piece of sky did fall on my head this morning.

Finn McCool (The System isn't Broken; It's Fixed)

March 1st, 2013
10:42 am

Oh man, this is my tax prep weekend. Uuuugh. The 10 rental houses screws my weekend.

JKL2

March 1st, 2013
10:43 am

cheesy- Or like George W. The coward who had his daddy open every door for him and get him out of Vietnam

Bush served honorably in the Air National Guard. (like many others at that time). Please rave on about obama’s distinguished military career now…

PS: I think defeating Russia and communism trumps pulling out of Beruit. Reagan made you proud to be American. obama is embarrassed to be one.

Hillbilly D

March 1st, 2013
10:45 am

Create a crisis, bloviate, posture; lather, rinse, repeat, ad infinitum. This is all just stupid political games. A pox on all their houses.

Aesop's Fables and other Lib Economic Theories

March 1st, 2013
10:47 am

Never mind that the tax hikes in the fiscal-cliff deal are double the spending cuts under sequestration.

Using who’s numbers? cheesy’s? This will be one of the few tax hikes in history that didn’t result in diminished revenues, if that’s true.

Dusty

March 1st, 2013
10:49 am

Thank you, Cheesy Grits

I feel so much better. You have announced:: We did not have a debt problem in 1965.

Whoopee!1 Are we supposed to forget the SIXTEEN TRILLION in 2013 under the Obama administration????? (OK, we are going to be out of debt in another 75 years. Such happiness!!)

JKL2

March 1st, 2013
10:50 am

Reagan added $1.3T to the deficit in 8 years. obama was able to add $5.9T in 4 years. Now that’s a REAL man.

Aesop's Fables and other Lib Economic Theories

March 1st, 2013
10:51 am

I think the larger issue is that we’ve become a nation led by those who prefer using The Pathological Lie to share information. Can’t you just feel how highly they think of us?

Finn McCool (The System isn't Broken; It's Fixed)

March 1st, 2013
10:51 am

Reagan made you proud to be American.

You weren’t proud to be an American before Ronnie came along? And haven’t been proud since?
hmmmm. Sounds like a deeper problem.

Jefferson

March 1st, 2013
10:52 am

Those tax hikes on the upper income was a compromise to keep all the tax cuts from taking place, which would have been better for the finances of the country. The spending cuts will cause some pain, but thats the results of law.

Centrist

March 1st, 2013
10:55 am

Aquagirl posted “The other increases were mostly on incomes of $250,000 and up”.

Actually, it is on taxable (after qualified deductions) incomes of over $450K. The rest of the Bush era temporary tax rates were made permanent. For this, the media credited Obama with a “win” and claimed the Republicans caved.

Obama originated the sequestration idea, so I guess he gets another “win” today.

Dusty

March 1st, 2013
10:56 am

Welcome, aquagirl, I see you are really gungho on the figures this morning. You must have won on the kiddie crosswords yesterday. Atta, girl!

Never forget liberal latitudes when figuring taxes. Soak the rich! Semper over the po’ starvin’ chilluns with their obesity problems! Onward and upstream!!

Aesop's Fables and other Lib Economic Theories

March 1st, 2013
10:58 am

Disposable income, or the money left over after taxes, dropped 4 percent after adjusting for inflation, the biggest plunge since monthly records began in 1959.

Now, remember, this is a booming economy according to the dimocrats. So just ignore that empty of wallet of yours and dance to the music!

Jefferson

March 1st, 2013
11:00 am

I thought you sad sacks wanted to cut spending. Hope you don’t have to take in a relative who is a participant.

snoqualmiefalls

March 1st, 2013
11:01 am

Yeah, on this one I tend to agree with Aesop and the Pathological Lie..
Such as WMD’s in Iraq, or Sadam killing children, to save the world the US must step in for regieme change in Iraq or regieme change in the Afghan.. Why yes Aesop you are spot on this morning.

stands for decibels

March 1st, 2013
11:03 am

Create a crisis, bloviate, posture; lather, rinse, repeat, ad infinitum. This is all just stupid political games. A pox on all their houses.

Never a big fan of “both sides do it” dismissals, but this time it has a great deal of validity.

Coming from the left as I do, I think Obama has bungled the messaging–the problem, IMHO, is not that the GOPers are not doing the right kind of balanced approach to deficit reduction. The problem is that deficit reduction is already happening, it is stupid to try to accelerate it and risk contracting the economy when we are barely below 8% unemployment and people are only beginning to psychologically emerge from their bunkers and try to start new businesses, splurge on (say) a new car or home, etc.

But instead, Obama goes right on saying he essentially agrees with his opposition, we do have a “spending problem,” and then he thinks he’ll be able to work some Clintonian triangulation abra-cadabra and fix it. this ain’t the 90s; that ain’t gonna work.

JF McNamara

March 1st, 2013
11:06 am

I’m tired of caring Kyle. I’ve got crisis fatigue. I wish both sides would just STFU for about a year and let us have a boring government that simply turns the crank for a while. There is no reason to have a fiscal crisis every three months…

Rafe Hollister preparing for an Obamanist America

March 1st, 2013
11:07 am

Well, you can’t avoid crises if you lead from behind or not lead at all.

