Fiscal Cliff

[Buddha12]

US barrels toward a fiscal cliff

The White House and Congress have had their chance over the last few years to thread this policy needle, mixing short-term stimulus with medium-term austerity and essential reforms. Instead, political bloodlust killed any chance of mindful bipartisanship. The recommendations of the Simpson-Bowles deficit commission were ignored, and the Congressional Joint Select Committee on Deficit Reduction -- the "supercommittee" -- simply failed to produce results.

A big part of the reason analysts at Standard & Poor's pulled our AAA rating back in August was our dysfunctional politics. Democrats and Republicans didn't address the issues. And they didn't merely kick the can down the road -- they held all of us hostage to 11th-hour brinkmanship as the debt ceiling approached to score points with far-left and the far-right extremists.

You see, after years of fiscal irresponsibility, we face an inescapable dilemma: We fly off the fiscal cliff, cutting the deficit by crushing the economy and, like Europe now, repeating the mistakes of the 1937 Great Depression double-dip; or we swerve, keep our tax cuts and benefits but watch in horror as a lingering deficit doubles the national debt over the next 10 years.

http://money.msn.com/investing/us-barrels-toward-a-fiscal-cliff-mirhaydari.aspx

 

[joepistole]

The White House and Congress have had their chance over the last few years to thread this policy needle, mixing short-term stimulus with medium-term austerity and essential reforms. Instead, political bloodlust killed any chance of mindful bipartisanship. The recommendations of the Simpson-Bowles deficit commission were ignored, and the Congressional Joint Select Committee on Deficit Reduction -- the "supercommittee" -- simply failed to produce results.

Were they? The president has referenced their work and tried to build upon their work a number of times in his negotiations with Republicans. And there would not have been a commission were it not for an executive order from President Obama.

"The original proposal for a commission came from bipartisan legislation that would have required Congress to vote on its recommendations as presented, without any amendment. In January 2010, that bill failed in the Senate by a vote of 53-46, when six Republicans who had co-sponsored it nevertheless voted against it.[5] Thereafter, Obama established the Commission by Executive Order 13531. Former Republican Senator Alan Simpson (R-Wyo.), after his appointment to co-chair the Commission, criticized the former supporters who had voted against the bill, saying that their purpose "was to stick it to the president."[6] In the absence of special legislation, the Commission's proposals are not guaranteed to be considered by Congress in a single up-or-down vote." - Wikipedia

"A report was released on December 1, 2010, but failed a vote on December 3 with 11 of 18 votes in favor, with a supermajority of 14 votes needed to formally endorse the blueprint.[3] Voting for the report were Bowles, Coburn, Conrad, Crapo, Cote, Durbin, Fudge, Gregg, Rivlin, Simpson, and Spratt. Voting against were Baucus, Becerra, Camp, Hensarling, Ryan, Schakowsky and Stern.[32]" - Wikipedia

http://en.wikipedia.org/wiki/National_Commission_on_Fiscal_Responsibility_and_Reform

A big part of the reason analysts at Standard & Poor's pulled our AAA rating back in August was our dysfunctional politics. Democrats and Republicans didn't address the issues. And they didn't merely kick the can down the road -- they held all of us hostage to 11th-hour brinkmanship as the debt ceiling approached to score points with far-left and the far-right extremists.

Who held the nation hostage? And more specifically, who were the folks on the far left engaged in "11th hour brinkmanship"?

You see, after years of fiscal irresponsibility, we face an inescapable dilemma: We fly off the fiscal cliff, cutting the deficit by crushing the economy and, like Europe now, repeating the mistakes of the 1937 Great Depression double-dip; or we swerve, keep our tax cuts and benefits but watch in horror as a lingering deficit doubles the national debt over the next 10 years.

http://money.msn.com/investing/us-barrels-toward-a-fiscal-cliff-mirhaydari.aspx

Thus far we have avoided the mistakes of The Great Depression, no thanks to our current crop of Republicans in Congress. But you are right, we do need some fiscal responsibility in Washington - something Democrats by and large have been trying to do. However, I have not seen it yet in our Republican brothers and sisters. The most important things we can do to fix our fiscal ills are to:

- keep the economy growing (make wise investments)

- fix our healthcare system to make it more efficient and effective - something every industrial nation execpt the US did decades ago and something Republicans have and continue to fight with every fiber of their being.

 

[madanthonywayne]

Obama has made his opening bid in ongoing negotiations to avoid the package of tax increases and spending cuts known as the fiscal cliff.

David Gergen
Elections do make a difference:
Obama has now doubled the ante, asking for a total of $1.6 trillion in higher revenues over 10 years. Even though that is twice the revenues discussed last year, Boehner hasn't walked away.
He hasn't even blinked. Instead, word seeps out from Republican ranks that his members are asking to keep the final figure under $1 trillion even as others in Washington speculate that a compromise may be struck at halfway between $800 billion and $1.6 trillion, at $1.2 trillion.
Last summer, that would have been considered a huge victory for Democrats. Remember that Republicans haven't voted for significant tax increases since 1990 -- 22 years ago. To get them to the point where they seem prepared to accept as much as $100 billion a year in new taxes, aimed at the affluent, is remarkable.

