Neither Thema nor Louise

I disagree with Bernard on both the substance and the politics of the fiscal cliff.

Maybe Balloon Juice has been gleefully kicking around John Boehner and Mitt Romney, but the Obama Administration is working toward exactly the goal Bernard advocates: addressing inequality. They’ve released a serious plan that that increases taxes on the wealthiest by $1.6 trillion, while making $400 billion of  entitlement “cuts” (which are really just increasing efficiency, not cutting benefits). It also includes $50 billion of stimulus, and has a permanent removal of the debt ceiling so it can’t be held hostage anymore. The plan is smart policy and smart politics. It’s a position Democrats can defend, and it puts Republicans in the position of advocating for unpopular, inequality-increasing benefit cuts on their own. If you’re going to call your Congressman, why not tell him or her to vote for this plan instead of doing nothing?

Doing nothing leaves us with the sequestration cuts, which are not benign, and tax increases that are not tailored to address the problem of inequality or the deficit. The tax increases are across-the-board, rather than targeted at the most wealthy. No tax policy is enacted to address major tax issues like carried interest, which should be taxed at ordinary income rates, not capital gains rates.

As for the cuts, here’s a simple breakdown:

In addition to cutting subsidies for Obamacare exchanges, and Medicare payments to providers, it also would cut payments to the NIH and CDC, education for the disadvantaged, food and drug safety, mental health services, air transportation and air traffic control (more here).  The fact that the cuts are immediate and far-ranging means that they will be implemented in a haphazard and arbitrary way, with the focus being the ability to strip cash from a given program, rather than the value of each program.  You can read a lot more at those links if you want the details.

Finally, Congress is already a dysfunctional body that is addicted to these moronic showdowns leading to blunt, stupid policies. Encouraging them to continue that kind of behavior is like telling an alcoholic that they’ll feel better after having another drink.

So, Democrats gloating over their victory is not the problem facing our country, and it hasn’t prevented Obama from offering a serious plan. Letting Congress go over the cliff is far more than just a tax increase, and it will make our economic problems, and Congress, worse. I’ll be calling my (Democratic) Congresswoman’s office to tell her to stay strong in supporting the President’s plan and demanding Republican action. If you have a Republican Congressperson, call them and ask them what’s their fucking plan.

92 replies
  1. 1
    Joey Giraud says:

    No, you misunderstand. The point isn’t to get a decent law passed, it’s to publicly humiliate the opposition so everyone will admit you were right all along.

  2. 2
    Schlemizel says:

    Too bad Bernie does not have the balls to wander into the comments & try to defend his position.

    I think you have done a marvelous job of exposing his poorly thought out proposal, thanks. You did miss the one important (to the goopers) part – the resulting damage to the economy would all be the Dems fault by the next election.

  3. 3
    Schlemizel says:

    BTW – the GOP plan, as articulated by Boner this week, is to “raise revenue” by cutting taxes while taking away the mortgage interest deduction then making up the rest by gutting Social security (allowing them to steal more money from the trust fund) and every Federal program except DoD which still needs larger than inflation year over year increases.

  4. 4
    General Stuck says:

    I been saying for four years, it is nonsense that Obama’s main loyalty lays with the corporations and their wealthy masters. Faced with a world economy on its deathbed, was in and of itself a giant red flag of caution, lest the US and likely world economy collapsed.

    So, for whatever limits and painful compromises he made to a fucked up senate, dem and repub, on financial matters, one thing has always been clear in the Obama message. And that is to roll back the massive income inequality the right wing has built the past three decades, within the limits of his office. And especially, do no harm to the poor. It is the philosophy and world view of a south Chicago community organizer by choice, with a magna cum laude from Hawwvard Law School, that was a ticket to great wealth, but O turned it down.

  5. 5
    Persia says:

    @Schlemizel: Agreed. The best hope we have for progress in 2014 is that things get at least a little better for voters, not substantially worse.

  6. 6
    Ben Franklin says:

    Pandering to public perceptions is never a mistake for political expediency.

    This sounds like a winner.

  7. 7
    Mark S. says:

    Quit fucking snarking and tell Congress to do nothing!

    And six months of recession won’t affect Bernard so shut the fuck up. Let’s try to keep some perspective here, folks.

  8. 8
    Baud says:

    I agree with you. It’s one thing to be willing to go over the cliff if the GOP plays games. It’s another to actively seek to go over.

  9. 9
    c u n d gulag says:

    My odious Teabagging nitwit of a Congresswoman, Nan Hayworth(less) thankfully lost – to Democrat Sean Patrick Maloney.

    So I don’t think I’ll call her.
    From my previous calls, she knows I hate her feckin’ worthless guts, and that I volunteered for the guy who beat her.

    She can now go back to being the Teabagging Optha something or other eye “doctor” that she says she is. (What is it it eye doctors and Teabagging?).

    Thanks, Nan HayworthLESS, for losing.

    We can see clearly now!

  10. 10
    Ben Franklin says:

    Playing to public perceptions is never a mistake for political expediency.

    This sounds like a winner.

  11. 11
    WJS says:

    So, Democrats gloating over their victory is not the problem facing our country, and it hasn’t prevented Obama from offering a serious plan.

    Yes, that’s also known as “concern trolling” and I had a good laugh at Bernard’s post and chose deliberately not to comment because, well, what’s the point? Why wander into that mess?

    At the conclusion of a nasty two year process, why wouldn’t you celebrate the fact that President Obama was handed a mandate? Obama beat Romney by 126 electoral votes and, I can guarantee you, if the situation was reversed, the Republicans would be calling that a mandate for the dismantlement of soshalism and everything else.

    The Republicans aren’t going to accept a plan of any kind unless they are beaten with the substance and details. That won’t happen this year, and it might not happen until well into the early months of 2013. Let them continue as the defenders of insanity. By failing to lead, they demonstrate that more of them should be removed from office in 2014. Why not start that process now?