Obama is more like a pin ball game, the crises bells ring loudly as he uses the paddles to keep the ball in play, always trying to avoid the ball going over the cliff, as he bangs into more and more crises and our debt score rises.

Politico

March 1st, 2013
11:10 am

“Ah, Kyle, we will suffer death by a thousand cuts while paying the highest taxes ever. ”

And looking over the last 50 yrs or so, where exactly are we at when looking at individual and corporate effective rates to paying the “highest taxes ever”?

You are willfully misinformed to say the least when it comes to effective tax rates and what we are paying as individuals and corporations.

Can I ask where you obtained your information?

Rafe Hollister preparing for an Obamanist America

March 1st, 2013
11:13 am

In 1965 the top tax rate on 200,000 dollars was 70 percent
We did not have a debt issue
Somehow the Union survived.

In 1912 the top tax rate did not exist as we had no income tax.
We did not have a debt issue
Somehow the Union survived.
We didn’t have a spending problem either, as we didn’t try to have the Fed Gov do everything for everybody.

td

March 1st, 2013
11:14 am

Cheesy Grits is gone but not forgotten

March 1st, 2013
10:38 am

In 1965 the top tax rate on 200,000 dollars was 70 percent

We did not have a debt issue

Somehow the Union survived.

And when you add in the amount of deductions taken (like all interest on credit cards) then the amount paid is about the same as the amount paid today.

stands for decibels

March 1st, 2013
11:17 am

if you lead from behind

I’d suggest you look up just where that phrase originated, and then apologize for using it in this context.

td

March 1st, 2013
11:18 am

JF McNamara

March 1st, 2013
11:06 am

I’m tired of caring Kyle. I’ve got crisis fatigue. I wish both sides would just STFU for about a year and let us have a boring government that simply turns the crank for a while. There is no reason to have a fiscal crisis every three months…

There is a huge reason that we have a crisis every three or so months. It is called the Democrats and Kyle explained the reason very well. The Democrats have refused to do things within the processes set up.

The Senate Dems will not pass a Budget and refuse to go through the budget process.
The Democrats refuse to go through the normal appropriations process.

JKL2

March 1st, 2013
11:25 am

finn- You weren’t proud to be an American before Ronnie came along? And haven’t been proud since?
hmmmm. Sounds like a deeper problem.

Did you think I sounded too much like the First Lady there? I’m unapologetically American.

Reagan: This is going to be tough, but we can do it because we’re American.
obama: Run for your lives, the sky is falling. Those evil Republicans are going to kill you.

Reagan was a great leader, obama can only spell leader correctly if it’s on his teleprompter.

Aquagirl

March 1st, 2013
11:25 am

Welcome, aquagirl, I see you are really gungho on the figures this morning. You must have won on the kiddie crosswords yesterday. Atta, girl!

Mornin’ Dusty, but I take issue with my supposed thrill over numbers, I said most tax increases were on $250,000 and up instead of listing all the increases because I’m not that gung-ho.

Folks here quibble about stuff like the phase out of personal exemptions for adjusted gross income over $300,000, blah,blah, blah, and truthfully I don’t keep track of who originated that and what particular crisis exended it. It’s a cog in a huge machine.

I’m fine with the Clark Howard approach to our spending—if someone is not talking about SS, Medicare/Medicaid and Defense, then it’s not serious. We need to deal with those first and then get to the 3.8 % surtax on investments.

Oh, and I hate crosswords, even kiddie ones I have no idea why. :) When I was a kid I always skipped those for the hidden pictures puzzles in “Highlights.”

1961_Xer

March 1st, 2013
11:25 am

The tax hikes, which take 2% from every workers paycheck, forces folks to realize just what 2% is. It also makes us wonder why if WE can shoulder that kind of decrease in budget, why can’t the federal government do the same?

And to those government workers about to take a 20% pay cut due to furloughs:
WELCOME TO THE REAL WORLD. I took a 30% pay cut three years ago when I lost my job and got another one. While YOU were insulated from those cuts in the public sector, I nearly lost my house, nearly went bankrupt, and ended with a job making 30% less. You coasted. Now it is your turn to take a 20% pay cut on a public sector salary and benefits (that already exceed my private sector salary by MORE than 20%).

Tiberius - pulling the tail of the left AND right when needed

March 1st, 2013
11:26 am

We will continue to be in one manufactured “crisis” after another as long as this incompetent sits in the Oval Office.

When you can’t lead, blame the other guy.

When your proposals are DOA in the Legislative Branch, claim a “crisis” is upon us.

Pathetic.

Dusty

March 1st, 2013
11:33 am

OH dear,

I think that I shall never see,

So many liberals wantin’ things free.

And..raise those taxes on somebody else,

(While climate makes our icebergs melt).

PLEASE, somebody, help Obama lead

“Cause he needs help, oh yes indeed!

The financial sinkhole is getting bigger

Enlarged by that humongous huge debt trigger.

Maybe somehow Clint could “make my day!”

But I’m leaving this OK Corral and going my way.