There are at least two sticking points. Obama has insisted that the first new revenues come from raising tax rates on couples who earn above $250,000; Boehner has insisted that, no, they should come from limiting personal deductions and closing loopholes. Democrats like Sen. Harry Reid say the deduction/loophole route won't yield enough revenue. The Washington Post editorial page argues that in fact, limiting deductions to $50,000 per taxpayer would raise about $750 billion over 10 years, nearly matching the $800 billion that would be raised through the proposed tax hikes on the top 2%.
In Washington of yore, when leaders sat down and negotiated face to face, those differences would seem highly bridgeable. Get part of the revenue by raising rates slightly (not all the way), and get the rest through deductions/loopholes. Both sides get some of what they want.

The other sticking point is that Republicans insist now that, as Obama would put it, the final grand bargain must be balanced. Big tax increases and big spending cuts must be voted on together so both sides are guaranteed concessions by the other.

Instead of turning the GOP willingness to deal on taxes into a win-win, the White House seemingly wants to humiliate them by insisting they cave entirely on increasing tax rates -- or take responsibility for going over the cliff. Instead of sitting down and negotiating directly with leaders from the other side in private getaways, as presidents like Lyndon Johnson and Ronald Reagan did, the president launches a campaign-style offensive against them.
The proposal that Treasury Secretary Timothy Geithner put before Republicans on Thursday, as reported by The New York Times, was clearly intended to score political points with Democrats rather than entice Republicans into serious negotiations. It was full of nonstarters. One example: It demanded that Republicans lock in to $1.6 trillion of higher taxes in December and in exchange said that spending cuts one-quarter that size would be the subject of talks next year. Come again? http://www.cnn.com/2012/11/30/opinion/gergen-obama-cliff/index.html

So Obama's opening offer is: Fuck you. Forget about a "balanced approach". Increase taxes now, and maybe we can talk about cutting spending next year. No promises, mind you. It's somewhat reminisent of Michael Corleone:

“My offer is this, nothing. Not even the money for the gaming license, which I would appreciate if you would put up personally.”​

Clearly Obama believes the Republicans will get the blame if we "go over the cliff" and feels no need to negotiate. So much for bi-partisanship in his second term. So much for the "balanced approach" he talked about during the campaign. He is setting the stage for another 4 years of vitriol and hate in Washington in the hopes that it will benefit him politically.

I read an article with an excellent suggestion on how Republicans should handle this issue: Pass Simpson/Bowles

Short on good options, here's one play GOP leaders might be able to make to regain some of the high ground and throw the White House back on its heels: Embrace Simpson/Bowles. President Obama established a bipartisan debt commission with great fanfare in 2010. Its leaders were Alan Simpson, a former Republican Senator, and Erskine Bowles, President Clinton's former Chief of Staff. The panel was tasked with engineering a solution to right America's fiscal ship. In the end, they produced a set of recommendations that received the blessing of a majority of its members.

- The plan called for a 3-to-1 ratio of real spending reductions to tax increases. Federal spending as a percentage of GDP was capped at 21 percent, substantially lower than the Obama average.

- The spending cuts impacted multiple sectors of government, targeting everything from discretionary spending, to defense, to Medicare, Medicaid and Social Security. Some modest reforms were suggested for these entitlement programs.

- The plan raised taxes by limiting and eliminating many popular deductions, some of which disproportionately favor the wealthy. Some of these massively hiked revenues were offset by a major, pro-growth simplification of the tax code. The proposal established three relatively low marginal income tax brackets (12/22/28 percent). It also repealed the Alternative Minimum Tax and called for lowering the corporate tax.

- Overall, Simpson Bowles projected $4 Trillion in deficit reduction over a ten year budget window.​

Best case scenario: Republicans catch Democrats off-guard, and (much or most of) the plan is adopted. At the very least, GOP negotiators would gain major leverage in fashioning a less horrific final compromise. Worst case scenario: Democrats firmly reject the plan, further talks stall, and the we go over the cliff. But even under this scenario, Republicans would have very prominently done their part to try to avoid the impasse, and the public's assignment of blame would be rendered far more complex than simply, "the Republicans did it."
http://townhall.com/tipsheet/guybenson/2012/11/30/simpson_bowles

I think the Simpson/Bowles idea is a good one. It would allow all sides to save face and represents real compromise. Not that I think Obama has any interest whatsoever in compromise or even in avoiding the fiscal cliff. But passing Simpson/Bowles might just put him on the defensive and force him to do the right thing.

The alternative, is the "let it burn" strategy:

http://americanglob.com/2012/11/30/let-it-burn/​

Which is what will probably happen, since it only requires that our government do what it does best: jack shit.

