Fun with the Fiscal Cliff

The Daily Beast had a fascinating story yesterday regarding budget discussions in Washington. President Obama is learning to be more aggressive in the wake of his re-election and is no longer trying to appease Republican lawmakers:

In the past, the modus operandi from the White House on tax and spending issues was a tone poem of tortured frustration, self-criticism, and bargaining. They’d make a middle-of-the-road proposal and then very quickly move off it, failing to appease Republicans and demoralizing the base. But this time is different. Now, the Republicans are compromising and demoralizing their base…

…”They’re in kind of a tough position now,” Treasury Secretary Tim Geithner said on Fox News Sunday. “They’re trying to figure out how to find a way to support things that they know they’re gonna have to do. That’s going to be hard for them.” (Note: the very willingness of Geithner to appear on a Fox program is a sign of the administration’s newfound confidence.) Geithner pounded home the Obama administration’s talking point: we’ve put forward our plan. If the Republicans don’t like it, they should put forward their own. [Pols emphasis]

This approach would have made a lot of sense four years ago, and it probably would have prevented the health care debate from dragging on for 18 months. The strategic decision to ask Republicans, “What is your proposal?” is devastating in its simplicity, in part because the GOP is completely lost on the issue:

The reality should be seeping in to viewers of the Sunday shows that the Republicans don’t have a game plan. They don’t have a single, specific proposal to avoid the fiscal cliff. And even if they had one, they don’t have a roadmap to get there. They keep expecting Obama to come back with something more to their liking, which they’d also reject.

Many Republicans literally don’t understand what is happening. [Pols emphasis] Sen. Charles Grassley tweeted over the weekend that he was frustrated that President Obama hadn’t embraced the recommendation of the Bowles-Simpson Commission. Apparently, he is one of the many people in Washington who doesn’t understand that Bowles-Simpson recommended letting the Bush tax rates on the wealthy expire, while also proposing to cap or eliminate deductions primarily enjoyed by the wealthy.


Unfortunately for Republicans, the national narrative (and polling data) is not in their favor. The public isn’t buying the idea that the White House is the problem, which is particularly problematic when you have Republicans who don’t even understand some of the basic fundamentals. It’s become abundantly clear that the GOP will shoulder most of the blame if there is no budget decision.

18 Community Comments, Facebook Comments

  1. harrydobyharrydoby says:

    The GOP members of Congress are definitely in a tough spot:

    Norquist: Tea party resurgence if no “fiscal cliff” deal.

    Even worse, Norquist seems pretty sure that the Tea Party will never vote for Obama again — Oh My!

    Grover Norquist is predicting that President Obama will be the political target of tea partiers if a deal on averting the “fiscal cliff” fails to materialize.

    I guess Obama will just have to buckle under and cut taxes and raise defense spending…

  2. parsingreality says:

    Let the Bush tax cuts expire.

    New, more Democratic Congress in the beginning of January.

    New taxes on the wealthy, new/old cuts on Joe and Josephina Sixpack.

    And I wish everyone would stop talking about $250K income as the point of additional taxation.  That’s ADJUSTED GROSS INCOME, which probably reflects gross income of at least 50% more for those that get there.

  3. DaftPunkDaftPunk says:

    Dear Mr. President,

    After a status quo election in which both you and the Republican majority in the House were re-elected, the American people rightly expect both parties to come together on a fair middle ground and address the nation’s most pressing challenges.

    “Fair middle ground” of course means keep the rich happy.

    That didn’t feel like status quo to me.

  4. DavidThi808DavidThi808 says:

    Obama has learned how to negotiate with the GOP. It’s looking really good so far. I’m hoping tomorrow that on all those cuts in the GOP counter-proposal he asks them for the specifics. That will have people howling.

  5. GalapagoLarryGalapagoLarry says:

    I’m darned near out of Milk Duds.

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  7. Colorado PolsColorado Pols says:

    It doesn’t take a crystal ball to predict that the Tea Party will be mad at Obama regardless of the outcome here.  

  8. ProgressiveCowgirlProgressiveCowgirl says:



  9. BlueCat says:

    but few  others, emphasizing the fact that everybody gets the lower rate on the first 250K of that adjusted income. So if your adjusted gross is 275K you pay the lower rate on on all but the 25K over. A few more percentage points on less than 10% of your adjusted income which comes to a tiny over all increase.  So as for the boo hoo for people who make low six figure incomes and the small business person who takes income from the business, this increase will have little to no effect whatsoever. If your adjusted income off your Mom and Pop business is 200K, pretty nice, it doesn’t affect you at all. Only a  very few percentage points of all small businesses yield enough income to be affected.