    When did I become the keeper of the feelings and sensitivity of my defeated enemies? Why should I care if one side cannot lead or govern? Let the voters decide, and let the southern states that cannot vote for their own economic self-interest continue to live in squalor. You cannot help those who cannot help themselves; those of us who live in states that can effectively help their citizens are tired of hearing about how “wrong” we are from people who hand out giveaways to billionaires.

  12. 12
    feebog says:

    Put me in the too much too soon column in terms of the fiscal cliff. But we are going to have to face some facts down the road. The first is that even a 39.6% marginal tax rate is not going to do enough to turn around the income inequality curve. We will need something much closer to 50%. The second is that we are going to have to increase taxes on the middle class at some point if we are truly going to start bringing down the debt in a meaninful way. The third is that we cannot continue to spend almost 700 billion dollars a year on defense. The way to assure funding for medicade and medicare is to transfer a shitload of the bucks we now throw at defense and use it to fund other discretionary programs. The sequestration cuts are a start, but do little to change the fundemental imbalance we have between defense spending and everything else.

  13. 13
    Rosie Outlook says:

    Does anyone else think a coup is possible if Congress continues willfully paralyzing the government ? Has there ever before been a situation where a Congressional faction large enough to block even the most routine governmental functions went on strike, as it were? I can’t think of one.

  14. 14
    Roger Moore says:

    @Mark S.:

    And six months of recession won’t affect Bernard so shut the fuck up.

    And if we reduce the deficit in part by cutting social services, there’s no way the Republicans will ever create another one by slashing taxes on the very rich in order to create the same situation. It’s not as if they’ve admitted that a major part of cutting taxes is to force exactly those kinds of cuts or anything.

  15. 15
    WJS says:

    @Roger Moore:

    It’s not as if they’ve admitted that a major part of cutting taxes is to force exactly those kinds of cuts or anything.

    That’s an excellent point–is our children learning?

    When did a Republican ever learn from the mistaken belief that “voodoo economics” is a viable principle for governance? When the Republican leadership can admit that the Bush economy was created by wrongheaded policies that should be repudiated, then and only then can we have an honest debate about how to eliminate income inequality and grow our economy.

  16. 16
    aimai says:

    @c u n d gulag:

    Why would any of that prevent you from calling her? At the very least you should be working on converting the poor lost souls who are her phone bank answer people. Never think that giving people a piece of your mind is wasted.

    aimai

  17. 17
    Schlemizel says:

    @Roger Moore:

    My guess is Bernie is not concerned about the pittance that would be his social security check either.

  18. 18
    jl says:

    Krugman has some good posts at the NYT today on the awfulness and absurdity of the GOP position on fiscal policy, and the worthlessness of the corporate media coverage.

    To summarize the GOP position, from the reality world: repealing the Bush tax cuts for the wealthy alone cannot solve the long term deficit problem all by itself, so doing anything on that front is worthless. But cuts in social insurance benefits for poor working and middle class (that those people have paid into already) that have a smaller effect by almost an order of magnitude is extremely important and the the only sign of having a serious plan.

    Really shameful.

    What Defines A Serious Deficit Proposal?
    Kthug, NYT
    http://krugman.blogs.nytimes.c.....-proposal/

    The Full McConnell
    Kthug, NYT
    http://krugman.blogs.nytimes.c.....mcconnell/

    Edit: not sure whether what I typed is snark or a serious high minded evidence based argument, but I will let it stand.

  19. 19
    Higgs Boson's Mate says:

    Does anyone really believe that the party that was touting the idea of defaulting on our debt is going to pass Obama’s plan because of the threat of sequestration? His plan could cure cancer and provide pollution-free electricity at one cent per kWh and the Republicans would till demand their pound(s) of flesh for passing it.

    In their minds they didn’t lose, Romney lost because he wasn’t conservative enough. Get it? There are probably any number of ways for sequestration to occur and then for them to pass bills (“Our boys are running out of ammo!”) to ensure that defense is the least affected.

    They failed to prevent Obama’s re-election, goody. They will therefore devote a good deal of energy to ensuring that his successor in office is a Republican.

  20. 20
    Maude says:

    Boehner is claiming that no progress has been made on the talks. He is stonewalling.
    The Republicans want what they want and are not going to allow Obama to win this unless there’s no way they can block it.

  21. 21
    bemused says:

    @c u n d gulag:

    It’s probably pointless to call my out-going Republican Rep. Chip Cravaack beaten out by Dem. Rick Nolan. I’m sure my name is on the ignore list as I never got notifications of any of his meet and greet with constituents even though I signed for emails from his website. I noticed he has not posted anything on his facebook site since Nov. 6!

    I think I will call his office one last time to encourage Chip to break his record and do one good thing before he packs up and leaves.

  22. 22
    Linda Featheringill says:

    I think that Bernie might be concerned that we’ve been so busy making fun of Romney and company that we’re missing out on an opportunity to accomplish something important. There is work to be done and there are issues to lobby for.

  23. 23
    Persia says:

    @Linda Featheringill: But Bernie also wants us to lobby our congresspeople to do…nothing.

  24. 24
    EriktheRed says:

    The President’s plan…

    has a permanent removal of the debt ceiling so it can’t be held hostage anymore.

    …which is why Republicans won’t agree to it.

  25. 25
    Phylllis says:

    Re: Education cuts. We’ve been informed there will be immediate decreases to those who receive impact aid. In South Carolina, that’s Richland, Aiken, Charleston, and Horry County, right off the top of my head. Cuts to Title I-funds for children in poverty and IDEA-funds to serve special needs children, would occur in FY 2014 funds. Our state department of ed has already told us they can’t really project what our cuts would be-some folks might only get cut 6-7%, some 18-19%. Planning for 2014 projects begins in January. If I plan for a 19% cut in my project, that’s a teacher and a teacher’s aide.