 

[milkweed]

But passing Simpson/Bowles might just put him on the defensive and force him to do the right thing.

http://www.enacttheplan.org/national-commission-fiscal-responsibility-and-reform

But I agree with Obamas proposals so far. I didnt agree with the Bush tax cuts to begin with. Just like I didnt agree with the bailout/too big to fail bs. My income has dropped in half since 08 so I am not going to be paying the average increase. Its worth it to me to see people like Pelosi and Bonner having to cough up much more of their excessive gains.

I do not fear the 'fiscal cliff'. I've been living on the edge of it most of my life.

 

[ElectricFetus]

All that Obama needs to do is wait until after Dec 31, then republicans can make "tax cuts" once the tax code relaps. Majority of Americans support tax increases on the wealth and have seen obama says that we needs both spending cuts and tax increase on the wealthy, but have not heard the republicans say they are willing the raise taxes, if we go over the cliff it will be the republicans that appear obstructionary.

 

[Michael]

The alternative, is the "let it burn" strategy

I was reading a study comparing sociopaths with financiers/bankers (I'm going to extrapolate to lawyers and politicians). When they ran a game test with them, what they found was bankers would adopt an approach of destroy their opponent even at the cost of profit. All that mattered was destroying their competitors. Even when the chance of making profit was evident - they instead opted to attempt to destroy their competitors. The sociopaths OTOH favored profit taking.

Something to think about

 

[R1D2]

If we don't go over the "cliff" the next 4-8 years. We will eventually. Our debt as a nation is now so large its almost unreversible. We must I fear take the governments advise and prep for up to 3 months of survival. I unfortunately I can't prep though. Because of family.

 

[Jeeves]

Thing 1: Just letting the Bush cuts lapse isn't a tax increase (the government has already lost so much revenue and paid so much extra interest for the past 3 years since it should have lapsed, plus the six years before when it shouldn't have existed: those guys at the top owe the country, big time!) The "job-creators" have shot their was: they've already fired people and moved industry off-shore; leaving the country altogether would put them out of juicy government contract and bailout range. (BTW What did John Galt do for bread and clean socks in his rich-guys-only valley? Migrant workers?)
It's a terrible idea to put both tax reform and federal spending cuts in the same bill, just to placate a lunatic fringe. The budget must me considered carefully, various sectors and priorities weighed. Even the Teapots wouldn't stand for cutting Medicare; they're okay with cutting education, but have done that already at state level (and may yet regret cutting police and fire departments.) Defense spending will automatically decrease when/if the US vacates the middle east, but they'll have to adjust for veteran rehabilitation. Hurricane, flood, snowstorm and drought relief, large-scale power or crop failure, other disasters, can't be pre-budgeted. Many events can't yet be calculated; the government must retain some fiscal flexibility.
Investment in the future - infrastructure, energy, employment, training, etc. - must not be negotiated away for a day's grudging press approval. Obama has one slim chance to set the country on a path to survival; if he pisses it away to please the denizens of BS Mountain, we're all doomed.

Thing 2: What happens if a nation caps interest and refuses to pay any more; capital sum only? What happens if it divides its debts into two categories - the ones it must pay and the ones it can safely default on? Three - the ones it can fine for three decades of tax fraud. For that matter, what happens if the cliff won't move?

 

[Repo Man]

I rahter enjoyed Paul Krugman's take on the situation:

In the ongoing battle of the budget, President Obama has done something very cruel. Declaring that this time he won’t negotiate with himself, he has refused to lay out a proposal reflecting what he thinks Republicans want. Instead, he has demanded that Republicans themselves say, explicitly, what they want. And guess what: They can’t or won’t do it....

...And there never was. Republicans claim to be for much smaller government, but as a political matter they have always attacked government spending in the abstract, never coming clean with voters about the reality that big cuts in government spending can happen only if we sharply curtail very popular programs. In fact, less than a month ago the Romney/Ryan campaign was attacking Mr. Obama for, yes, cutting Medicare.

Now Republicans find themselves boxed in. With taxes scheduled to rise on Jan. 1 in the absence of an agreement, they can’t play their usual game of just saying no to tax increases and pretending that they have a deficit reduction plan. And the president, by refusing to help them out by proposing G.O.P.-friendly spending cuts, has deprived them of political cover. If Republicans really want to slash popular programs, they will have to propose those cuts themselves.

http://www.nytimes.com/2012/12/03/opinion/krugman-the-big-budget-mumble.html?_r=1&

 

[clusteringflux]

I don't think the president has much of a plan..

1.6 Trill in new taxes over the next 10 years does not seem very likely to do much against the current spending problem. Plus where does all of that come from? I mean how many American 10Million and billionaires are there? Would their combined wealth even equal 1.6 trillion?

This is a non-starter if we're to believe he keeps the middle class insulated from major tax hikes (Oh and major cuts to cornerstone entitlements, of course).

WashingtonDC=land of make believe

 

[Aqueous Id]

So Obama's opening offer is: Fuck you.

According to the electorate, the Republicants said that.

Forget about a "balanced approach". Increase taxes now, and maybe we can talk about cutting spending next year.

