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?
Making people who don’t pay taxes pay would help raise revenue too.
Hate to say it but with our current debt and obligations, we were over the cliff a long time ago thanks to the insane asylum known as Washington. Let Obama and Congress put their salaries toward debt reduction befoere they lay it on us.
Barone did such a great job analyzing who would win the election we would be fools to not heed his advice. /s
OK, its apparent that some people think we will win a PR war if we let the president win this and simply raise taxes sending the economy into another recesssion while increasing the budget deficit through lower overal tax receipts. This is faulty thinking at best and strategically a loser in the short and long term. The Press is never going to give the R’s any props for anything they do. It’s just impossible. They are at permanent war with us and every battle is spun to their advantage no matter what. If you don’t believe that just look at the last 4 years and how the R’s STILL get the blame for the economy.
Howdy NRA1995
How have you been?
Dream on if you think those bozos are going to give up their "hard earned" money.
The thing is - they can't stop thinking about spending. Even if they get more money they are going to spend it and therefore our deficit will still be in the trillions of dollars.
Wall Street will tell them to “just agree to anything so we can continue trying to inflate the bubbles”. And they will.
I think I tend to agree with you. If the bulk of the populace is so brain-dead as to still be blaming Bush after four years, they’ll still be blaming him after 8. Or 48. Or 148.
This is a false axiom.
An analogy: you go to a bank to make a deposit. While you are there, a bank robber decides to rob the bank. After he gets money from the teller, however, a policeman enters the bank and arrests him.
The policeman demands that the robber give the money back to the teller, but the robber complains, “Hey! He (that being you) was in line as well, so I should only give back half the money, and he should give back the other half.”
Except this analogy goes further. Obama, the bank robber, is demanding that you, the depositor, has to give back all the money, based on his promise that sometime, he *may* decide to give back the money too. In a year or a decade or two.
“Because it’s only fair!”
Obama is spending money as fast as he can, in frivolous, stupid and destructive ways. Yet he has the gall to demand higher taxes, so he can spend even more money.
The Republicans are saying no *new* taxes, you’ll just have to be satisfied with the Bush tax cuts ending, to give you more money.
And somebody, anybody, is even suggesting that the Republicans should meet him halfway? Ridiculous!
The only proper response is to *stop* Obama, the bank robber, from continuing to rob the bank. Unfortunately, we can’t get the money back that he has already destroyed, but facilitating future bank robbery out of some weird idea of “fairness”, is just buncombe.
Talked this AM with a person I know who is moderately wealthy. Not a Bill Gates, but not a pauper.
He clearly said that people he knows are buying residences in other places & moving out of the USA for a remote place to operate from. Not all are selling what they currently have, except for the Californians. Those in California realize that changing Prop 13 will hammer them with a MUCH higher property tax. Combine that with a $25,000 limit on deductions, and you have a position between a rock and a hard place. They also are tired of the tax increases that have passed there by the parasites, which again punishes the successful.
Talent can MOVE.....
Money can move.....
Assets can move...
Splitting up companies into smaller parts can happen....
They all didn’t get as successful as they are by being stupid.
My friend basically said he will do NO further investing in ANYTHING and will just dive under the radar. He is a ‘holding position’ for as long as it takes.
I know for a fact that he is a decent investor in companies which are trying to expand, etc. I also know that he does NOT feel that he should be punished by Obama for doing so. He won’t pay this kind of tax structure.
My friend is a small player in the arena of the wealthy. He has lots of company in his thoughts.
You don't do stuff like this-cut spending not add higher taxes to a person/business already suffering. In 2013, whether Romney or Obama won, taxes are going up so why give them the aok to increase it even more to grow the government madness.
That's the plan to bring the American economy down from being a super power. Repubs going right along and have so for many years as we continue to vote them in. Something has to give. The producers are getting tired of this.
I see.
So Republicans need to keep flipping off and fighting against their own base so to try to save the Republic?
It’s this attitude that got us where we are today.
No I’m sorry. We need to fight this - starting right now.
There is nothing left to compromise on.
I wish Republicans would grow enough of a spine to say that government relief programs and "stimulus" are like opiate drugs; while they may at times alleviate a level of pain which would otherwise be fatal, they can also be addictive. More importantly, beyond a certain limit, increasing doses are harmful rather than therapeutic. If the current levels of such programs were not above the maximum therapeutic level, the economy would have recovered by now. Given the massive growth in such spending, it has almost certainly reached the point of doing more harm than good, and continued expansion would simply make things worse.
If the Republicans maintain that such programs are already too big, and refuse to consent to any expansion, then even if the Democrats push through massive increases any failure of the economy to recover would fall on their heads, and would be a sign that the Republicans were right. By contrast, if the Republicans accept that small increases may be beneficial, the Democrats will have no problem claiming that the programs are failing because the increases weren't big enough.
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