  26. 26
    Felonius Monk says:

    @Roger Moore: @WJS:

    It’s not as if they’ve admitted that a major part of cutting taxes is to force exactly those kinds of cuts or anything.

    This really started in earnest with the Reagan administration and they were not particularly secretive about it. They combined tax cuts for the wealthy with large increases in deficit spending, defense in particular — remember John Lehman’s 600-ship Navy (Lehman was most recently one of Romney’s advisers.) But they did publicly state on numerous occasions that the whole idea was to starve the social programs — you know, all those icky things that republicans hate like welfare, medicare, etc.

    So I think they have been pretty open about what their plan is. The Bush tax cuts just furthered their objective. Remember, the tax cuts for the 98% don’t amount to squat compared to what the top guys got.

  27. 27
    Linda Featheringill says:

    @Persia:

    Bernie is saying congress should do nothing about this one issue. Let the Bush tax cuts expire. All of them.

    I think that IF we could replace these with the tax breaks for the first 250K income, that would be good.

  28. 28
    Maude says:

    @Felonius Monk:
    Ronald Reagan was an evil old man.

  29. 29
    arguingwithsignposts says:

    @Linda Featheringill:

    I think that Bernie might be concerned that we’ve been so busy making fun of Romney and company that we’re missing out on an opportunity to accomplish something important. There is work to be done and there are issues to lobby for.

    Maybe Bernie should read the front page of this fucking blog, then. He might have noticed some posts by Tim F. about calling your congressfolk.

    ETA: I would have no problem if mistermix, dougj, ABL, AL, soonergrunt or SP&T wanted to come in and talk about too much snark, but these bomb-throwing second-tier FPers (FdB also comes to mind) are pushing it.

  30. 30
    jl says:

    The death throes of the GOP will be long, and have the potential to cause great damage. That is a fact that cannot be avoided.

    The GOP in the lame duck session will do what they will do. If enough of them are still in their reactionary bubble world, they may do something that most people would consider insane.

    We cannot control it. Only thing to do is advocate and educate for good policies and hope the GOP continues to render itself obnoxious in the eyes of the public (and so far, looks things looking good on that front, which maybe small consolation for the people that could get hurt next year).

    My idea of good policy is for Obama administration to stand strong on good policy proposals. If they can limit damage some relatively small Medicare and Medicaid changes that may well be irrelevant in a few years due to health care reform, that may be best we can do. (that would not include raising Medicare eligibility age, but might include means testing for wealthier people, IMHO).

    But if the old rich white guys of the GOP decides to replace Thelma and Louise as iconic cliff-drivers-over unless they get unacceptable concessions that will hurt as many people as a few months falling off the fiscal cliff will, then that is their choice.

    Actually, it would not be diving over a fiscal cliff, but driving down a steep slope that can easily be reversed, and I think will be largely reversed once the GOP sees the political fallout.

    Edit: As I see it, thing about the ‘fiscal cliff’ effects is that they will have significant macroeconomic effects that will hurt everyone, including the GOP corporate sugar daddies, not just poor to middle class people. If they are not happy, the GOP is not happy regardless of GOP ideology, and $ pressure will be put on the corrupt rich white party that will be hard to resist.

  31. 31
    eemom says:

    Is there a fallback position if the President’s plan can’t be forced through? What “compromise” on his part that could get the republiscum to agree would be acceptable to us? At what point would going off the cliff be preferable?

    Just putting these questions out there — I have no idea of the answers.

    All I personally ask is that everyone continue to mock that Finel clown. kthxbai.

  32. 32
    Davis X. Machina says:

    @arguingwithsignposts:

    ETA: I would have no problem if mistermix, dougj, ABL, AL, soonergrunt or SP&T wanted to come in and talk about too much snark, but these bomb-throwing second-tier FPers (FdB also comes to mind) are pushing it

    .The great god Balance is an implacable god. He demands his sacrifices. He shall have his acolytes — even here.

  33. 33
    Bruce S says:

    If, when the economy is doing better, we do go back to something on the order of the Clinton-era rates for folks between, say $100 – $250 thousand, it needs to be balanced or preceded by more tax brackets at the upper end – go up an additional marginal percent – or better two – on each income increment of one million $. While the Clinton era rates are “empirically defensible” from an economic perspective (obviously those rates didn’t hamper growth or investment) the continuing increase in income inequality/skewed distribution of productivity gains and inflation in certain key areas like mortgage debt means that the old rates need to be re-calibrated to match current reality. “Doing nothing” makes no sense. If for no other reason than this is a uniquely favorable moment of political leverage for Dems.

  34. 34
    Schlemizel says:

    @Persia:

    And while doing nothing say noting mean about those wonderful people of the GOP

  35. 35
    Schlemizel says:

    @arguingwithsignposts:

    Agreed – there should be a special place for FP’ers who can’t be bothered to engage us loutish thugs in comments. Since it is too much effort to engage maybe they should get there own page with no commenting permitted.

    Alternatively, they could STFU and leave the floor for those willing to debate

  36. 36
    kooks says:

    @mistermix(top) In your summary of Obama’s plan, don’t forget to include the bits about the estate tax (lowering threshold, raising rate) and taxing investments as income – it’s good stuff.

  37. 37
    Bruce S says:

    Right now I’m wondering just how much Democratic Snark it might take to keep fucking Dan Senor off of my goddam TeeVee. Is there no failure that could possibly discredit this POS?

    Stephanopoulos has a truly shitty show.

  38. 38
    JohnK says:

    Bernie has jumped the snark. He cannot show his face in comments. There is no snark good enough for the cowardly basturd.

  39. 39
    jl says:

    @Bruce S:

    Krugman been on Steph’s show lately? If not, why not?