    It’s pretty clear who the Repugs are fighting for when they dig in their heels on this and it isn’t the engineer married to a teacher or the couple with a typical small business. Even most of the top one percent,  won’t see  all that much of an increase in their tax bill, certainly not an amount that should affect their ability to be good consumers. As for their job creating capacity, if they have businesses and enough clients and customers to warrant it they’ll hire more people regardless of a small tax increase.

    It might put a small dent in Romney class pocketbooks but they don’t invest their money in creating jobs anyway. They probably won’t even have to go without an elevator for their cars in their third homes. If anyone is getting votes by promising gifts, true extra perks as opposed to meeting real needs like access to healthcare, education and, you know, food, it’s the Repugs and most of the people they trick into voting for them aren’t getting a thing.


  10. Sir RobinSir Robin says:

    Can’t we see, just for once, the MSM call out the Republicans for saying for the last year that Obama has NO plan, and are now trotting our their meme that Obama’s recent plan is JUST LIKE his plan from last year!?

    I don’t get it:-)

    Anyway, I saw and felt the fiscal cliff today while driving around. I hit a curb.

    Happy Hanukkah, and may the Festivities begin for what just might be a wonderful Holiday Season.

  11. caroman says:

    Parsing is absolutely correct that the additional taxes will be calculated on taxable income (TI), not adjusted gross income (AGI).  The difference is huge.  TI is after deductions for mortgage interest, state and local taxes, charitable contributions, personal exemptions, etc.  Moreover, arriving at AGI is after deductions like pension contributions which are often very large for high income earners.  Parsing is correct in assuming gross income is more like $375,000 or even more gross income.

    And, Blue is correct in pointing out that these increases are applied to only the amounts above $250,000 in taxable income.  So, someone making $500,000 per year in gross income would only be paying about $4,000 more in taxes using Parsing’s assumption.  And this is what the GOP is fighting for?  

  12. BlueCat says:

    I appear to have gotten my terms messed up but what I meant was definitely taxable income. Naturally if it isn’t taxable it isn’t taxed.

    The main thing Dems need to keep reminding people of is just what President Obama said. Everybody, even billionaires, pays the lower rate on the first 250 K. Everyone. And very few people make more than the figure you used, 500 K. Most in the top 2% don’t.

    I even heard some woman on the radio saying that her business would be limited because she’d keep her income under 250 K on purpose which makes no sense if you understand that it’s not a matter of crossing a line and paying a higher rate on everything. What does this woman think would happen if she made 260 K? Does she really think she’d be worse off? If so, she needs somebody else to run that business for her anyway.

  13. Having to actually step up to being The Grinch around Christmas time.

    Part of me thinks they’d much rather play the passive grinch and go over the fiscal cliff rather than propose specifics. So far it seems Obama and the Democratic team have caught on to the ploy and aren’t giving them wiggle room. If they want to cut, they’re going to have to make some suggestions as to where…

    Today’s proposal looks almost exactly like last year’s GOP budget – more of the same, with plenty of magic budget pixie dust and no details for analysts to chew on.

  14. Republicans like to say they’re “the Daddy Party” – the ones who step up and present the hard truths. But in this case it looks like “daddy” is saying “go ask Mommy”.

    Sorry to any righties left reading this blog – no more acting tough but passing the buck on bad decision-making.

  15. parsingreality says:

    From time to time some rightie, claiming to be a business owner, calls into Ed Schultz or Thom Hartman.  They believe, or more likely, been told to believe, that it’s a choice between hiring more people or paying more taxes.

    They further conflate the laughable corporate tax rates with personal income tax, and both with hiring.

    I’m going to guess, just on observations and not on data, that most small business owners don’t pay any corporate taxes, don’t make over $250K (actually probably close to that in gross), and like to pretend that their personal taxes will go up from the first dollar.

    And they call us irrational?  

  16. Tom says:

    the Republican strategy of “closing loopholes and deductions” to raise revenue will similarly hit everyone. If they’re serious about their revenue targets, then people making much less than $250k will likely get hit.

    Folks in the upper but not stratospheric levels of income will probably come out worse since the mega-rich don’t so much take advantage of loopholes and deductions as park vast sums of wealth in places where it simply can’t be accounted for. That $800 billion of promised revenue has to come from somewhere and it would be much easier to eliminate college, mortgage and charitable deductions than to spark an international incident trying to dive into accounts in Bermuda or the Caymans.

  17. caroman says:

    Let’s see, that leaves me with about $6,000 even after CO taxes.

    Something tells me that this woman, like Joe the Plumber, doesn’t really earn $260k.  You can’t be successful and be that stupid.

  18. BlueCat says:

    please call talk radio with this talking point e-mail forward.

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