When will lawmakers get serious on the "fiscal cliff"?

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House Speaker John Boehner wants Americans to know that House Republicans are serious about dealing with the "fiscal cliff."

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Boehner: We can't "negotiate with ourselves" on "fiscal cliff"

"This week we made a good faith offer to avert the fiscal crisis and that offer included spending cuts and reforms and included additional revenue," he said Wednesday. "Frankly, it was the balanced approach that the president's been asking for. Now we need a response from the White House. We can't sit here and negotiate with ourselves."

But here's the thing: The "good faith offer" was little more than a general statement of priorities that lacked the specifics necessary to actually get to a deal. It was no more of an attempt to find common ground than the White House's initial proposal, which everyone in Washington was well aware had no chance of passing the House.

Boehner and the rest of the House Republican leadership laid out their offer in a letter to the president earlier this week. It said Republicans would cut a total of $1.2 trillion in spending, but it does not actually say what would be cut. The letter broadly says that the cuts would follow those put forth in what was called "the Bowles plan," a reference to Democrat Erskine Bowles, who quickly put out a statement saying that the letter does not represent his beliefs. (Republicans were referencing testimony that Bowles gave to the Joint Select Committee on Deficit Reduction last year. That testimony represented Bowles' understanding of the midpoint between the two sides at the time; he noted Monday that "circumstances have changed since then.")

Let's give House Republicans the benefit of the doubt and assume they are calling for the cuts articulated last year by Bowles. His testimony called for roughly $600 billion in Medicare savings, in part from raising the Medicare eligibility age, $300 billion in other discretionary spending cuts, and $300 billion in cuts to other mandatory spending programs. 

Despite GOP claims that they represent a middle ground, there is simply no reason Democrats would agree to these cuts. Here's why: If the nation goes off the fiscal cliff, it faces $1.2 trillion in automatic spending cuts split between domestic spending and military spending. Republicans are effectively proposing to keep the cuts but focus them entirely areas that Democrats want to protect: Domestic spending and other entitlements. Meanwhile, under the GOP plan, there would be no cuts to defense programs -- the area Republicans want to protect. Why on earth would Democrats agree to a deal in which all the cuts are made to their priorities when they could simply do nothing and let the pain be shared by both sides?

That's not the only problem. When it comes to new revenue - aka, additional money coming into the government - Boehner has set a target of $800 billion. This is not insignificant: The offer has already prompted howls from some on the right who oppose any new revenue. But it is also less than substantive, since Boehner declines to say how he would make the cuts -- he merely says they should come through "pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates." Does that mean getting rid of the mortgage interest deduction? Capping charitable deductions? The letter doesn't say.

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[eroteme2]

Compromise is what is needed. Compromise occurs when Republicans drop their positions and comply with Democrat demands.

[marychgo]

We have a JOBS crisis, NOT a DEBT crisis. The top two marginal tax rates should go back to Clinton-era levels because they produce significant revenue while having a minuscule effect on economic growth. Extended unemployment benefits and the payroll tax cut should be continued because they have a strong positive effect on jobs and economic growth. The AMT patch and the "doc fix" should be extended. Everything else should be on a jobs-based TRIGGER: half of the "sequester" cuts (50% defense, 50% other discretionary) should take effect when the unemployment rate drops to 6%; the other half when the unemployment rate drops to 5%.
As for "entitlement reform," Social Security would be in great shape until all of us AND our children are dead and gone if we simply made ALL earned income (including "carried interest") subject to FICA tax. And if capital gains and dividends were also subject to FICA and Medicare taxes, Medicare would be well on the road to recovery.
The LAST thing we should do is to raise the eligibility age for Medicare! In the short term, all that would do is shift Medicare costs for younger seniors from the federal government to the seniors themselves, their employers, and state governments (for those too poor to qualify for private insurance). But the larger reason NOT to raise the eligibility age is that increased life expectancy for seniors is a profoundly class-mediated phenomenon. Wall Street moguls and U.S. Senators may be living to age 90 or 95, but construction workers and waitresses and cabdrivers and retail clerks are lucky if they make it to age 80. So a higher eligibility age simply shifts billions of dollars of benefits from poor and working and middle class Americans to the richest of the rich. Does that sound like rational public policy to anyone?

[NBGerry]

Hey! Mary, why don't we get rid of all of the Evil Bush Tax Cuts? They only help the wealthy, right? We need to go back to the good old days of the Clinton Administration when we ran a surplus!

As far as SS and Medicare - I agree with many that they should not be on the table. They each have their own separate taxes. If they are running short on money, raise the tax rates on each.

As far as Medicare cuts -- as you pointed out, the "doc fix" has been alive and well, they have yet to institute the automatic cuts that the law states they should for the past 5 years. But the President is proposing more "savings" through this! Why doesn't he stop for a minute and smell what he's been shoveling?

[NBGerry]

Actually, I'm glad Congress is taking a long weekend. We've already got a bipartisan agreement. Going back to the Clinton tax rates for everyone! Spinner - You gotta love that, right? I mean, the Bush Tax Cuts just helped the wealthy anyway, so this has got to be better than that.

