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Both Sides Must Give Ground To Avoid Fiscal Cliff ^ | November 17, 2012 | Michael Barone

Posted on 11/19/2012 12:21:54 AM PST by Kaslin

In his first formal press conference in months, Barack Obama showed that getting re-elected can increase a president's confidence and combativeness. He staked out tough stands on several issues, especially on the looming budget negotiations.

Looking ahead to the "fiscal cliff" on Dec. 31, when the 2001 and 2003 tax cuts expire and sequestration cuts government spending sharply, Obama demanded $1.6 trillion of increased revenues as part of any budget bargain.

That's twice the number he and Speaker John Boehner agreed on in the grand bargain talks in the summer of 2011.

Those talks fell apart when Obama telephoned Boehner and raised his demand to $1.2 trillion. Boehner refused, and as Bob Woodward describes in "The Price of Politics," congressional leaders of both parties worked out their own approach. Sequestration, first suggested by Obama's budget director, became part of the deal.

There's a solid argument that limiting high earners' deductions could raise $800 billion or more. A $25,000 cap on deductions, according to The Wall Street Journal, would yield almost $1.3 trillion of additional revenue. The Simpson-Bowles commission showed that broadening the tax base could net $1.1 trillion.

And there's a solid argument that raising tax rates on high earners, in conjunction with the increase that's part of Obamacare, would slow down economic growth. That's because many small businesses are taxed at the individual income tax rate.

Obama once accepted that argument, albeit reluctantly, when he temporarily abandoned his quest for higher rates in December 2010. Raising them, he conceded, would hurt while economic growth was still sluggish.

It's actually more sluggish today than it was then, although as Obama pointed out in the press conference, we are further away from the sharp economic decline of 2008-09.

In effect, Obama is giving House Republicans a choice between a growth slowdown due to higher tax rates now and the much sharper slowdown that some economists predict -- 5 percent is a number bandied about -- if we go over the fiscal cliff.

The political leverage seems to be on Obama's side, or so he seems to believe. Most of the media inevitably blame Republicans when Republicans and Democrats are not able to reach agreement.

Politico reports that a number of House Republicans, including some staunch conservatives, think they'll have to give in on higher rates. Many members don't want to defend them back home.

But there is also a force working against Obama: the gravity of the government's fiscal condition. The president himself has recognized that entitlement programs are on an unsustainable trajectory.

Federal spending under Obama has been 24 percent to 25 percent of gross domestic product. Even in World War II, revenues never reached that level. Since that war, the highest level was 20.6 percent of GDP in 2000, when the government was flush with tax revenues from the capital gains of dot-com founders.

Growth does increase revenue in a progressive tax system like ours.

Several participants in the grand bargain negotiations, Woodward recounts, described them as trying to solve a Rubik's Cube. Republicans wanted lower tax rates with base-broadening tax reform to provide added revenues, and they wanted changes in the trajectory of entitlements.

Democrats wanted higher rates on high earners but were not averse to broadening the tax base and were at least talking about entitlements.

The problem is not just reaching agreement, but reaching agreement on something that can get majorities in both houses of Congress.

Some members of both parties won't vote for any bargain in which the other side gets something. So leaders of both parties have to persuade colleagues that they have made sufficient policy gains to warrant the policy concessions.

History shows that can happen. In Bill Clinton's second term, he and Newt Gingrich reached agreement, with the aid of then-Chief of Staff Erskine Bowles, because there was something for both sides. Republicans got a capital gains tax cut, Democrats got S-CHIP (State Children's Health Insurance Program), and they both got a balanced budget.

Clinton and Gingrich were even making progress on Medicare reform and negotiating about Social Security until the Lewinsky scandal erupted.

House Republicans have a majority and some leverage but cannot hope to prevail on all fronts. They may decide that higher tax rates are tolerable if they can make significant progress toward spending discipline and changing the trajectory of entitlements.

In summer 2001, Obama wasn't able to produce such a package. Will the second-term Obama succeed?

TOPICS: Business/Economy; Culture/Society; Editorial
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1 posted on 11/19/2012 12:22:00 AM PST by Kaslin
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To: Kaslin

Yeah we just need to reach across the aisle and moderate our tone.

Let’s dump some of the extremists and work with liberals to get all their ideas passed.

It hasn’t worked yet, but that just means we’re due for a win. :)

2 posted on 11/19/2012 12:32:17 AM PST by Tzimisce (What do you do when every level and every branch of the government is corrupt and aligned against yo)
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To: Kaslin

Butch Cassidy: Alright. I’ll jump first.
Sundance Kid: No.
Butch Cassidy: Then you jump first.
Sundance Kid: No, I said.
Butch Cassidy: What’s the matter with you?
Sundance Kid: I can’t swim.
Butch Cassidy: Are you crazy? The fall will probably kill you.
Sundance Kid: Oh, shit...