    Write and twit tweeter tweet Steph with links to Krugman’s NYT posts today. Ask why Steph allows hacks to mislead the nation.

    I don’t have a tweeter account, though seems like there is some other jl who does.

  40. 40
    SiubhanDuinne says:

    @arguingwithsignposts: I certainly hope you’re categorizing Kay in the first tier.

  41. 41
    xian says:

    @WJS: remember that Bush claimed a mandate to privatize social security but he had not run on that, and he failed decisively.

  42. 42
    arguingwithsignposts says:

    @SiubhanDuinne: Kay slipped my mind, an egregious oversight. Perhaps it was because she so rarely deals in snark to begin with. I also skipped Betty Cracker, whom I’d never think to castigate us for too much snark. Zandar and Tom Levenson, also, too.

  43. 43
    Felonius Monk says:

    @Maude:

    Ronald Reagan was an evil old man.

    I didn’t say he wasn’t. However, I think he was more stupid than evil, but his stupidity led to a lot of evil by others in his administration.

  44. 44
    lacp says:

    @eemom: Damn good questions, too. How does one negotiate with fanatical morons?

  45. 45
    Chris T. says:

    Doing nothing … tax increases that are not tailored to address the problem of inequality or the deficit. The tax increases are across-the-board, rather than targeted at the most wealthy. No tax policy is enacted to address major tax issues like carried interest, which should be taxed at ordinary income rates, not capital gains rates.

    Although it’s not the whole fix, really, capital gains, carried interest, dividends, and “ordinary income” should all be treated the same (or as similarly as possible).

    There was, once, a good excuse for a much lower tax rate on (long term) capital gains: inflation used to be quite high.

    Capital gains occur when you buy an asset—such as a house, or stock on a stock market—and keep it for some time and then sell it. Suppose you buy a house in 1960 and sell it in 1990. Inflation in between those two years was pretty serious: a paperback book, for instance, that cost maybe $0.35 in 1960 went for nearly $6 in 1990. So your 1960 house that cost $20k might now be over $200k, but that represents, well, essentially no change in price. That’s part of the logic behind things like the house-price-gain exclusion (established in the 1990s) and the low tax rate on capital gains (1980s, lowered further in the 1990s and 2000s).

    In the last decade, though, inflation has been so close to zero as to be almost negligible. If you bought something for $20k in 2002 and sold it for $300k in 2012, that really is a huge gain. There’s no reason to give you a huge break on that $180k-over-ten-years that is not given on $18k/yr. (There is a weaker reason to give you a small break: it encourages people to make long-term investments.)

    Now, inflation could (and should, and eventually will, in the long run in which we are all dead anyway) return at a modest level. So it’s reasonable to index capital gains to inflation. In the 1980s and early 1990s, that idea used to be something I referred to as “the full employment act for accountants” because you’d need to use one to calculate the “real” gain on which you’d be taxed. Now, though, the IRS just need provide a web site with a little calculator: plug in “year bought, price paid, year sold, price obtained” and it applies the appropriate deflator to tell you what your taxable gain (or loss) was. This is the same process we use now to calculate our gain-or-loss, except that there’s a web-enabled calculator (which you can download to your own machine) to do the arithmetic.

  46. 46
    Anya says:

    @General Stuck:

    I been saying for four years, it is nonsense that Obama’s main loyalty lays with the corporations and their wealthy masters. Faced with a world economy on its deathbed, was in and of itself a giant red flag of caution, lest the US and likely world economy collapsed.

    I’ve always wondered, if Obama was a ‘Corporatist Democrat,’ as the purists among us proclaimed, then why did the corporations and Wall-Streeters hate him so much? Why did they spend tons of money to defeat an ally?

  47. 47
    xian says:

    @Linda Featheringill: that’s not the goal, though. it’s the fallback threat, the forcing function togive the GOP two bad (in their view) outcomes to choose between.

  48. 48
    Or something like that.Suffern Ace says:

    @Bruce S: Dan Señor is married into the club. He slept his way into that open invitation, so it’s unlikely he’ll be going anywhere. And he’s the type of guy who’ll get into every republican administration until he’s dead or convicted of something. Like all those Nixon and Ford administration people who are finally dying off.

  49. 49
    Schlemizel says:

    @Anya:

    Because there is never enough for those bastards. They want the dystopia promised by Grover not the Dickensian era the corporate Dems offer

  50. 50
    Fair Economist says:

    I’m repeating myself, but the austerity bomb is not a huge problem. If the Bush cuts expire, Obama will propose an improved tax cut (even improved over the sub-250,000 part of the Bush cuts he’s offering to keep now). At that point the Republicans either concede – and we are better off than with the current offer – or their party will be killed by spending the next two years demanding the middle class pay more taxes. I’m willing to take a recession to destroy the Republican party – recessions are normal, and happen from time to time. They are bad but not the end of the world.

    Likewise, although the sequestration cuts are bad, with a large deficit and a Republican House, we are going to get some kind of budget cuts over the next two years. Putting half of them on defense is far better than anything else we’re going to get. Remember even Obama’s proposal increases the cuts on Medicare to almost as much as the entire non-defense sequester.

    On a final note, remember the catfood commission is trying to use the long-term deficit to excuse Medicare/SS cuts. After the austerity bomb, we’re basically to long term deficit balance and they have no leverage, meaning no cuts. Yahoo!

    All told, the Bush tax cut expiration plus the sequester cuts are better than anything we’ll get through the normal negotiation process.

  51. 51
    xian says:

    @eemom: the fallback is the cliff. then there’s a new baseline and the Dems propose middle-class tax cuts and cfixes for the sequesters, forcing GOP to oppose tax cuts for the middle class or fold.

  52. 52
    Fair Economist says:

    @Chris T.:

    There was, once, a good excuse for a much lower tax rate on (long term) capital gains: inflation used to be quite high.

