Fiscal Cliff

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So so close after the US elections are the republicans gonna block the budget. They seem to have the most to loose for obvious reasons, unless it is a protest vote to another democratic term. Not sure how long the president would last without a budget.

[cybercoma]

Obama can just sit back and let the tax cuts expire, pegging the increase to the middle class on the Republicans for not negotiating a solution. While the GOP can refuse to raise the debt ceiling, this will be looked at as irresponsible by people after the criticism they took last time.

[WWWTT]

I'm going to have to agree with you!

At some point in time, there is going to have to be some movement in the US houses.

WWWTT

[Shady]

Obama can just sit back and let the tax cuts expire, pegging the increase to the middle class on the Republicans for not negotiating a solution. While the GOP can refuse to raise the debt ceiling, this will be looked at as irresponsible by people after the criticism they took last time.

Not really. The CBO reports that doing nothing on the fiscal cliff would cause another recession.

[bush_cheney2004]

That's OK...it's time for another recession. Tax cuts and other tax holidays have gone on for way too long. Raise taxes, cut spending...for everybody. Welcome to the new normal.

[Shady]

I'm going to have to agree with you!

At some point in time, there is going to have to be some movement in the US houses.

WWWTT

Nice. Cause a new recession, massive job loss and taxes to go up on the middle class just for some make believe political gain.

[Shady]

That's OK...it's time for another recession. Tax cuts and other tax holidays have gone on for way too long. Raise taxes, cut spending...for everybody. Welcome to the new normal.

Obama will never go along with knowingly causing a recession under his watch. He has his legacy to think about.

[bush_cheney2004]

Frankly, I want to see how the president deals with a second term when there is no more political mileage in blaming George Bush. He and the Congress have to make a Hobson's choice.

[Bitsy]

This is how Joshua Green of Bloomberg Businessweek sees the events unfolding, let us hope he is right.

In Obama’s second term, leverage will shift to the Democrats on almost every issue of importance. And that shift has already begun.

Once the economy stabilized, the defining struggle in Obama’s first term was the battle for revenue. From his efforts to end the Bush tax cuts for the rich, close the carried-interest deduction, and enact the Buffett Rule, Obama failed in every attempt to generate higher tax revenue to pay for new spending and reduce the deficit. Obama confronted a Republican party determined to starve government and convinced that its path back to power lay in engineering his failure. As Senate Minority Leader Mitch McConnell (R-Ky.) said in 2010, “The single most important thing we want to achieve is for President Obama to be a one-term president.” Republicans mostly held the line.

To keep the economy afloat, the White House cut the deals it felt it had to. Many, such as Obama’s agreement to extend all of the Bush tax cuts in 2010, were poorly received by Democrats. Now comes the payoff. The expiration of those cuts and the automatic reductions set to take effect at year’s end—the so-called fiscal cliff—mean that Obama and the Democrats can gain a huge source of new revenue by doing nothing at all. Republican priorities are the ones suddenly in peril. The combination of tax increases on the rich, higher capital-gains taxes, and sharp cuts in defense spending have congressional Republicans deeply worried. To mitigate these, they’ll have to bargain.

Despite their post-election tough talk, Republican leaders have dealt themselves a lousy hand. Obama can propose a “middle-class tax cut” for the 98 percent of American households earning less than $250,000 a year—while letting the Bush tax cuts expire for those earning more—and dare the Republicans to block it. If they do, everyone’s taxes will rise on Jan. 1. It’s true that going over the fiscal cliff, as some Democrats believe will happen, would set back the recovery and could eventually cause a recession. But Democratic leaders in Congress believe the public furor would be too intense for Republicans to withstand for long.

Going over the cliff would also weaken the Republicans’ greatest point of leverage: renewing their threat to default on the national debt. Right now, the Treasury expects to hit the debt ceiling in February. But if the cliff can’t be avoided, tax rates will rise and government coffers will swell, delaying the date of default—thus diminishing the Republicans’ advantage. Alice Rivlin, the founding director of the Office of Management and Budget and a senior fellow at the Brookings Institution, says that “as quickly as the IRS began changing the withholding schedule, the date would be pushed back.”

