The Fiscal Cliff

[Uncle Ted]

Let's get rid of the coast guard! It is like a wimpy version of the navy anyway

Let's get rid of the DHS as well. It is like a wimpy version of the FBI anyway.

[wuapinmon]

Also, and TBills repurchased will just make the Fed print and sell more TBills.

No one will ever get the US to discipline its spending urges, only China when it refuses to buy US securities.

Well, my argument would be that the new funds could only go to retiring debt, with the supposition that there wouldn't be any new debt because spending would've been reined in.

[frank ryan]

Let's get rid of the DHS as well. It is like a wimpy version of the FBI anyway.

Plus it sounds really creepy and scary!

[YOhio]

Plus it sounds really creepy and scary!

I think it sounds like an off-brand delivery service.

[Pheidippides]

There is another bubble looming out there. Depending on what Congress and the President do the next couple of months will have a heck of a lot to do with whether the bubble is a manageable burst or one where the shit will hit the fan.

If the republicans settle for a minor spending cuts, coupled with more taxes and increased government investment (Obama's word for spending), it will be a shit hit the fan bubble burst.

It won't be a stock market or real estate bubble, but they will be effected of course.

Oh, by the way this is just my opinion and just shared for conversation purposes.

I'm going to go out and invest based on this right now!

[LA Ute]

Why the left got taken to the cleaners:

Jennifer Rubin (quoting Yuval Levin in part):

"For liberals, this was not a moment of danger to be minimized but by far their best opportunity in a generation for increasing tax rates (which is the only fiscal reform they seem to want) and for robbing Republicans of future leverage for spending and entitlement reforms. And it is likely the best one they will encounter for another generation. Many on the left have seemed convinced lately that the politics of taxes had changed dramatically in their favor, and that the opportunity presented by the cliff could result in the kind of surge in revenue that could put off the coming fiscal crunch for years (until, they seem to think, it will just magically go away at some point) and so could save our entitlement programs from the need for reform. . . .

"But that hasn’t happened here. This deal is projected to yield $620 billion in revenue over a decade—increasing projected federal revenue by about 1.7% over that time. And that’s about it. The Democrats have made the Bush tax rates permanent for 98 percent of the public, which Republicans couldn’t even do when they controlled both houses of Congress and the presidency. . . .

"If even under the conditions of the past month—with a very liberal president just re-elected, Republicans in disarray, public opinion on taxes seemingly friendlier to them than it has been in decades, and higher tax rates automatically taking effect—the Democrats can’t get more than a tiny pittance of revenue and no chips to use later, then their basic approach to fiscal issues just won’t work. The idea that they will raise rates again in the Obama years when they don’t have all these factors working in their favor is a fantasy. And the notion that the politics of taxes has decisively changed in their favor has been disproven by their own behavior: Many Democratic senators were as relieved as Republicans to see the threshold for higher rates rise well above $250,000, and would not have stood for it dropping below that level to where their upper middle class voters are. Having discovered an effective political wedge in the tax debate, the Democrats have now basically used it up and gotten awfully little in return...."

The professional class of aggrieved conservatives showed that their obstinacy clears the way for a coalition of practical Democratic and Republican lawmakers to horse trade. That is the best development in national politics in a long time. Let’s see if it is sustainable.

[frank ryan]

Why the left got taken to the cleaners:

Jennifer Rubin (quoting Yuval Levin in part):

No one got taken to the cleaners-yet. That is silly hyperbole.

[Goatnapper'96]

I think you misunderstood me. I think it hurts, but I'm not opposed to it, just that the rich have less cause to complain about the pain of more taxes.

I think the pain of increased taxes should (meant to put a "not" here initially) be interpreted individually, unless you are an empathy type of voter, and how it impacts economic growth. Everyone knows that the rich can afford to pay more. They pay more both because they make more and because the tax system is progressive. However, there are many schools of thought that once you reach a threshold wrt tax rates it becomes self-defeating in the respect of decreasing government revenues.

FTR, I am a staunch conservative and do not think the recent tax increases have crossed that threshold, but we are closer today than we were two days ago. I think we should use this huuuuuuuuuge Obama victory over the forces of the Rich to now realize this is our level of government revenues. Make the budget work within this framework of revenues. Once spending has been cut to this reasonable and modest level of revenues then we can talk about some type of sunsetting tax increase with the specific purpose of paying down the debt. If the debt is not paid down the tax goes away and once the debt gets back to a reasonable number it can also go away unless you can get a 2/3 majority vote in Congress.