    That’s what I used to think. But, then, I realized that the “unfair” tax created by capital gains + inflation is actually a wealth tax – on average, long term everybody pays inflation rate times capital gains on all wealth. A wealth tax is the best kind of tax – minimally disruptive and maximally progressive, and this one is fairly easy to collect to boot. So bring on those capital gains hikes!

    (Not that anything you say is incorrect.)

  53. 53
    Chris T. says:

    @Fair Economist: Yes, I did say “excuse” and not “reason”. :-)

  54. 54
    Schlemizel says:

    @Fair Economist:

    Thats so sweet of you! Yes, please offer to sacrifice the well being of millions of Americans cuz it OK by you!

    Yes, we need to make sure that SS & Medicare are not sacrificed on the austerity alter but thats more likely to happen in a panic caused by the massive disruption you are so willing to subject the country to.

    What we should be doing is letting the GOP know we will blame them if the deal falls through & then push for the best deal possible.

  55. 55
    Roger Moore says:

    @Fair Economist:

    But, then, I realized that the “unfair” tax created by capital gains + inflation is actually a wealth tax – on average, long term everybody pays inflation rate times capital gains on all wealth.

    Which is exactly why the MOTU have been pushing for ever lower inflation. Every time inflation goes below the Fed’s long term target during a recession, they push the target rate lower rather than letting inflation go back up. The gradual decline in long term inflation is one of the big drivers of increasing income inequality.

  56. 56
    Felonius Monk says:

    Well, here’s a “new” idea from the rethugs:

    On Sunday, during an appearance on Meet the Press, Sen. Bob Corker (R-TN) reiterated his call for restructuring entitlement programs like Medicare, highlighting the “very painful cuts” he has proposed as part of a package to avert the fiscal cliff. Corker 242-page plan calls for a Paul Ryan-like proposal to transform the guaranteed Medicare benefit into a voucher plan for beneficiaries.

    Corker Bullshit

  57. 57
    jl says:

    I think the PR war is on, even Geithner is on board:

    Geithner: Republicans Are In A ‘Tough Position’

    ” Treasury Secretary Timothy Geithner said that Republicans are in a “tough position” with regards to a debt deal because they still have to figure out what their side is willing to put forward, during an interview on “Fox News Sunday.” While Republicans have called on Democrats to propose cuts to entitlements, Geithner argued on Sunday that Democrats had put forward a detailed plan and that if Republicans want something different, then the ball is in their court. ”

    http://livewire.talkingpointsm.....h-position

    But, we have to realistic about difficult tactical decisions that might have to be made. The lame duck GOP is in a position to hurt a lot of people no matter what Obama and Democrats offer.

    Concessions on SS and health insurance that will difficult to reverse after the lame duck session will cause great harm to poor to middle income people.

    I personally would probably take a much bigger hit in the short run from the a dive off the ‘fiscal cliff’, but allowing difficult to reverse and deadly cuts on social insaurance as part of a compromise is immoral, IMHO.

    The only consolation is that, if Obama and Dems can make a good case to the public, the choices and political consequences for the GOP are really bad. Bad enough to do lasting damage, or change their ways as political fallout hits them.

    @Felonius Monk: thanks. A good example. Giving in to that kind of BS, which was explicitly debated in the election (and we won) and which would be difficult to reverse, and would flat stone cold kill a lot of non wealthy folks, or the fiscal cliff? I would have to accept the fiscal cliff and try to repair damage next year. Crummy options, but that is what the GOP can force, if they want to.

  58. 58
    Joel says:

    Yeah, sequestration fucks over those of us in the government-funded research sector pretty good. But I’m willing to go that route if need be. Shared sacrifice, motherfuckers.

  59. 59
    burnspbesq says:

    You’re both wrong. The only way we ever get our fiscal house in order is to put in a VAT.

    Yes, I know it’s regressive, but if you’re thinking clearly it should be obvious that when you put in a VAT you can also tweak the income tax in order to maintain whatever degree of progressivity in the overall tax burden you think is optimal.

    The other thing that needs to happen is semantic. It will clarify the conversation dramatically if we stop talking about the payments that are used to fund Social Security and Medicare as “taxes” and talk about them as what they really are, and as what the rest of the world calls them, “social insurance contributions.” There’s no reason for Social Security or Medicare to be cluttering up discussions about fiscal policy or tax reform.

  60. 60
    gene108 says:

    The political problem is simple.

    The GOP will not lose their political position, if they oppose Obama.

    They can be as merciless as they want to be. They can slaughter babies on the floor of the House.

    It doesn’t matter.

    Their constituents view Obama as a bigger threat than a GOP Rep, who slaughters baby to the snake god Set.

    With the 2010 redistricting, the GOP’s position to do nothing but oppose has just been made stronger.

    If there were a way to fuel the 90%+ disapproval of the House against incumbent GOP representatives, you may see some shifting of positions, but so far the abysmal approval ratings of the House has not translated to voter backlash against incumbents.

    Until that changes, there will be no reason for the House to compromise.

  61. 61
    4jkb4ia says:

    I agree more with this post. The public will clearly blame the Republicans if we go over the cliff because it will have happened because the Republicans insisted on things that most of the public doesn’t like. But Obama has to present a coherent plan to get the political advantage of blaming the Republicans.

    On the exit poll that people don’t want to raise taxes to cut the deficit, if I hadn’t been interrupted by my husband doing business at the nursing home I would have written that to compromise, you need someone who will take Yes for an answer. According to both Bai and the WaPo’s accounts of the Debt Ceiling Debacle, Boehner walked away because he couldn’t take Yes. I am sure that many of you saw the NYT story on Friday about taxes being lower for everybody than 30 years ago, but ordinary people being very skeptical about more taxes and cuts in services both. This shows that there’s no ideological scale to giving an answer like that especially since other polls show that increased taxes on the wealthy is supported.

