The Fiscal Cliff

[Goatnapper'96]

Perhaps increasing taxes on the wealthy is a bit more than just math.

http://www.washingtonpost.com/blogs/...ome-tax-hikes/

My question is this.....how does taxing the rich more decrease income inequality? This past decade we have continued all of the government financed, mostly by the rich and 33% by debt, methodologies designed to give poorer people the opportunity to improve their financial situation. However, the data indicates fewer and fewer are taking advantage of those "ladders to the middle class." In a future of less government revenue, when compared to the Clinton tax rates that taxed middle class and some upper middle class families more, how will this situation be fixed? It is inevitable that government expenditures are going to have to be decreased, likely significantly. So how do we get the lower classes to be upwardly mobile with less money for their programs than we have been spending for the last decade?

It just seems to me that this is such an emotional argument as even Brother Boulle recognizes that the biggest driver to fixing our deficits has to be increased economic growth. Further, he indicates that he knows the tax rates that the President/Democrats want is an impediment to that economic growth. The reality is the economic growth is going to disproportionately favor the wealthy/or those with the skills to take advantage of the growth opportunities. I am not sure what the answer is but in 15 years my guess is the Democrat answer will be an even more progressive tax structure than what we will end up with sometime next year after going over the cliff. Their justification will be that the rich got richer over the last decade.

I still believe the American dream exists but it seems to me that many are unable to take advantage of it. I do wonder sometimes if the skillsets neccesary to take advantage are getting more and more limited. I don't know what the answer is but it appears to me that the government has not solved the problem the past decade despite spending pretty much as much as it damn well pleased.

[byu71]

I wonder if it has to do with education or if we are having a change in attitude in the country of, "is it worth the risk and effort"?

I am thinking of the small businessmen I have as clients who have become awfully wealthy. My definition of awfully wealthy is someone worth more than $10 million.

None of them have a graduate degree. One of them doesn't even have a bachelors degree. None of them are in the field they graduated in. All of them when they started their companies worked 80 hour weeks. Of course they all are driven and I don't think it is about the money. It seems they all really enjoy the "battle". None have retired, but lately they are thinking a lot more about it.

I think the latest financial collapse shook quite a few people up. I think Obama attitude of "you didn't build this" and if you are highly successful (monetarily) we will spread it around, probably also kills incentive.

The combination of the collapse and Obama has killed a lot of risk taking incentive, IMHO.

[byu71]

I would be interested in hearing you guesses.

How does the market react to going over the fiscal cliff?

How does the market react to kicking the deal down the road as usual. For instance tax rate increases on $400K earners and above and expenditure cuts to be talked about later?

My guess. Over the cliff not good, but not real bad

Short term fix, short term good, long term not so good.

As someone who does have some money in equities, I would rather have us go over the cliff and see another bandaid type solution from our leaders (he says sarcastically speaking of them as leaders).

[Moliere]

@RichardGrenell: Obama's been on a Hawaiian vacation but comes back in time to blame others for not working towards a fiscal deal.

[chrisrenrut]

I would be interested in hearing you guesses.

How does the market react to going over the fiscal cliff?

How does the market react to kicking the deal down the road as usual. For instance tax rate increases on $400K earners and above and expenditure cuts to be talked about later?

My guess. Over the cliff not good, but not real bad

Short term fix, short term good, long term not so good.

As someone who does have some money in equities, I would rather have us go over the cliff and see another bandaid type solution from our leaders (he says sarcastically speaking of them as leaders).

I'm small time, most of my investments are in my 401k. But a couple of weeks ago I moved 80% of my balance into the safest, low risk funds. I'm guessing nothing substantial is going to get done, and the market will react negatively. I'm not not so much trying to time the market, as protect my 20% YTD return for 2012. :humblebrag:

[All-American]

Screw it. Let's go over.

Going over the cliff was the one thing everybody could agree was not the best-case scenario, but then, we never were going to agree on what the best alternative would be. If it were up to me, we'd be slashing spending all around and altering the tax codes to flatten rates and broaden the base, but that's just not going to happen. America has voiced its preference for big government and robust entitlement programs. If that's what the people want, so be it-- but let them pay for it themselves.

We heard all through the election how great things were under the Clinton administration, and how disastrous the Bush tax cuts were. Fine-- let's go back to doing things the way we did under Clinton, from top to bottom. What's good for the rich goose is good for the poor gander, isn't it? After all, nobody with any familarity with how reverting to the Clinton rates will affect revenue streams is under any illusion that letting the Bush rates expire will generate anything but drops in the bucket if rates don't rise for the middle class.

At this point, it may well be that nothing will do more to cure America of its appetite for big government like having to pay for it. And make no mistake-- whether now or later, we will pay for it.

[Indy Coug]

When the American people voted for Obama they voted for the fiscal cliff. Time to give them what they wanted.

[Jacob]

If this new deal includes making all tax cuts permanent except for incomes above 400k, estate tax extension at or above 3m exclusion, AMT patch, and chained CPI for SS, this seems like a complete an utter victory for Republicans. What's the downside? Especially if the sequester stays in place or can be replaced with 1.2T in spending cuts.

But news is now that Reid is backing out because of the chained CPI, which Obama supports. Obama starts looking like a conservative in this deal. 97% of drastic Bush tax cuts made permanent. Cuts to SS spending (reducing 25% of shortfall over 75 years). Significant spending cuts (even though most come from defense). What's not to like about this deal for a Republican other than Obama gets credit for it? What more could they have possibly hoped for after the election?