This new, post-election reality should compel both sides toward the “Grand Bargain” on entitlement and tax reform that President Obama and John Boehner tried, and failed, to strike in the summer of 2011. Most people in Washington expect these negotiations to dominate the 2013 calendar year. Here again, leverage has shifted from Republicans to Democrats. “The message of this election is twofold,” says Senator Chuck Schumer (D-N.Y.). “Americans want us to come together around a balanced compromise. And the major issue surrounding the fiscal cliff that was litigated in the election was revenues—voters clearly sided with us. The president made it a campaign issue, and he won.”

http://www.businessw...ng-the-cards#p1

[bush_cheney2004]

The Republicans have nothing more to lose in the short term, and can safely call the president's bluff. Let the tax cuts expire as they should have long ago, and restore the previous marginal rates for all. The House can justify saying no to a middle class tax cut as deficit reduction, turning the argument upside down.

[Pliny]

They are tied to a system built on a ruse but you can bet they will fast and furiously be moving money around because that is all they do anyway.

Barack Obama can just say, "I didn't build that! It was Hillary and Harry, Nancy and Valerie, Eric and Timmy - Lord knows Ben played a big part too - he told me all along what to do - it's more his fault. I was poorly advised. Whoever is responsible we are going to hunt them down and bring them to justice. It was probably George Bush, Dick Cheney, Karl Rove, Alan Greenspan, Newt Gingrich, Wall Street...oh...and Fox news. We are still gathering information. They built that - they even said they did. I didn't. Bill Clinton told me so. He said, no one could have fixed the economy in four years. So there! I have been dealt an impossible hand and I think it is a racist plot. That's the thanks I get for saving the nation and the auto industry, killing Osama and driving Al Qaeda into the ground - I did build that by the way!

[bush_cheney2004]

Well, something has to give either way. Some of us have cash piling up like this year's leaves, and have no plans on spending it with so much uncertainty. Corporations are doing the same. Low interest rates are killing senior retirement portfolios too.

There are worse things in the world than a recession!

[Big Guy]

So Barack Obama emerges victorious from the ashes of this most costly, vicious, negative and destructive presidential campaign in US history. This monumental battle has left the power structure basically the same but teetering. Meanwhile, the cost to that nation is far beyond the estimated $3 billion price tag. This campaign has pitted young against old, white against non-white, male against female, rural against urban and rich against poor. America emerges from this fray as a troubled nation of two angry, polarized and entrenched camps.

The caustic campaign political rhetoric has been dominated by evasions, shady half-truths, personal slurs and outright lies. The rest of the free world watched sadly as the Americans tore apart their social fabric by demeaning their presidency and the extremes of the political class revealed themselves as a disingenuous and untruthful mob. Unfortunately, this is the inevitable result when individuals place ambitious self interest and party politics above the obligation of stable governance and the common good. As our own government has become more polarized we Canadians should take this as a warning and a glimpse into the future lest we do not change our ways.

In the North American form of democracy, politicians who solved problems through dialogue and compromise were considered statesmen. Now, this same behaviour is seen as traitorous to their party by their colleagues and leaders and soon these “statesmen” find themselves muted or in the private sector. It is becoming more and more difficult for the public to refer to our politicians as those “honorable” members.

Obama has won this pyrrhic victory and is returning to the helm of the American ship of state. Unfortunately, he is captaining a polarized vessel with one half of his crew rowing in one direction and the other half rowing in the opposite direction. His ship is stagnant in the water and being drawn slowly towards a disastrous fiscal whirlpool which has the capability to drown the whole world economy. Canada, which has always sailed in the American wake, is destined to follow the American line.

Our only hope is that the few statesmen still in politics find the political courage to blink and compromise with the best interests of the free world in mind.

[bush_cheney2004]

The election didn't cost the nation anything, and in fact was about $6 billion in mostly private, economic stimulus. It was not the most "vicious" or "negative" campaign in U.S. history either. It was just another American election, and there will be one just like it in 2016.

Canada's fate is in the hands of Canadians, and if it isn't, there's your trouble.