  62. 62
    Zandar says:

    @feebog:

    ” The second is that we are going to have to increase taxes on the middle class at some point if we are truly going to start bringing down the debt in a meaningful way.”

    Bullshit.

    Utter Centrist Dalek\Village Idiot bullshit.

    As long as we’re spending $80 billion a year of local/county/state taxes on bribes to “job creators” that’s utter bullshit.

  63. 63
    👽 Martin says:

    @Chris T.: There’s nothing stopping Congress from changing Cap Gains to cost basis * inflation and then taxing as regular income. They could publish the inflation rates for each tax year (if you bought in 1990, multiply your cost basis by x%, if you bought in 2000, multiply your cost basis by y%) and then just tax it as regular income.

    Problem solved. Not hard. Everyone would understand it, and it’s fair. And for low-income people, they still get the benefits of all of the graduated tax rates. The real money to be made is in those assets that will increase in value faster than inflation (Google stock) and those investors are still going to see pretty much the same cost basis as they do now. And if we do get high inflation back, the system covers it just fine.

    There was a push in the early 90s for Bush Sr. to issue an executive order to have the IRS do this under the cap gains rates at the time. The intent was to provide tax relief for investors who were taking the high cap gains rates at the time against the relatively high inflation (6% in the late 80s/early 90s and 14% from the late 70s/early 80s for long term). Today it could be done as an incentive to put cap gains at the same level as income, or back to the old rates.

  64. 64
    jl says:

    @gene108: As I see it, driving down the fiscal steep slope affects the macroeconomy, rich people will be hurt, corporations will be hurt, not just lesser poor to middle income people. And their feelings about economic hardship are much more delicate than those of the lesser people. So, there will be pressure put on the GOP from their constituency and funders if the GOP doesn’t do a deal.

    So there is some hope, next year, if not this one, if the GOP decides to hurt and kill people rather than pay any attention at all to good policy.

    Edit: not saying fiscal cliff diving is a desirable option. It should be avoided, but not at all costs. The cost of difficult to reverse cuts in social insurance that will kill people is too much for me, personally.

  65. 65
    jl says:

    @Zandar: Controlling the long term debt requires health care reform. Fiddling with middle class tax rates will not solve that problem. So, maybe for different reasons, I agree with Zandar.

  66. 66
    👽 Martin says:

    @Zandar:

    As long as we’re spending $80 billion a year of local/county/state taxes on bribes to “job creators” that’s utter bullshit.

    That’s an entirely different phenomena. That’s local governments competing for slices of a zero-sum pie. It’s stupid, I agree, but it says nothing about overall tax/revenue. Local governments will keep doing it because if they don’t attract the jobs, they likely wouldn’t see that revenue anyway, so the opportunity cost is very low. And in many of those deals, the companies are paying some fixed amount in exchange for the recurring tax benefit – which is understandable as companies are relatively cash rich now. They’re converting a fixed asset into income (a reduced recurring liability).

    And that’s a hard problem to solve. The best I can think of is to apply the ‘no welfare for drug users’ standard to local government – the feds will reduce subsidies to local/state govt. dollar for dollar for any tax waivers. Not even sure how to implement such a thing.

  67. 67
    Joey Giraud says:

    Soaking the very rich with high tax rates is good not just for budgetary reasons.

    If rich people are allowed to keep too much money, they spend all their time leaping into huge piles of cash like Scrooge McDuck, when they should be working their voodoo to create jobs and drive the economy.

    Income pressure; if it’s good enough for blue collar labor, it’s should be good enough for the rich.

  68. 68
    Fair Economist says:

    @Schlemizel:

    Yes, we need to make sure that SS & Medicare are not sacrificed on the austerity alter but thats more likely to happen in a panic caused by the massive disruption you are so willing to subject the country to.

    You are massively overestimating the effect of the austerity bomb. The Bush tax cuts were actually followed by a *reduction* in growth. Reversing them is not going to cause meaningful harm. Half the sequester falls on non-personnel defense spending, which also has a low multiplier and will have little effect on the economy besides the contractors themselves. That leaves the non-defense spending as bad, but it’s about 0.3% of the economy, resulting in a reduction in growth of about 0.5%. Bad, yes, but smaller than the normal year-to-year variations in growth rates.

    The disruption is not going to be massive. Possibly, it won’t even be detectable – we may just end up not improving as much as we would have anyway. It will be far, far less than the financial crisis, and less than the effects of the 2011 cuts the Republicans forced through. There will be no panic, except maybe among wealthy Republicans realizing they won’t get special treatment for unearned income anymore.

  69. 69
    Mnemosyne says:

    @Chris T.:

    (There is a weaker reason to give you a small break: it encourages people to make long-term investments.)

    As I understand it, this is the problem with the current capital gains tax — it applies to both long-term and short-term investments, which I don’t think was the original rationale for it. It makes sense to me to tax a long-term investment at a lower rate to encourage long-term investments, but it makes NO sense to tax short-term stock market churning at the same rate because capital is capital is capital and any investment is good investment, even if you only had your money in that stock for 20 nanoseconds.

  70. 70
    Fair Economist says:

    @jl:

    Controlling the long term debt requires health care reform. Fiddling with middle class tax rates will not solve that problem. So, maybe for different reasons, I agree with Zandar.

    Actually, no, because Obamacare already has major reforms and closed about 2/3 of the long term Medicare shortfall. The rest could be closed by an increase in the payroll tax of about 2% – far less than the increases under Reagan. Obama’s proposal of 400 billion in long-term cuts would also roughly close what’s left of the gap. It’s all the “reforms” you need.