It was pretty obvious that a vote for Obama was a vote to roll back the Dubbya tax cuts for the wealthy, just as a vote for Obama was a vote to spare cuts from education, infrastructure, renewable energy, Medicare and so on. A vote for Obama was a vote against the Right Wing and its agenda of attrition against middle and lower incomes. "Balanced" doesn't mean caving to the Right. It means ignoring the bullshit and looking at the costs vs benefits, and the risks, objectively. If Obama and his team can do that, they win -- we all win. Voters are hopeful this is how it will play out.

No promises, mind you. It's somewhat reminisent of Michael Corleone:

“My offer is this, nothing. Not even the money for the gaming license, which I would appreciate if you would put up personally.”​

Except Corleone was a Republicant, and vice-versa.

Clearly Obama believes the Republicans will get the blame if we "go over the cliff" and feels no need to negotiate.

A whole lot of people fully expect the Republicants not to budge on the tax cuts for the wealthy. They need to concede this first. Obama already made his first gambit, last time around, when he sacrificed this goat in order to keep the tax cuts for the middle class. Hence the phrase "holding the middle class hostage."

So much for bi-partisanship in his second term.

You say that as if bipartisanship is unilateral.

So much for the "balanced approach" he talked about during the campaign.

Balance doesn't mean caving to an agenda that was not the will of the voters who elected him. Democracy is actually in play, even as you speak.

He is setting the stage for another 4 years of vitriol and hate in Washington in the hopes that it will benefit him politically.

Vitriol and hate are child's play for Republicants. They are more inclined toward character assassination, inciteful lying, racial hatred and bigotry, denigration of women and minorities, xenophobia and up-against-the-wall Redneck Motherhood. The hate and vitriol is directed at the audiences of FAUX News and Rush(ians are Coming) Limbaugh. Republicantism is entirely founded on hate and vitriol. Take that away, and you have the Democratic ideal, except moronic, and without the progressive instinct.

I read an article with an excellent suggestion on how Republicans should handle this issue: Pass Simpson/Bowles

Passing laws has become problematic under the Republicants who have forced the filibuster into the vote on just about every significant bill. First pass the rules amendment to prevent the Republicants from 4 more years of obstruction via filibuster. By then we'll be off the cliff anyway. Let the chips fall where they may.

The alternative, is the "let it burn" strategy: ... which is what will probably happen, since it only requires that our government do what it does best: jack shit.

Thus far your government has done a lot to saved you from an economic depression, to keep you safe from foreign invasion, to reduce the pollution in your air and water, to educate you and/or your children, to extend you a lifeline if you go broke or suffer a catastrophe or debilitating illness, and on and on and on.

When you say the gov't won't do anything - what are you lacking? Do you want some vague sense that impending doom will be averted? Do you want to keep foreigners out of the country? Do you want to repress minorities and women? Perhaps you want to end the teaching of evolution. And so on. The refusal of the gov't to do those things is not "doing jack shit". That's the gov't the voters wanted. That's democracy in action.

 

[Tiassa]

Inflated Chickens?

So Obama's opening offer is: Fuck you. Forget about a "balanced approach". Increase taxes now, and maybe we can talk about cutting spending next year. No promises, mind you.

And what was Senator McConnell's?

So this afternoon, Mitch McConnell made the most specific "fiscal cliff" offer we've seen thus far from Republicans. Here it is:

In an interview in his Capitol Hill office, Mr. McConnell said if the White House agrees to changes such as higher Medicare premiums for the wealthy, an increase in the Medicare eligibility age and a slowing of cost-of-living increases for programs like Social Security, Republicans would agree to include more tax revenue in the deal, though not from higher tax rates. [...]

Mr. McConnell offered his ideas as examples of the structural changes Republicans are looking for. "The nexus for us is: revenue equals genuine entitlement eligibility changes," Mr. McConnell said.​

McConnell's offer is this: We'll give you increased revenues via the closing of loopholes -- and in exchange, you give us the entitlement reforms we want, plus the tax rates we want.

That's not much of a compromise. Indeed, it's not new. As Steve Benen noted recently, that essential arrangement is what Lindsey Graham offered last Sunday.

In fairness to McConnell, the White House has not offered a compromise either. It has laid down what it wants and offered a small concession in the form of Medicare cuts. McConnell has now done roughly the same: He has laid out what Republicans want in entitlement reform and made a small concession in the form of revenue increases. To be clear, this is what McConnell should be doing. This isn't as specific as we need it to be, but it's sort of a start. We want Republicans to tell us what they want; they're not obliged to offer a "compromise" up front either. What remains to be seen is whether the same pundits who criticized the White House offer as "unserious" because it doesn't contain significant concessions will dismiss McConnell's offer in similar terms now that he has done precisely the same thing.

(Sargent)​

And Speaker Boehner's?

Last week, the Obama administration presented congressional Republicans with a formal offer in their ongoing fiscal talks, and challenged GOP leaders to come up with a plan of their own. Today, House Speaker John Boehner (R-Ohio) and the House Republican leadership sent a letter to the White House that's been described as a "counteroffer," but that's not quite correct.