Bye now!.

getalife

March 1st, 2013
11:34 am

The only crisis is the gop self destructing and Americans do not care about that.

Del

March 1st, 2013
11:36 am

Somehow the Union survived.

However, over the ensuing ten years 58,000. Americans did not survive and the “Great Society” helped to get us in the financial condition we’re now in.

JF McNamara

March 1st, 2013
11:40 am

@td,

It’s not just the Democrats. It’s the Republicans too. Raising the debt ceiling should not have been an issue. That is procedural, because the money had already been spent and allocated by Congress. That wasn’t new legislation.

The Republicans signed on to this arrangement too. There is no blaming the other side. Everyone is culpable.

td

March 1st, 2013
11:41 am

We (The USA) has spent around $15 trillion since 1964 on the “Great society/War on poverty” and what do we have to show for it?

We have almost the same % of poor now and we did in 1964.
We are $16 trillion in debt.
We have nearly lost the family unit in the nation.

More great progressive thought.

William Smith

March 1st, 2013
11:42 am

One of our biggest problems is not spending by the government but spending by the consumer. At this time we can cut more than 85 billion if it is cut so as not to hurt the consumer. Many programs are worthless but still are being used. It seems funny that any Congressman can name a stupid program that needs to be ended. Why can’t they be ended. The answer is campaign contributions from all these special interest. Best example for campaign reform!

Centrist

March 1st, 2013
11:42 am

Aquagirl again incorrectly posted: “I said most tax increases were on $250,000 and up instead of listing all the increases because I’m not that gung-ho.”

Obviously you only listened to Obama’s $250K mantra for 5 years that started with “Joe the Plumber” loudly complaining. Obama was forced to cave and change it to $450K which made the temporary Bush era tax rates permanent for 99% of taxpayers.

jconservative

March 1st, 2013
11:43 am

Politics in fascinating.

The total power of spending, taxing and borrowing rests with Congress. Congress has the power but does not want the power. With power comes accountability. And Congress does not want to be held accountable.

So the laws on the books say what revenue the president can raise, what spending he must do and where he must spend it, tells him to pay the bills on time and to borrow if necessary and tells him how much he can borrow.

One would think that with that kind of power the president would essentially be a pure administrator.

But no, accountability lurks in the shadows. So the Legislative branch looks to the Executive for legislation.

Now we come to presidential accountability. Many in the constitutional law arena have been suggesting for decades that the president simply borrow exactly the difference between funds available in Treasury and the amount of expenditures required by law. I short, violate the debt ceiling laws.

Does Obama have the courage?

td

March 1st, 2013
11:44 am

JF McNamara

March 1st, 2013
11:40 am

@td,

It’s not just the Democrats. It’s the Republicans too. Raising the debt ceiling should not have been an issue

No my friend. When you are borrowing 40 cents of every dollar we spend and stealing from our children and grandchildren their chance of prosperity then the debt ceiling should not be raised one single penny.

Don't Tread

March 1st, 2013
11:44 am

“Because congressional Democrats have given up on the budgeting process, which would force them to commit in black-letter documents to the kind of tax-and-spend plans they desire for the coming years…”

Bingo. So long as they keep the financials “under the table”, they can continue to fool some of the people all of the time and hide their real intentions as long as possible. Their taxation/spending plan is intended to force equality of outcome, rather than fund legitimate government operations or reduce the deficit/debt. This is why 0bama continues to campaign for higher taxes against the “evil rich”, even though their taxes were just raised, and continue to siphon money to “his people”. Lather, rinse, repeat.

Next on the 0bama hit list: your 401(k)s.

Rafe Hollister

March 1st, 2013
11:47 am

sfd Seems the slogan lead from behind originated in the WH

As Jason Ukman noted in an excellent Checkpoint Washington column in July, a front-page Washington Post article in March written with on-the-record cooperation by the White House had already laid out this theme.

Check out the headline on the article: “On Libya, Obama willing to let allies take the lead.”

The White House began to protest only when the policy was summarized in a bumper-sticker-like phrase that reflected negatively on the president. Sometimes, political spin can catch up with you.

From the Washington Post

stands for decibels

March 1st, 2013
11:55 am

On Libya, Obama willing to let allies take the lead.

Well, see, a) that’s a foreign policy issue, and b) it does tie into the same spirit of the Mandela quote, I suppose, plus c) it’s not actually the same phrase.

But beyond that, to just toss out a phrase like that to besmirch fiscal wonkery–well, it seems like the cheapest of shots, at best

Aquagirl

March 1st, 2013
11:56 am

Obviously you only listened to Obama’s $250K mantra for 5 years that started with “Joe the Plumber” loudly complaining.

No, I actually looked at a list of the hikes and took the lowest number (if there is one) where they start. The specific tax hike I cited was a surtax of 3.8 percent on investment income on joint returns with taxable income over $250,000, not the increase from 15% to 20% on dividends and capital gains. I think that’s the one you’re talking about because it starts at $450,000.

The list I used was compiled by Robert Bluey of the Heritage Foundation, who would probably be quite upset if he knew you confused him with Barack Obama.