  71. 71
    gene108 says:

    @4jkb4ia:

    The public will clearly blame the Republicans if we go over the cliff because it will have happened because the Republicans insisted on things that most of the public doesn’t like.

    I just can’t believe ordinary actions, like votes on a budget or tax policy, can breach the protective cocoon the MSM and right-wing media have built to insulate the GOP from their actions.

    @jl:

    And their feelings about economic hardship are much more delicate than those of the lesser people. So, there will be pressure put on the GOP from their constituency and funders if the GOP doesn’t do a deal.

    The rich will be hurt, but a rich guy getting hurt is like a kid skinning his knee. It’s a nuisance, but it’s also part of being in the game.

    For a guy, who just got hired to a job after being laid off in 2008 or 2009 and lacking the seniority to not be the first to get let go, a recession would a much more serious injury.

    Unless you can flip traditional GOP voters in red-states or red-districts to vote for Democrats in 2014, every discussion on political ramifications will be moot.

    I just don’t see how this debate can breach the MSM/Right-wing media cocoon the GOP enjoys that would cause sometime or traditional GOP voters to vote for Democrats.

    The Republicans have already built up the narrative, which their followers agree with, that President Obama doesn’t negotiate or is willing to accept GOP ideas. They just have to trot this narrative out again about how the GOP had plans, but Obama never gave them the chance to interject their ideas. This would insulate the GOP pretty successfully amongst their constituents.

    Unless we can pick off GOP voters, which I think is unlikely, because of this it won’t matter to the GOP whether or not we fall back into a recession.

    These are no longer honorable men, who put the needs of the country ahead of their blind ambitions.

  72. 72
    jl says:

    @Fair Economist: I agree, the ‘fiscal cliff’ is a gradually increasing slope. In a few months, main risk is triggering a recession, but even that is not certain. But in any event, the inconvenience will extend to wealthy and corporations, and they will start the exerting heavy pressure on the GOP at the slightest nick.

    @gene108: Well, we clearly disagree. I hope we don’t have to find out who is correct next year.

  73. 73
    ruemara says:

    @Fair Economist: I’m not saying you’re wrong or right, but as a person who is kinda under the poverty line and a government worker, I am still fairly nervous about the whole thing. I also have found, based on previous net progressive freakouts/wars/general partial info bullshittery, that for most of the people on my side of the political fence, they are just as willing as conservatives to sacrifice people like to their cause. For the greater good, of course. Even when I agree with the goals, I am not willing to suffer even more for it. You get to keep a roof and 3 squares; if this hits me in the wallet, I don’t have much wallet to bear the brunt.

  74. 74
    Chris T. says:

    @Joey Giraud: You are correct sir!

    In fact, the mere threat of a rise in dividend taxes is unlocking a lot of corporate cash right now, via “special dividends”. This is a poor use of the money, but less poor than the previous use, which was that companies simply sat on it.

    Money is a lot like water in more than one way. In this case, the similarity is that money “in motion” (as it were) is like moving water carving up the landscape, providing rain to sustain plant life, or powering dynamos to generate electricity.

  75. 75
    Fair Economist says:

    @4jkb4ia:

    The public will clearly blame the Republicans if we go over the cliff because it will have happened because the Republicans insisted on things that most of the public doesn’t like. But Obama has to present a coherent plan to get the political advantage of blaming the Republicans.

    But he has! The current Obama plan is a straightforward center-right proposal which puts us very close to long-term budget balance, closes the Medicare funding shortfall, and has no majorly disruptive elements. Sure, I’d like higher taxes on unearned income and a larger role for Medicare, but it will do just fine.

  76. 76
    Chris says:

    @Felonius Monk:

    I didn’t say he wasn’t. However, I think he was more stupid than evil, but his stupidity led to a lot of evil by others in his administration.

    Reagan, like many Republican presidents, seems to’ve had an administration where he was simply the public face grinning and waving for the rubes, while his cabinet actually made policy.

    And I don’t mean that in the sense that Reagan was a dupe controlled by shadowy puppetmasters; I mean that in the sense that he didn’t give a shit about the business of governing, and therefore left it entirely in other people’s hands. Same thing Grover Norquist wanted President Romney to do.

  77. 77
    jl says:

    Can’t help but snark a bit.

    ” The rich will be hurt, but a rich guy getting hurt is like a kid skinning his knee. ”

    I can accuse you of making my case for me. You ever see and hear the after effects of a kid skinning his knee? Especially a little kid skinning his knee. The Masters of the Universe are like a little kid skinning his knee. They will freak out. Who will they freak out too? Who will the threaten if the oopsie isn’t made to disappear right away. Obama? The Democrats? No, their flunkies, the GOP. And next year, the GOP will have to pay attention, or at least enough of them will.

  78. 78
    Fair Economist says:

    @ruemara:

    I’m not saying you’re wrong or right, but as a person who is kinda under the poverty line and a government worker, I am still fairly nervous about the whole thing. I also have found, based on previous net progressive freakouts/wars/general partial info bullshittery, that for most of the people on my side of the political fence, they are just as willing as conservatives to sacrifice people like to their cause. For the greater good, of course.

    Yes, that’s very true. There will be some identifiable people seriously hurt by any particular change. I don’t know any way to change that. A compromise might well help you compared to the austerity bomb, but it will necessarily hurt others as well, and I’m confident that in total it will be more. I fully understand why you don’t want the austerity bomb to go off.

  79. 79
    Maude says:

    @ruemara:
    When they say the word sacrifice, I know who it means and it certainly is not them. I can’t stand this and I tend to rant.
    You work hard and look at how you struggle. It makes me so mad.
    No one who has little money should suffer in any way because of the Republicans.

  80. 80
    Chris says:

    @Anya:

    I’ve always wondered, if Obama was a ‘Corporatist Democrat,’ as the purists among us proclaimed, then why did the corporations and Wall-Streeters hate him so much? Why did they spend tons of money to defeat an ally?