House Speaker John Boehner on Monday sent a counter offer to President Obama to avoid the looming fiscal cliff that raises $800 billion without increasing tax raise tax rates on top earners and makes $1.4 trillion in cuts and reforms to entitlement and discretionary spending programs.

Boehner's offer does not outline how to deal with a country fast approaching its debt limit and sequestrations' across-the-board spending cuts.​

So, what's the pitch? Under this proposal, Republicans would keep all of the Bush-era tax rates, but accept $800 billion in new revenue. How? Through "through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates."

From there, the GOP leaders want to cut $600 billion from Medicare and Medicaid; cut $300 billion from mandatory programs; cut $200 billion by changing the consumer price index; and then cut another $300 billion in further discretionary spending.

To call this a "counteroffer" is to strip the word of meaning. Under the GOP plan, Republicans get the more than $1 trillion in spending cuts Obama already gave them; Republicans get the entitlement cuts they want; Republicans get hundreds of billions of dollars in additional cuts to programs they haven't identified; and Republicans get all of the Bush-era tax rates they've prioritized.

This isn't a "counteroffer"; it's a Christmas wish list written by kids without access to calculators.

(Benen)​

In the end, it might well be that Republicans are simply spoiled by the idea of getting everything they want:

President Obama’s victory blew up the framework created by the 2010 elections, which forced him to play defense. Now, he finally has room to move. That’s the only way to understand the ongoing budget talks.

This has several implications. First, why was anyone surprised that Obama’s initial offer to the Republicans was a compendium of what he’d actually prefer? We became so accustomed to Obama’s earlier habit of making preemptive concessions that the very idea he’d negotiate in a perfectly normal way amazed much of Washington. Rule No. 1 is that you shouldn’t start bargaining by giving stuff away when the other side has not even made concrete demands.

Second, Obama made clear that he will not allow the fiscal calendar to set his priorities. Past actions by Congress established this wacky set of deadlines requiring frenzied decision-making. This does not mean the deficit is the nation’s highest priority. It isn’t. Speeding up economic growth is the most important thing now.

Thus did Obama’s opening proposal call for measures to boost the recovery, including an infrastructure bank, a public-private partnership that ought to appeal to Republicans. And he was right to insist upon an extension of unemployment insurance and another year of the payroll tax holiday or some equivalent way to keep middle-class purchasing power up. Raising taxes on the wealthy won’t damage the economy. A sudden drop in the take-home pay of the vast majority of U.S. consumers would.

(Dionne)​

We need to remember that Republicans claim a mandate any time they win the White House, regardless of the margin. The same rule, apparently, is not extended to Democrats. But, as the saying goes, elections do have consequences. From Obama's inauguration in 2009, the consequence has been intractable opposition from Republicans.

If conservatives wish to take President Obama's opening round in the fiscal negotiations as a "fuck you", they are welcome to. After all, someone needs to say it, and Republicans need to hear it.

But the idea that a president who just won an election is somehow being disrespectful when opening legislative negotiations with his preferred outlook? That's just laughable. Republicans would be having strokes, dropping like flies, and thanking Obamacare for regarding idiotic apoplexy as a preexisting condition that cannot be denied coverage, if Democrats tried that argument. One might as well suggest that calling Orly Taitz, infamously known as the Birther Queen, a crackpot is somehow disrespectful to Republicans.

And the thing is that the GOP knows it:

Republicans are seriously considering a Doomsday Plan if fiscal cliff talks collapse entirely. It’s quite simple: House Republicans would allow a vote on extending the Bush middle class tax cuts (the bill passed in August by the Senate) and offer the President nothing more: no extension of the debt ceiling, nothing on unemployment, nothing on closing loopholes. Congress would recess for the holidays and the president would face a big battle early in the year over the debt ceiling.

Two senior Republican elected officials tell me this doomsday plan is becoming the most likely scenario. A top GOP House leadership aide confirms the plan is under consideration, but says Speaker Boehner has made no decision on whether to pursue it.

Under one variation of this Doomsday Plan, House Republicans would allow a vote on extending only the middle class tax cuts and Republicans, to express disapproval at the failure to extend all tax cuts, would vote “present” on the bill, allowing it to pass entirely on Democratic votes.

By doing this, Republicans avoid taking blame for tax increases on 98 percent of income tax payers. As one senior Republican in Congress told me, “You don’t take a hostage you aren’t willing to shoot.” Republicans aren’t willing to kill the middle class tax cuts, even if extending them alone will make it harder to later extend tax cuts on the wealthy.

(Karl)​

Still, though, there is some suggestion that the U.S. will go cliff diving.

But as President Barack Obama bargains (toughly) with House Speaker John Boehner as the fiscal cliff (or bump) nears, Norquist, his cachet waning or not, is not Boehner's problem. He is not the force that is preventing the speaker from striking a deal with an electorally energized Obama. The true obstacle is Boehner's own comrades: those scores of tea partiers in the House Republican caucus who detest compromise—especially with the president. As Boehner tries to forge an accord with Obama, he has to watch carefully his colleagues and his back.

