Categorized | Current Affairs

The latest on the "fiscal cliff" negotiations





Apparently a deal on the tax side of the equation has been worked out, via the New York Times:

Under the emerging deal, income taxes would rise to 39.6 percent from 35 percent on income over $400,000 for single people and $450,000 for couples. Above those income levels, dividends and capital gains tax rates would also rise, to 20 percent from 15 percent.

The official familiar with the deal stressed that taxes would rise in some sense on the top 2 percent of earners, as Mr. Obama had wanted. That is because the deal would reinstate provisions to tax law, ended by the Bush tax cuts of 2001, that phase out personal exemptions and deductions for the affluent. Those phaseouts, under the agreement, would begin at $250,000 for single people and $300,000 for couples.

The estate tax would also rise, but considerably less than Democrats had wanted. The value of estates over $5 million would be taxed at 40 percent, up from the current 35 percent. Democrats had wanted a 45 percent rate on inheritances larger than $3.5 million.

Under the deal, the new rates on income, investment and inheritances would be permanent.

That last bit, making the rates permanent, I asume means that the Bush rates will be locked in for everyone earning under Obama’s class warfare number. Obama didn’t help things today when he went on TV and suggested he would push for more taxes later:

Mr. Obama used the occasion to warn Republicans that he would continue to press for more tax increases even beyond whatever may be included in a deal now. “If Republicans think I will finish the job of deficit reduction through spending cuts alone,” he said, then “they’ve got another thing coming. That’s not how it’s going to work.”

Republicans responded to the president’s speech angrily, accusing him of “moving the goal posts” just when a deal was in reach.

That sounds like bluster from the campaigner-in-chief designed to appease his kook base. If the rates are made permanent as part of the deal, the threat of automatic tax hikes is over. How, then, will he raise taxes again later in the debt ceiling deal? Republicans will have a much stronger hand than they do now. Does he think the Republican House will pass a tax increase? If so, he’s been nipping at the White House egg nog. The only thing left in the way of sealing the deal is the spending cuts. The Republicans appear willing to allow the spending sequestration to take place but, naturally, the Democrats want no spending cuts as part of the deal:

But a final deal is being held up by one last question: What to do about $110 billion in automatic spending cuts set to begin Jan. 2.

While Republicans want them to go into force unless they are replaced by spending cuts elsewhere, Senate Democrats want to put them on “pause” for at least a year. All sides are angry over the impasse.

Tax increases now, spending cuts later. Does that sound familiar? Unfortunately, this may be the best the GOP can do. As I argued earlier, the Republicans need to remove the possibility of being blamed for a massive middle class tax hike from the table. Once that’s done, Obama will lose a lot of negotiating leverage. Make no mistake, Obama wants to go over the fiscal cliff so that Republicans will be blamed, and is likely trying to sabotage the deal. That’s why he’s trying to move the goal posts again. My personal opinion, for what it’s worth, is that the Republicans should take the deal now and make those Bush tax rates permanent for everyone under $450,000. Then when Obama asks for additional tax hikes later, as he most certainly will, the GOP can tell him to go pound sand.



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  • IndieDogg

    The most sobering and marginally disgusting fact about this war in Washington, with all its cannon roar and smoke, is that nothing they’re discussing will have any fundamental effect upon the icebergs in front of this nation.

    And these are not hidden icebergs. They are standing there, clearly in view, awaiting the multiple collisions to come. And the fools on the bridge are screaming at each other over a game of checkers.

    Insanity. Government Gone Wild.

    And it’s not a pretty picture.

  • CharterOakie

    Oh that we might see Sudden and Relentless Reform in our day and time.

    For that we’ll need charismatic, moral leadership.  I know just the person for that.

    • conservativemama

      That’s what I think everyday.  If only we had a President Palin in this moment instead of this petty, petulant con man who wants nothing more than to steal our future.

      • CharterOakie

        "petulant con man" — exactly!

  • CharterOakie

    Doug – thanks for all your continued excellent work.

    • bucky321

      i second that

  • Pete Petretich

    "CONGRESS THROWS WORST NEW YEAR’S EVE PARTY IN THE WORLD"
    http://www.breitbart.com/Big-Government/2012/12/31/Congress-Throws-Worst-New-Year-s-Eve-Party-in-the-World

    HNY!

    This is where I’ll be, me Guinness in hand…

    http://www.nighttowncleveland.com/

  • http://www.facebook.com/people/Lor-Mazz/1060895688 Lor Mazz

    I canont believe this garbage will pass the house. obama said he wants MORE taxes we fold like a cheap suit. time to turn liberterian i guess at least they stand for something. with no sarah i knew i should have voted for ron paul. 

    • bucky321

      repubs in senate  caved and so with dems and a few repubs in house it will pass. speaker will say tomorrow he didn’t raise taxes cause they already went up but tax cuts only for some

  • Freempg

    I echo CharterOakie’s comment. Thanks for your excellent work, Doug. Happy New Year.

  • John_Frank

    Doug, thanks for the follow up.

    People might also find the following of interest:

    Exclusive – GOP Insists on Tax Benefits, Cuts During Sequester Replacement Period
    http://www.breitbart.com/Big-Government/2012/12/31/Roth-IRA-proposal-fiscal-cliff

    U.S. Budget Compromise Deal Reached
    http://online.wsj.com/article/SB10001424127887323820104578213242594177744.html?mod=WSJ_Home_largeHeadline

  • John_Frank

    For those still following along, the Senate is about to begin voting on the "compromise" bill:

    Chad Pergram?@ChadPergram
    Senate begins vote on #fiscalcliff fiscalcliff bill. Reid says members should be here "quickly." Needs 60 votes.
    https://twitter.com/ChadPergram/status/285999018864156672

    On the question of the President saying he wants more revenue, etc. Minority Leader McConnell, who is now speaking on the floor of the Senate:

    Chad Pergram?@ChadPergram
    McConnell: We’ve taken care of the revenue side of this debate. Now it’s time to get serious about reducing…spending #fiscalcliff
    https://twitter.com/ChadPergram/status/285999481940475907

    Translation:

    McConnell is saying let’s pocket what we have achieved on the revenue side and focus on spending. If Obama wants more revenue, he can go pound sound.

  • HuntingMoose

    ======================================================

    just vote for it but as part of the package deal, acknowledge we need another speaker of the house, a speaking who can fight like a girl and has experience with negotiating with corrupt lawmakers and corrupt politicians and is not part of this DC disaster

    I let the readers of this blog guess who I have in mind…

  • friskyness

    Why aren’t the republicans on tv bluntly saying the tax hikes are all Obama’s fault?  Why don’t they fight?

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