3 posted on 11/19/2012 12:37:29 AM PST by FlyingEagle
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To: Kaslin

If they wimp out and increase the taxes and it looks like from this article some are trying to say they are for that..then when the nation fails, it will be their fault. People will not want to grow their companies if the tax rate is so high, profits are not there, to endure long term stability. The economy should be saved but not like this. If they do this, the party will be punished again. They will not cut spending they always tie it back into bills. They are doing smoke and mirrors. Obama and Speaker probably already made a deal. Lord, why do they even consider raising taxes-look how they lied about the bailouts. We have no one to trust/count on it seems.

4 posted on 11/19/2012 12:37:45 AM PST by Christie at the beach (I like Newt. As another FR member says..Obamas are living in gangster paradise.)
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To: Christie at the beach

Curious how OBozo claims he now can do all he would desire. Based on less than 1% edge in votes that he claims give him the win. Especially curious considering that is about the margin of fraud we know exists. Someone may want to remind OBozo, if there is someone close to him that does actually care about him, that dictators dying of natural causes like Fidel and Hugo are NOT the typical ending. Hanging from a meathook is more likely. Not threatening, just pointing out that there is no such thing as an “ex dictator”. There are ex Presidents. When it is clear the elctions are a sham then the peaceful transfer of power cannot occur.

5 posted on 11/19/2012 12:42:07 AM PST by wastoute (Government cannot redistribute wealth. Government can only redistribute poverty.)
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To: Christie at the beach


I’m going deer hunting again.

freaking politicians. Wish they would just leave my money to myself. bastiges.

6 posted on 11/19/2012 12:45:02 AM PST by onona (Don't mean nothin)
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To: Kaslin

Go ahead and cave in, PUBs. You’re going to do it anyway. You know it; I know itl the RATs know it; heck, everybody knows it.

Then, in 2014, you all can kiss your jobs goodbye.

7 posted on 11/19/2012 12:48:23 AM PST by NTHockey (Rules of engagement #1: Take no prisoners)
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To: Kaslin

This is nuts.

Obama doesn’t want a solution to the “fiscal cliff”. What he really wants is the chaos that results from an economic collapse. He’s setting up a Cloward-Piven situation.

Any tax increases will be hung around the Republican’s necks like a cursed albatross but no tax increase at this point will save the nation. None! The Republicans need to hang tight and fight tough against any effort to brand them as the cause of an economic collapse.

The deficit, no matter how much the Democrats try to shift the blame, belongs to BHO2. He brought it on and he alone owns it.

This Republican dominated House of Representatives must continue to try to do the people’s business honorably. It is, after all, why we elected them.

BHO2 is following the Cloward-Piven plan to collapse the system, and out of the resulting chaos establish communism. That is why he has armed certain governmental departments.

Get ready for a civil war, folks!

8 posted on 11/19/2012 1:09:44 AM PST by SatinDoll (NATURAL BORN CITZEN: BORN IN THE USA OF CITIZEN PARENTS.)
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To: wastoute

I am getting so tired of these people in charge. No one with any common sense does these things in their lives- Hey, Joe-citizen you can spend yourself out of debt. All of them are basically corrupt or so incompetent it’s not even funny any longer. They have a government that they don’t even know how to manage, nor to run efficiently, to delegate the nation’s’s only about punishing the successful man along with making America into some free dope oriented anything goes global community without any mention of God. You want to marry your dog, Teddie...come on down- you want to tell a family Christmas is illegal-come on in; we’ll give you free legal counsel to file this urgent case.

We see a racists agenda and no one will call him on anything. He is not a good man. He is just a man though. The media has successfully neutered the republican male (political correctness). Yippee! How much longer am I willing to follow these people. This is becoming difficult to defend any longer. Barely can listen to talk radio-local DJ’s have more guts to tell it like it is. TV is off in our home. Our side needs to come out and tell Obama NO! and not cross the aisle.

What do they have to lose by being firm. I don’t want to end up paying higher taxes for a much larger welfare state. It is insane. Enough, people. They are working us over while people oh yes, let the rich guy pay more. The rich guy keeps companies running not the poor guy. Liberals bring misery to whatever region of the country they control.

Jesus expected the poor to work. Jesus is good. Liberals are for bad things. Can’t deny it.