This has been the challenge for Boehner for the past two years. There's not much doubt that in the summer of 2011 he sincerely desired attaining the so-called grand bargain Obama offered: spending cuts and Medicare and Medicaid reductions (that were harder on providers than beneficiaries) in return for greater tax revenues squeezed from the wealthy and corporations and a hike in the debt ceiling. And Boehner presumably would fancy producing such a mighty deal now. But two summers ago Boehner was warned by moderate Republicans in his caucus that if he accepted anything resembling the package Obama was offering he would face a rebellion, perhaps a mutiny, within his own caucus that might be led by House Majority Leader Eric Cantor. That could have led to his demise as speaker.

This basic dynamic—Boehner cannot haggle freely with the president due to the intense opposition to a deal within his own ranks—has not fundamentally changed. What has changed is the president's hand. According to senior administration officials, Obama is not eager to go over the cliff, but he is willing. If no deal is reached by the end of the month, all the Bush tax cuts—for the rich and not rich—will evaporate. Obama would then demand in early January that the new Congress immediately pass legislation to reinstate the lower tax rates for the bottom 98 percent. Boehner and the Republicans presumably will find it difficult to say no and insist they will only vote for such tax relief if it includes breaks for the wealthy or cuts in Medicare and other government spending. As a Democratic strategist close to the White House says, "For years we've tried to make the case that the Republicans are willing to hold up tax cuts for 98 percent to help the guys at the top. This is the cleanest shot we've gotten at this."

(Corn)​

It's not just Democrats considering the leap:

And while we still tend to think that a deal will be struck before year’s end (Congress being essentially like newspaper journalists, needing the threat of an imminent deadline to get anything done), we’ve also been struck by the small-but-growing chorus of so-called “cliff divers” – partisans on both sides arguing that going over the cliff might actually be the most palatable option.

In many cases, of course, this kind of talk may just be part of the game of chicken, designed to scare the other side into making concessions.

But increasingly, some seem to be genuinely concluding that going over the cliff would in fact be the best choice – better than what they fear is shaping up to be a disastrous, hastily constructed deal on taxes and spending that would then be much harder to undo.

Initially, it was mostly those on the left voicing this argument – in part because that would actually accomplish one of their chief goals: ending the Bush tax cuts for the wealthy (and, the thinking goes, Democrats could then come back and reinstate the middle-class tax cuts in 2013). As far back as last summer, Sen. Patty Murray (D) of Washington said in a speech at the Brookings Institution: “I will absolutely continue this debate into 2013, rather than lock in a long-term deal this year that throws middle-class families under the bus.”

Lately, a number of voices on the right have been making essentially the same case. “Our preferred strategy here would be to accept the sequester now, knowing that Congress is not going to do something more rational – they’re not going to take on more fundamental spending reforms – and push off increasing taxes,” Matt Kibbe, president of the conservative advocacy group FreedomWorks, told MSNBC Monday morning.

Likewise, outgoing GOP Rep. Joe Walsh of Illinois, who has close ties to the tea party, told Bloomberg last week: “The thing that would be much worse would be to craft a bad deal that would do anything that raises taxes. Doing what’s right over the next couple weeks is more important than doing something that would harm our economy in the name of meeting a silly deadline.”

One other indication that the once “unthinkable” option may be becoming more widely “thinkable” is the shift in the language describing it. There’s been a deliberate effort in recent weeks to rebrand the fiscal “cliff” as more of a fiscal “slope,” with a number of lawmakers, as well as prominent investors like Warren Buffett, arguing that, counter to all the doomsday predictions, the US economy wouldn’t go off the rails in January if Congress failed to act. “It’s not like something cataclysmic happens on Dec. 31,” Sen. Bernie Sanders of Vermont told Politico last week.

(Marlantes)​

What we're seeing right now in the negotiations is mere posturing. President Obama and the Democrats presently enjoy the tactical advantage; Republicans cannot long afford to sit back and wait for Democrats to flinch. The most likely outcomes are either Doomsday or the Dive, I think. With Doomsday, Republicans can avoid "shooting the hostage", and set themselves up to fight the entitlement brawl in 2013 and into the midterm season.
____________________

Notes:

Sargent, Greg. "Mitch McConnell makes an offer". The Plum Line. November 30, 2012. WashingtonPost.com. December 3, 2012. http://www.washingtonpost.com/blogs...5274030-3b31-11e2-9258-ac7c78d5c680_blog.html

Benen, Steve. "Don't call it a 'counteroffer'". The Maddow Blog. December 3, 2012. MaddowBlog.MSNBC.com. December 3, 2012. http://maddowblog.msnbc.com/_news/2012/12/03/15649952-dont-call-it-a-counteroffer

Dionne Jr., E. J. "Why sane bargaining looks strange". The Washington Post. December 2, 2012. WashingtonPost.com. December 3, 2012. http://www.washingtonpost.com/opini...7c0928-3b48-11e2-b01f-5f55b193f58f_story.html