[sharkman]

Here's what gets me about this fiscal cliff. It's been coming for months, looming in the windscreen until it now blocks out view of anything else. It's a serious situation that has to be dealt with in some way or another. Yet the main stream media has been mum on this issue for at least a few weeks coming up to the election. Ask yourself why. They were also mostly mum on the whole Benghazi attack after the first week or so. The story continued to look worse and worse for the administration and it became clear that Obama was either unaware of what was going on, which would be incompetence, or knew about it and let his policy of keeping a low profile allow Americans to sustain a several hour attack which drones videoed. The press did very little investigating and when info was released that drones had actually videoed the event and nearby forces were told to stand down and not give aid, the press was silent. On the other hand, the press swallowed whole Obama's crazy ass theory that a video released in May was responsible for the attack on September 11. That in itself was breathtaking.

The press was also mum on the Iranian attack last week on a US drone flying in international airspace. The press has been very selective in what they've chosen to cover and not cover, and it all has been very beneficial for the president. Seeing how the press has performed thus far, for this fiscal cliff I guarantee you the Republicans will be painted as villians and the president a clear headed hero trying to save America. From 4 years of mismanagement that has put them where they are today.

Edited November 9, 2012 by sharkman

[BubberMiley]

It's a conspiracy. The MSM also didn't devote all of its coverage to Obama saying "you didn't build that." What's with that?

[Michael Hardner]

In the North American form of democracy, politicians who solved problems through dialogue and compromise were considered statesmen.

...

It's kind of rich that the party that had to endure 20+ years of anger and outrage gets this kind of response when they use the same tactic that kept them out of power for the majority of the last 32 years.

The polarization doesn't need to continue - it's done. If the Republicans were stupid (they aren't) then they could continue to call for hellfire in response to gay marriage, immigration amnesty and son on. There would probably be even less polarization required if they tried that in 2016, as there will be 2 or 3 % more Latin and African Americans around then to vote against them.

[Michael Hardner]

It's a conspiracy. The MSM also didn't devote all of its coverage to Obama saying "you didn't build that." What's with that?

The press didn't cover issues in the campaign. It`s the first time that ever happened I suppose. (sarcasm alert)

Look, the MSM is biased for sure, but this example is part of the general trend of policy discussions not being as important as impressions, slogans and gaffes. There was an election in 2000, I believe, where they barely discussed foreign policy at all.

[cybercoma]

Not really. The CBO reports that doing nothing on the fiscal cliff would cause another recession.

yes. The GOP will cause another recession by not coming to the table in good faith. The blame will fall squarely on them in the media and with the people. You watch…

[sharkman]

yes. The GOP will cause another recession by not coming to the table in good faith. The blame will fall squarely on them in the media and with the people. You watch…

Yes, whatever happens, the media will blame the GOP. It won't matter at this point who gets blamed, another recession is coming as new taxes constrict a weak economy. The coming tax rate changes are already having an effect as companies prepare for it.

BTW, what is your take on two days of bloodletting for the DOW? Have you heard of the multiple lay offs announced since the election? thousands of workers are being let go.

Edited November 9, 2012 by sharkman

[Michael Hardner]

thousands of workers are being let go.

How much do you think the unemployment rate will rise by as a result ?

[bush_cheney2004]

.... thousands of workers are being let go.

Since Obamacare will now remain the law of the land, small and medium sized businesses will shed workers to get under the 50 employee limit, or convert them to contractors without benefits. Thanks Barack!

[Michael Hardner]

Since Obamacare will now remain the law of the land, small and medium sized businesses will shed workers to get under the 50 employee limit, or convert them to contractors without benefits. Thanks Barack!

America is still a great place to do business and eventually everyone will be used to the higher costs. Then we can raise taxes more, which I will greatly enjoy of course.

[bush_cheney2004]

Of course...raise taxes now...right now. I'll bet President Bush is laughing his ass off at the bickering and nail biting over the "Bush tax cuts" (EGTTRA) that should have expired two years ago.

Let's get this party started.

[Guest American Woman]

Since Obamacare will now remain the law of the land, small and medium sized businesses will shed workers to get under the 50 employee limit, or convert them to contractors without benefits. Thanks Barack!

Let's not forget to thank the Senators and Congressmen who voted "yes" ....