I think it is wrong for them to increase taxes. You know they are all crooks because if they wanted to save the economy they could impose a new fair tax or flat tax like now..the economy would soar with this burden out of the way. Pretty soon, we are all going to be up to 40/45% in taxes..The younger generations better start growing up.

They will ignore the fraud..already doing do. Paul Ryan says Obama won fair and square.

9 posted on 11/19/2012 1:29:46 AM PST by Christie at the beach (I like Newt. As another FR member says..Obamas are living in gangster paradise.)
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To: FlyingEagle
As I've said in an earlier thread, if the numbers don't add up, they never will.

Let's get it over with and screw the history books.

10 posted on 11/19/2012 1:42:05 AM PST by knarf (I say things that are true ... I have no proof ... but they're true)
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To: Kaslin

Perhaps Obama could give the Republicans lessons in bowing. Then the Republicans could bow to the Democrats. That would be, like, bipartisan! Right?

11 posted on 11/19/2012 2:02:43 AM PST by TChad
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To: Kaslin

You give an inch they’ll want a mile.

12 posted on 11/19/2012 2:38:54 AM PST by mosesdapoet ("A voice crying in the wilderness make streight for the way of the Lord")
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To: onona
Be careful, successful. Keep safe.

(Say hi to Bambi for me)

13 posted on 11/19/2012 2:38:56 AM PST by Christie at the beach (I like Newt. As another FR member says..Obamas are living in gangster paradise.)
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To: Kaslin
It is impossible to make any significant reduction in a $16 TRILLION national debt (and growing a trillion every year) with “tax increases on the rich”

The $800 BILLION is over 10 years. Our debt is increasing $120 billion a MONTH. Do the math. Total confiscation of all income of all “rich” wouldn't address 6 months of the problem. Plus obama’s demand for $1.6 trillion of the American people's money doesn't even include the costs of obamacare.

“Tax increases on the rich” are pure democrat political theater. It is certain the democrats are only doing this to hang the economy-ruining effects of the petulant marxist’s tax increases on the GOP.

These are perilous times. Thee question is no longer whether to give obama his tax increases, but how to make OBAMA and the democrats irrevocably OWN the results.

Given how very many so-called middle class people are 1-2 paychecks away from disaster, the effects of these taxes plus all the other costs going up (healthcare, energy, food costs) will be sobering. Let sobriety begin

14 posted on 11/19/2012 3:06:59 AM PST by silverleaf (Age Takes a Toll: Please Have Exact Change)
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To: Christie at the beach

The Democrat’s plan is push the Private Sector over the Fiscal Cliff no matter what.

15 posted on 11/19/2012 3:10:09 AM PST by Son House (Romney Plan: Cap Spending At 20 Percent Of GDP.)
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To: Kaslin

Actual spending cuts, not promises of spending restraints, should be the price for any tax increases and the magnitude of spending cuts and tax increases must equal. Obama always talks about fairness what could be more fair?

16 posted on 11/19/2012 3:16:05 AM PST by monocle
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To: NTHockey
"Go ahead and cave in, PUBs. You’re going to do it anyway. You know it; I know itl the RATs know it; heck, everybody knows it.

Then, in 2014, you all can kiss your jobs goodbye."

Yes, and when the GOP loses big, they will conclude it is because they didn't compromise enough. They will draw the wrong conclusions from their losses and compromise some more. Rinse and repeat. Maybe the country should be taken over the cliff and see if something new and better emerges or if we end up with Cuba, instead.

17 posted on 11/19/2012 3:31:29 AM PST by Truth29
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Comment #18 Removed by Moderator

To: Kaslin

16 trillion in debt probably over half of that is owed to the friendly folks over at the Federal Reserve Bank, who like a rich uncle, will forgive the debt when push comes to shove!

What deficit? It is all smoke being blown up America’s tail pipe.

19 posted on 11/19/2012 3:35:13 AM PST by urbanpovertylawcenter (where the law and poverty collide in an urban setting and sparks fly)
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To: Kaslin

The bottom line for Republicans is that it’s easier to stand firm now than a year from now, in an election year. Obama may think he has all the cards, but he needs to be made to understand that he is in imminent jeopardy of blowing up his entire second term even before it begins. If he backs Republicans off the cliff and gets a double dip recession, that’s his legacy. And Boehner should make it clear that there are two more consequences. If there is a government shutdown, even brief, a fair number of offices will never reopen, because Republicans won’t fund them. And in the aggregate, an across the board budget freeze is the best Obama can hope for in the next four years.

20 posted on 11/19/2012 4:00:52 AM PST by sphinx
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