Karl, Jonathan. "Republican Doomsday Plan: Cave on Taxes, Vote 'Present'". OTUS. December 3, 2012. ABCNews.Go.com. December 3, 2012. http://abcnews.go.com/blogs/politics/2012/12/republican-doomsday-plan-cave-on-taxes-vote-present/

Corn, David. "John Boehner's Hostage Crisis". Mother Jones. December 3, 2012. MotherJones.com. December 3, 2012. http://www.motherjones.com/politics/2012/12/john-boehner-fiscal-cliff-tea-party

Marlantes, Liz. "Going over the 'fiscal cliff': why more are sounding ready to take the plunge". DC Decoder. December 3, 2012. CSMonitor.com. December 3, 2012. http://www.csmonitor.com/USA/DC-Dec...hy-more-are-sounding-ready-to-take-the-plunge

 

[Jeeves]

Thank you, Tiassa. That was the best exposition on the problem i've ever seen.

 

[madanthonywayne]

 

[Futilitist]

If we don't go over the "cliff" the next 4-8 years. We will eventually. Our debt as a nation is now so large its almost unreversible. We must I fear take the governments advise and prep for up to 3 months of survival. I unfortunately I can't prep though. Because of family.

Hey R1D2,

I totally agree. The fiscal cliff is here. Next, the abyss.

I tried to bug out a couple of years ago. I went to the Pacific Northwest and signed up at a wilderness college to learn paleolithic living skills. I learned how to make a shelter, how to make a bow drill fire, how to skin a bear, how to make arrows and a bow, how to hunt and track, medicinal (and poisonous) plants, flint knapping, basket weaving, beach combing, eating earthworms and bugs, etc. But what I really learned, after a year in the woods, is that if you weren't born into a paleolithic culture, it will take you the rest of your short life to learn it. In other words, it is practically impossible.

Good luck everyone.

---Futilitist

 

[Billy T]

Technically yes but then pass "Plan B" which is told at: http://www.sciforums.com/showthread...-cliff-of-US&p=3021718&viewfull=1#post3021718

Boehner, claims elimination of some unspecified loop holes & deduction, will boost revenues by 800 billion but:

... The president said lawmakers could only generate revenue “in the range of $300 billion to $400 billion” through curtailing tax breaks, “It’s a simple proposition that you can’t raise enough revenue,” without hiking rates, he said.

“And if you don’t raise enough revenue through loopholes and deductions, then it’s going to be middle-class families who make up the difference, and that actually would be bad for business.” Obama’s own plan includes more than $750 billion in revenue that could be generated from top earners.

Boehner needs to tell whose oxen will get gored for 800 billion gain to be creditable. For example is the home mortgage interest deduction one or it will only be caped at X dollars. Etc.

 

[joepistole]

It appears Boehner purged his leadership yesterday, ousting some of the fiscal extremists in his leadership. Some on the right are speculating that the purge may ultimately cost Boehner more than he expects. Things are happening on the Republican side of the fence. The party is cracking, what replaces it remains to be seen.

The real issue in the fiscal cliff negotiations is not what needs to be done. Hell we have had that discussion for years now. The question is will Boehner be able to get his caucus to endorse and vote for a somewhat responsible remedy to the Fiscal Cliff. To date, Boehner has not been able to make that happen and the pressure is mounting.

While the Tea Party membership and the officials they have elected are unquestionably ignorant and not the brightest bulbs on the shelf, the same cannot be said of their financial sponsors. And those financial sponsors are putting a lot of heat on senior Republicans to avert the fiscal cliff. The Fiscal Cliff is a lose-lose situation for Republicans and the nation. We will have to see how this plays out over the coming weeks. How far the party cracks and the timing remain to be seen; but it is cracking. We saw the first cracks last evening with Boehner’s leadership purge.

I think a larger and more important issue in the Fiscal Cliff discussions is often ignored by the media. It is the credibility of the US government; whither the US government is capable of responsible fiscal management. Can the US government be relied upon to be a rational actor as it has been in the past? With the rise of the Tea Party and more extremist elements in the Republican Party it is not at all clear that the US government is capable of rational fiscal actions. If the Republican Party continues down the path it has set, led by right wing media entertainers who get paid for sensationalism rather than prudent policy and special interest lobbyists, the party and the nation are at risk.

By the way the much touted Simpson-Bowles Plan was not all that great either. Below is a synopsis of the plan.

http://en.wikipedia.org/wiki/National_Commission_on_Fiscal_Responsibility_and_Reform
“Final plan

The final plan, released on December 1, 2010 reduced the federal deficit by nearly $4 trillion, stabilizing the growth of debt held by the public by 2014, reduce debt 60 percent by 2023 and 40 percent by 2035. The deficit would be eliminated by 2035.

Outlays would equal 21.6 percent of GDP in 2015, compared to 23.8 percent in 2010 and would fall to 21.0 percent by 2035. Revenues would rise from 14.9 percent in 2010 to 19.3 percent in 2015 and would equal 21.0 percent in 2035.