Good job Congress! Take the rest of the year off!

[sjc_1]

The supposed $80 billion in loophole closings and deduction caps is not specific, it is just more vague hand waving from Boehner. He and the Republicans have had 18 months to have their staffs go through the tax code and get specific...but Nooooo...can't have anything THAT rational.

[bobw101]

RepubliCon_Liar_RobMe replies:

LOL!....Looks like BOBW101 was caught being an ignorant Republi-minion again.

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Go away little monkey.

[bobw101]

quantum_analysis replies:

GEE, what happened to federal revenue after the reagan tax cuts?

Nice cherry-picking on your part, which I would have expected!

There's a reason non-partisan economists use the percentage of GDP as a way of comparing different years, since you cannot compare different points in history or different administrations with different circumstances and different populations and numbers in the workforce. You're comparing apples to kumquats.

Besides, you're also being disingenuous using 1978 to 1981 or 3-years, compared to the 7-years between 1982 to 1989!

Nice try, but YOU LOSE, trying to put saint ronnie back on that pedestal, even after the Iran/Contra illegal arms sales!

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1978 - 1981 is 4 years and 1982- 1989 is 8 years, you might want to go back and do your 1st grade homework. 1978- 1981 income taxes averaged 8.8% of GDP, 1982 - 1989 income taxes averaged 8.3% , but one also has to remember inflation was at double digits when Carter was in office.

So exactly what was the result of Reagan allowing people to keep more of THEIR money. Inflation went from 12.5% in 1980 to 3.9% in 1984. Economic growth went from -.2% in 1980 to plus 7.3% in 1984. Interest rates dropped from 19% on a 30 year mortgage to 8%. Growth was over 50% higher for the next 7 years, than the previous 7 years under Carter. The prosperity under Reagan created nearly 35 million jobs and the economy was 33% larger when he left office.

Although he did spend like a liberal and violated the law in Iran / Contra scandal, the prosperity produced by his tax policies cannot be argued.

No I am not a supply sider.

[bobw101]

quantum_analysis replies:

GEE, what happened to federal revenue after the reagan tax cuts?

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During Carter's budget years, income tax revenue rose 106 billion, from 241 billion in 1978 to 347 billion in 1981, an increase of 44%. Inflation during the years of 1978-1981 was 52% or 13% per year. During Reagan's budget years, income tax revenue rose 202 billion, from 347 billion in 1982 to 549 billion in 1989, an increase of 58%. Inflation during fiscal years 1982-1989 was 34% or 4% per year. Income tax revenue grew at a faster rate under Reagan than it did under Carter, unadjusted or adjusted for inflation.

[quantum_analysis]

Federal Revenue by Year
1977 -- $355.6B
1978 -- $399.6B
1979 -- $463.3B
1980 -- $517.1B
1981 -- $599.3B
Economic Recovery Tax Act of 1981
1982 -- $617.8B
1983 -- $600.6B

GEE, what happened to federal revenue after the reagan tax cuts?

Nice cherry-picking on your part, which I would have expected!

There's a reason non-partisan economists use the percentage of GDP as a way of comparing different years, since you cannot compare different points in history or different administrations with different circumstances and different populations and numbers in the workforce. You're comparing apples to kumquats.

Besides, you're also being disingenuous using 1978 to 1981 or 3-years, compared to the 7-years between 1982 to 1989!

Nice try, but YOU LOSE, trying to put saint ronnie back on that pedestal, even after the Iran/Contra illegal arms sales!

[quantum_analysis]

NBGERRY replies: So get rid of all of the Bush Tax Cuts Quantum, right?

An equitable sharing of the "pain" by everyone, no one wins, we all share in digging out of this mess!



Actually yes, and I also agree with many of your other 6 points except for:

#2 -- by repealing the bush tax cuts, it will increase the capital gains rate to 20% from 15%, and I believe that should be capped at a few million, rising to "taxable income" above that cap. Likewise for the inheritance tax.

#5 -- we could no more go back to a 1990s budget than we could a 1900 budget, since even national security was less than $300 billion then, and today it's over $1.3 Trillion, with just V.A. costs at $150 Billion and climbing due to the seriously injured in the bush wars. That said, I would still like to see our national security budget cut in half, and have the defense contractors find REAL jobs like in renewable energy.

[mjvwsr]

McConnell Offers To Vote On Obama's Fiscal Cliff Plan, Reid Objects...

[quantum_analysis]

About That Time The Heritage Foundation Said The Bush Tax Cuts Would Pay Off The National Debt By 2010

Did you hear the one about the Heritage Foundation predicting the Bush tax cuts paying off the national debt?

It happened, in 2001.


Read more: http://www.businessinsider.com/about-that-time-the-heritage-foundation-said-the-bush-tax-cuts-would-pay-off-the-natioanl-debt-by-2010-2012-11#ixzz2EIdeypGD