[byu71]

If this new deal includes making all tax cuts permanent except for incomes above 400k, estate tax extension at or above 3m exclusion, AMT patch, and chained CPI for SS, this seems like a complete an utter victory for Republicans. What's the downside? Especially if the sequester stays in place or can be replaced with 1.2T in spending cuts.

But news is now that Reid is backing out because of the chained CPI, which Obama supports. Obama starts looking like a conservative in this deal. 97% of drastic Bush tax cuts made permanent. Cuts to SS spending (reducing 25% of shortfall over 75 years). Significant spending cuts (even though most come from defense). What's not to like about this deal for a Republican other than Obama gets credit for it? What more could they have possibly hoped for after the election?

The problem I have is I can't really say how I feel about the "deal" because I don't really know what the deal is. I heard Shumer again this morning wailing on republicans for wanting to protect millionaires. Yet, earlier in the interview he was for taxing those making over $250,000. It has worked for them. Making this about the hated rich, millionaire's and yet the bulk of the hurt will come to those who make less than a million.

As far as the republicans go, their problem is they have a diverse group and thus argue amongst themselves. Dems are united because their leadership, Obama, Reid and Pelosi are lefties.

What a joke Matheson's campaign was about him being a needed moderate. Anyone heard him comment on this thing? I didn't think so.

[Jacob]

The problem I have is I can't really say how I feel about the "deal" because I don't really know what the deal is. I heard Shumer again this morning wailing on republicans for wanting to protect millionaires. Yet, earlier in the interview he was for taxing those making over $250,000. It has worked for them. Making this about the hated rich, millionaire's and yet the bulk of the hurt will come to those who make less than a million.

As far as the republicans go, their problem is they have a diverse group and thus argue amongst themselves. Dems are united because their leadership, Obama, Reid and Pelosi are lefties.

What a joke Matheson's campaign was about him being a needed moderate. Anyone heard him comment on this thing? I didn't think so.

Right, we don't know what the deal will be. I'm saying that would be a great deal. And Lindsey Graham says there are 80 senators who would for for it without the SS CPI change. Without the CPI part, I still think it's a good deal. But a great deal with the CPI, which both sides should support and have supported pretty consistently in the past and Obama supports today, though his side is trying to throw it overboard.

Also, I count the ending of the "payroll tax holiday" as a good thing.

[byu71]

Right, we don't know what the deal will be. I'm saying that would be a great deal. And Lindsey Graham says there are 80 senators who would for for it without the SS CPI change. Without the CPI part, I still think it's a good deal. But a great deal with the CPI, which both sides should support and have supported pretty consistently in the past and Obama supports today, though his side is trying to throw it overboard.

My problem is I really don't know what Obama wants. He says a lot of things, like for one he would cut the defecit in half. Also his plan would be 3-1 spending cuts to revenue increases. Also his revenue increase started at $800 billion, up to 1.2 trillion, up to 1.6 trillion. He is now going to call anything at $800 billion or above as him compromising??? Also his cuts of 1 trillion as compromise although he started at 3-1????????? He can get away with this because no one holds him accountable. The press sits on the side and marvels at his great political skills. Especially his abilility to put the republicans in chaos.

I will admire him and his cohorts for the political savvy. Just like I admire a scam artist for pulling off a sham on naive investors.

What is interesting though is how really disinterested the public is in this. The so called rich have as they always do have made plans. The bulk of the public though just sit back and trust they will be taken care of.

I still hope we go off the cliff unless a deal includes significant spending cuts and not just to the military.

[Jacob]

My problem is I really don't know what Obama wants. He says a lot of things, like for one he would cut the defecit in half. Also his plan would be 3-1 spending cuts to revenue increases. Also his revenue increase started at $800 billion, up to 1.2 trillion, up to 1.6 trillion. He is now going to call anything at $800 billion or above as him compromising??? Also his cuts of 1 trillion as compromise although he started at 3-1????????? He can get away with this because no one holds him accountable. The press sits on the side and marvels at his great political skills. Especially his abilility to put the republicans in chaos.

I will admire him and his cohorts for the political savvy. Just like I admire a scam artist for pulling off a sham on naive investors.

What is interesting though is how really disinterested the public is in this. The so called rich have as they always do have made plans. The bulk of the public though just sit back and trust they will be taken care of.

I still hope we go off the cliff unless a deal includes significant spending cuts and not just to the military.

Why do you want all tax rates for all brackets to go up drastically?

[byu71]

Why do you want all tax rates for all brackets to go up drastically?

Because we had an awesome economy during the Clinton years and the Clinton tax rates were on everybody.

Everybody ought to have a stake in paying for the government they voted for. More people might be willing to listen to the argument of taxes and expenditures. A large number of the 98% don't seem to be concerned about the ever increasing and out of control defecit.

As far as the economy goes, you put another patch on and don't deal with real problems. The economy will just plug along waiting for the eventual hammering when finally we face the result of inflation and rising interest rates that will surely come.

I am sure when that happens it isn't going to be the rich that will get beat up the most.

[DU Ute]

[KillerDog]

I hope there's a fiscal cliff. Reducing the deficit through increased taxes and reduced spending sounds nice.