Built off a baseline called the “Plausible Baseline”, which closely resembled the Congressional Budget Office’s Alternative Fiscal Scenario, the plan achieved roughly $2 in spending cuts to $1 in revenue increases. The Plausible Baseline built off of a current law baseline by assuming that the 2001/2003 tax cuts were extended except for those above $250,000, the estate tax and Alternative Minimum Tax would continue at 2009 levels, the Medicare physicians pay freeze would continue and war spending would decrease based on current administration policy.

The final plan was broken down into six major components (savings are 2012-2020):

1. $1,661 billion of discretionary spending cuts by putting in place discretionary spending caps into law lower than what is projected to be spent.

2. $995 billion in additional revenue with $785 billion in new revenues from tax reform by lowering income and corporate tax rates and broadening the base by eliminating tax expenditures. An additional $210 billion in revenue is also raised in other revenue by switching to the Chained-CPI and an increase in the federal gasoline tax

3. $341 billion in federal health care savings by reforming the Sustainable Growth Rate for Medicare, repeals the CLASS Act (which has already happened), increase Medicare cost sharing, reform health-care tort, change provider payments, increase drug rebates and establishes a long-term budget for total federal health-care spending after 2020 to GDP + 1 percent.

4. $215 billion in other mandatory savings by moving to the Chained CPI for all inflation-indexed programs, reform the military and civil service retirement system, reduce farm subsidies, reduce student loans and various other reforms.

5. $238 billion in Social Security reform, to be used to ensure the program is sustainably solvent in the infinite horizon by slowing benefit growth for high and medium-income workers, increase the early and normal retirement age to 68 by 2050 and 69 by 2075 by indexing it to longevity, index cost of living adjustments to the Chained-CPI, include newly hired state and local workers after 2020, increase the payroll tax cap to cover 90 percent of wages by 2050 and creates a new minimum and old-age benefit.

6. Budget Process Reforms by creating discretionary spending caps and caps total federal revenue at 20 percent of GDP.

An additional $673 billion is saved due to lower projected spending interest payments as a result from lower deficits.” – Wikipedia

* The CLASS Act refered to in the Simpson-Bowles synopsis provides long term care for every American. It was part of Obamacare.

I don’t agree with much of this, especially the spending caps. Spending caps, price caps are recipes for failure. A spending cap is not a substitute for responsible fiscal management. A better solution would be to devise a method to ensure that congress acts in a fiscally responsible manner – that would involve election reforms and ethics reforms all of which are nonstarters in congress and the special interests that fund our government.

Below is a link to an article discussing the differences in the Republican and Democratic Fiscal Cliff plans.

http://www.cnbc.com/id/100276654

 

[ElectricFetus]

I like this "doomsday option" we get those tax increases on the rich (by not extended Bush tax cuts on them) without any agreement on spending cuts, thus no spending cuts! Sure there is the debt ceiling and other issues to deal with but those could in theory be dealt with one at a time in the next year while the president gets the wheels rolling on immigration reform which the republicans will be made to look really bad to those minorities by refusing on it.

 

[milkweed]

Maybe the fiscal cliff is exactly what this country needs to get its priorities back in line; as in a government that works for the people. Wages have been driven downward by the 'global economy' yet all the answers rely on taking more from those who have less (damn entitlements).

This is the law they passed so let us all live by it. If a recession happens so be it. Vote the jerks out next time for their failure as law makers.

http://www.creditcards.com/credit-card-news/fiscal_cliff-calculator-1701.php

Every way I punch in my particular numbers my increased tax will be between 350 and 550 (3.3% at top end). At 200K the increase in tax is between 7 and 8K. If someone making 200K cant afford 4%, then they need to dump cable or sell the suv.

Among the laws set to change at midnight on December 31, 2012, are the end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers),

Should have never tapped into SS funding to begin with.

the end of certain tax breaks for businesses,

Too vague to apply to my life (how it will affect my job).

shifts in the alternative minimum tax that would take a larger bite

Never been an issue in my life.

the end of the tax cuts from 2001-2003

The above tax cuts actually cost me more as I was removed from Head of Household and flung into Single filer status.

and the beginning of taxes related to President Obama’s health care law.

I am pretty sure the above is unrelated to the fiscal cliff. I am pretty sure they go into effect regardless.

At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect. According to Barron's, over 1,000 government programs - including the defense budget and Medicare are in line for "deep, automatic cuts."

http://bonds.about.com/od/Issues-in-the-News/a/What-Is-The-Fiscal-Cliff.htm

And so it goes. There are deep cuts in everyones position except the Republicans dont want to cut defense. Its a very sorry state of affairs when charitable giving is on the cutting block (deduction) and people think thats a plausable answer.

 

[joepistole]

Crack

The party is cracking, what replaces it remains to be seen.

Bloomberg reports 40 Republican congressmen are joining Democrats in the Fiscal Cliff negotations.




http://www.businessinsider.com/gop-defectors-sign-letter-on-compromising-on-the-fiscal-cliff-2012-12