    He kind of reminds me of FDR in the sense that they were both utterly loathed by Wall Street even though what they did saved Wall Street from a much harsher backlash. (Which to be clear doesn’t mean they were Wall Street tools – though many critics of both say so – just that they were reformists, not revolutionaries).

    I also think a lot of these people are petty, vain, easily offended tools. It doesn’t matter to them how Obama’s actions affect their bottom line. It matters a lot more that he’s not showing them the proper respect. A lot of our upper business classes have always looked at politicians as overpaid servants, especially in the last thirty years. They get very touchy when such people don’t treat them accordingly. And it gets even worse when they discover that they can’t just fire them, like they tried to last month.

  81. 81
    Tonal Crow says:

    @Chris T.:

    …Now, inflation could (and should, and eventually will, in the long run in which we are all dead anyway) return at a modest level. So it’s reasonable to index capital gains to inflation. In the 1980s and early 1990s, that idea used to be something I referred to as “the full employment act for accountants” because you’d need to use one to calculate the “real” gain on which you’d be taxed. Now, though, the IRS just need provide a web site with a little calculator: plug in “year bought, price paid, year sold, price obtained” and it applies the appropriate deflator to tell you what your taxable gain (or loss) was. This is the same process we use now to calculate our gain-or-loss, except that there’s a web-enabled calculator (which you can download to your own machine) to do the arithmetic.

    The IRS must publish the calculator’s complete algorithm. I hardly want to be asked to use an opaque calculator to derive my taxable gain, then get an IRS letter later questioning the derivation, and be unable to defend myself better than by saying “I used your web calculator”.

  82. 82
    Tonal Crow says:

    @Anya:

    I’ve always wondered, if Obama was a ‘Corporatist Democrat,’ as the purists among us proclaimed, then why did the corporations and Wall-Streeters hate him so much? Why did they spend tons of money to defeat an ally?

    Not to overly agree with “purists”, but dichotomies almost always mask reality. If we posit that Obama is a “corporatist Democrat”, the corporations might still want to defeat him to instead elect Romney, who is far friendlier to them than pretty much any Democrat.

  83. 83
    Chris T. says:

    @Tonal Crow: It also has to be available to all the other tax software (TurboTax being what most people would be familiar with, but all the various programs CPAs use). I’m just outlining how the “average taxpayer” would use it (once every however many years).

    (Keep in mind that the “average taxpayer” has about one breast and one testicle! Also half a penis and half a vagina…)

  84. 84
    Felonius Monk says:

    Here’s an interesting piece from BooMan:

    No Leadership, No Plan

    Who is going to pull it all together and make a proposal to the president? John Boehner? Didn’t we learn that John Boehner has no clout with his own caucus during the debt ceiling fiasco?
    Seriously. Who is going to step up?
    I predict that we are going over the cliff for the simple reason that there is no head on the GOP chicken.

    I guess this means if you fuck the chicken its head falls off!

  85. 85
    Ruckus says:

    @lacp:
    How does one negotiate with fanatical morons?
    Talking sense or using facts never works so I’d say if put bluntly, a crowbar upside the head delivered with a Hank Aaron swing seems to be the best way.

  86. 86
    cckids says:

    @Schlemizel:

    the resulting damage to the economy would all be the Dems fault by the next election.

    This. I’m so tired of listening to Dems & media types like Lawrence O’Donnell urgeing the president to “go off the cliff”. Aside from the fact that the markets will drop like a rock (which hurts pension plans & 401K’s), there will be other, real damage done to the economy; similar to the credit rating fiasco. Perception matters more than reality does to some parts of the markets.

    And does anyone truly doubt that our “liberal” media will lay most of the fault for any damages caused at the feet of President Obama? They are already acting as though the plan he’s proposed is highway robbery, simply because it doesn’t cave in advance to Boehner & co.

  87. 87
    Ruckus says:

    @Fair Economist:
    recessions are normal, and happen from time to time. They are bad but not the end of the world.

    So let’s have another on top of the little tiny one we just had? I guess that’s OK, I already lost everything.

  88. 88
    Keith G says:

    FWIW:

    So, Democrats gloating over their victory is not the problem facing our country, and it hasn’t prevented Obama from offering a serious plan.

    This seems strawman argument, as I do not recall anyone making that case.

    What some of have said is that the progressive groundlings need to both support and challenge our leadership through proactive behavior. Call, write, meet, and even march in order to show conservatives and the village (and our own leaders) that there is a large, energized consensus that expects results.

  89. 89
    Felonius Monk says:

    @cckids:

    They are already acting as though the plan he’s proposed is highway robbery, simply because it doesn’t cave in advance to Boehner & co.

    And your recommendation is?

  90. 90

    This is a very smart post, although it may be that temporarily “going over the cliff” gives Obama and the Dems sufficient additional leverage to actually enact what they are proposing.

  91. 91
    👽 Martin says:

    @Tonal Crow:

    The IRS must publish the calculator’s complete algorithm.

    There doesn’t need to be an algorithm. They calculate the aggregate rate of inflation for each year. If you bought in 1990 you pay cost basis * X. If you bought in 1991 you pay cost basis * Y. It’s a table with 100 entries, for completeness. It’s simple because we only need to worry about assets sold last tax year. And for short term cap gains, you ignore inflation because everyone will game the system by buying in Dec, selling in Jan, and taking the 6% inflation to cover their gain, so just treat that as straight income. It’s not like the rest of us are guaranteed a COLA against income over that period anyway, so it’s all equal.

  92. 92
    Tonal Crow says:

    @👽 Martin: An algorithm is a method for transforming one or more inputs into one or more outputs. However it is done, whether via simple multiplication from a table, or minimization by solving the derivative for zero, the algorithm must be publicly available, not just provided in an opaque calculator.

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