[Uncle Ted]

I think you misunderstood me. I think it hurts, but I'm not opposed to it, just that the rich have less cause to complain about the pain of more taxes.

I guess I was under the impression that working poor was under so much pressure that a tax increase was out of the question. Of course, folks are making a lot less on average since Obama took office and it is not like things like food are getting cheaper. Your proposed tax hike on fuel won't help with that either.

The rich will just have less of an incentive to take the risk to expand their business(es) and hire more people. Of course, Obamacare gives business owners a good reason to not risk expanding their business already. Employees are becoming a lot more expensive.

[wuapinmon]

I think the pain of increased taxes should be interpreted individually, unless you are an empathy type of voter, and how it impacts economic growth. Everyone knows that the rich can afford to pay more. They pay more both because they make more and because the tax system is progressive. However, there are many schools of thought that once you reach a threshold wrt tax rates it becomes self-defeating in the respect of decreasing government revenues.

FTR, I am a staunch conservative and do not think the recent tax increases have crossed that threshold, but we are closer today than we were two days ago. I think we should use this huuuuuuuuuge Obama victory over the forces of the Rich to now realize this is our level of government revenues. Make the budget work within this framework of revenues. Once spending has been cut to this reasonable and modest level of revenues then we can talk about some type of sunsetting tax increase with the specific purpose of paying down the debt. If the debt is not paid down the tax goes away and once the debt gets back to a reasonable number it can also go away unless you can get a 2/3 majority vote in Congress.

I agree. cowboy once posted some eye-opening data about the Clinton surplus and how it was largely due to enormous wealth creation/destruction from the dot-com boom. I can't find it now.

[Bo Diddley]

Why the left got taken to the cleaners:

Jennifer Rubin (quoting Yuval Levin in part):

I'm betting that the revenue debate is not over by a long shot. Among other things, all itemized deductions will be looked at.

[wuapinmon]

I guess I was under the impression that working poor was under so much pressure that a tax increase was out of the question. Of course, folks are making a lot less on average since Obama took office and it is not like things like food are getting cheaper. Your proposed tax hike on fuel won't help with that either.

The rich will just have less of an incentive to take the risk to expand their business(es) and hire more people. Of course, Obamacare gives business owners a good reason to not risk expanding their business already. Employees are becoming a lot more expensive.

Again, I'm not opposed, I just know that when you have a lot less, little bits bite more than when you're flush.

[frank ryan]

I think the pain of increased taxes should be interpreted individually, unless you are an empathy type of voter

Hey! We can't all be plutocrats now.

[Uncle Ted]

I think the pain of increased taxes should be interpreted individually, unless you are an empathy type of voter, and how it impacts economic growth. Everyone knows that the rich can afford to pay more. They pay more both because they make more and because the tax system is progressive. However, there are many schools of thought that once you reach a threshold wrt tax rates it becomes self-defeating in the respect of decreasing government revenues.

e.g. history has shown a tax increase on capital gains almost always resulted in less tax revenue. It will be interesting to see if history repeats itself given that long term cap gains tax is now 23.8% (20% base + the new obamacare tax), up from 15%.

[Goatnapper'96]

No one got taken to the cleaners-yet. That is silly hyperbole.

Wuap, why do you think George Bush could be incapable of putting together a coherent sentence, start two wars and still get re-elected and the Republicans increased in strength for two elections after his initial win? Because the Democrats made such a big deal about his tax cuts and the middle class voters decided the Republicans were in the camp of the middle class. The Democrats rode Bush's issues and when Obama promised in '08 that "nobody making less than $250,000 would have their taxes increased one nickel" was effectively 98% of a white flag wrt the Bush tax cuts. Well 98% is a stretch while it is 98% of the people at this point it is $73 billion of the $400 billion which works out to the Democrats waiving 81.5% of a white flag. But hey those Progressives got their shangra la that the rich are now paying their fair share. If reigning in the debt is a serious cause, and the Democrats want to keep middle class voters electing them it seems to me that there is little recourse but to cut the hell out of federal spending. Looking at the the past few days brouhaha with a long term perspective, i.e. going back 12 years to Bush's inauguration, is an obvious victory for Republicans of decreasing tax rates.