Barack Obama

Republicans Have Already Lost Fight on Fiscal Cliff

Obama will never fall on his sword, because he doesn't even have to bring a weapon to this fight.

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You'll remember that President Barack Obama was the only candidate with a detailed plan to deal with the impending fiscal unpleasantness. And, as the president explained this week during his first press conference since winning re-election, "more voters agreed" with him, so naturally, it's time to give the people what they want.

So what do we win? Well, turns out there's only one detail worth remembering when dealing with the slew of tax hikes that kick in next year: We must reverse Bush-era tax rates on the rich. According to rosy projections of the Congressional Budget Office, this would amount to around $824 billion in revenue over the next decade, or less than one year of deficit spending by the administration. Democrats also support a millionaire "Buffett" tax, which could raise—maybe—$47 billion over the next decade, or less than $5 billion a year, or around half a workday of the federal government's budget.

In other words, we get the genuinely unserious government we deserve.

Republicans have already conceded huge swaths of their argument to the president. Both House Speaker John Boehner and Senate Minority Leader Mitch McConnell are now ready to meet with Obama to tackle a nonexistent "revenue" problem rather than an unsustainable spending problem. So elections do have consequences—most notably, surrender.

Meanwhile, as the GOP plots an honorable out, the president is crushing them on the broader political and ideological front. It is the president who lays out the populist parameters of this debate (rich vs. the rest) and the Republicans who are unable to muster a cogent retort or a single enticing reform-minded agenda. Instead, the GOP has cooked up a political strategy that repetitively calls out the president for his lack of "leadership" in hopes of pressuring the White House. Good luck with that!

Obama went on to say that he remains adamant that taxes rates on the rich must rise—though he is flexible on the details of how he gets to raise tax rates to where he wants them, explained White House Press Secretary Jay Carney this week. In Washington, this is called "compromise." Obama explained in his presser that he's also "very eager" to reform the tax code and claims that entitlements such as Medicare and Social Security need a "serious look," but gave absolutely no hint on how he would move forward.

The president says he's open to all "new ideas" as long as those ideas "raise revenue, maintain progressivity, make sure the middle class isn't getting hit, and encourage growth." Since the president believes that government spending encourages expansion and that the wealthy should pay for that new spending, where does that leave us on debt? Gallup claims that 45 percent of Americans favor reducing the federal deficit with an equal balance of tax increases and spending cuts—which is up from 32 percent last year. One assumes that balance means a dollar in tax hikes for a dollar in spending cuts. Does that sound like it's about to happen?

Fox News' Bill Kristol recently wondered why the GOP would "fall on its sword to defend a bunch of millionaires, half of whom voted Democratic and half of whom live in Hollywood and are hostile." They shouldn't. They should fall on their swords—or who knows, even come up with a compelling argument—to institute a modicum of responsible budgeting.

As it stands today, after all, Obama will never have to fall on his sword, because, let's face it, he doesn't even have to bring a weapon to this fight.

NEXT: Economist: Federal Dependency Makes Maryland Vulnerable to Fiscal-Cliff Fixes

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  1. Boehner was reelected yesterday. Why? Is it because the GOP held the House? He knows where bodies are buried?

    1. Best tan wins dude.

    2. Because libertarian-ish Republicans are outnumbered by the theocrats in the GOP.

      1. Yeah, that’s the biggest problem with Boehner alright. Too damn religious. It’s not that he’s a spineless big government toad or anything.

  2. They should fall on their swords?or who knows, even come up with a compelling argument?to institute a modicum of responsible budgeting.

    Proton decay is more likely.

    I’m telling you, living in Liberia is terrific preparation for what’s coming. Insanely different wealth levels; three levels of living: guarded compounds, shanty towns, rural family farms; the ability to buy anything; having to be self-reliant for food and water. It’s really good training, I think everyone should try it.

    1. Lincoln was such a nice guy he offered that privilege to blacks first. Hey, you’ve suffered enough, why not this nice vacation?

  3. Boehner and McConnell are just the guys to drive the final nails into the GOP’s coffin.

  4. Won’t somebody think of those poor defense industry lobbyists? We cannot allow them to plunge to their deaths.

  5. I consider it a moral duty to keep money out of the hands of our government. I salute heroes like GE and Apple that sequester billions offshore.

    You are doing a great work keeping that money away from these criminals.

    1. Don’t forget the Kennedys. Old Joe invented offshoring when he moved his oil companies and $millions (now $billions) to Fiji.

      They should make a Bud Lite commercial about the guy.

      1. “Real Men of Genius”?

  6. Fuck you, cut spending first.

    1. But where? There’s nothing left to cut. We’ve already cut TO THE BONE! You want old people to starve?

    2. All cuts are draconian.

      1. What a crazy reactionary!

    3. More evidence the House won’t say or do that–retaining Boehner as Speaker.

  7. “So elections do have consequences?most notably, surrender.”

    This gets it exactly right.

  8. How is there not a revenue problem? Suppose we cut taxes to zero. No revenue whatsoever. Would the problem still be too much spending? As in, we were spending too much by spending at all? How low do taxes have to be before revenue becomes an issue with respect to the gap between revenue and spending?

    Say you want government to do a lot less, but stop with the bullshit. The Bush tax cuts are the single largest policy contributor to the deficit. Yeah just eliminating them for the rich won’t do a lot. But let’s just be clear about why we have a deficit. It’s not mostly because of new Obama policies. It’s overwhelmingly because of Bush tax cuts, Bush wars, and the Bush recession. Two of those were direct massive drops in revenue.

    1. The math and history say that getting rid of the Bush tax cuts won’t do shit.

      The historic average of tax revenue to GDP is about 17% in a very narrow range. We’ve only crossed the 19% threshold 11 times since 1948, no matter where the tax rates were set.

      http://www.whitehouse.gov/site…..s/hist.pdf
      Table 15.1

      With a GDP of $15 trillion, taking in 17% in tax-to-GDP results in $2.55 trillion in revenue.
      19% results in $2.85 trillion in revenue.

      Spending is now at $3.6 trillion. To bring revenues in line with spending based on the rare 19% threshold, net GDP would have to rise $4 trillion right now. At 17%, it would have to rise $6.5 trillion. The OMB tables and the Treasury’s Debt to the Penny charts show that every single penny of GDP growth since FY 2001 has been entirely due to deficit spending.

      Obama (and Team Red, for that matter) is blowing smoke to get the religiously politcal partisan mouth-breathers to point fingers at the other side instead of being honest about the math.

      It won’t matter how much you raise, or lower taxes. It won’t matter how much you cut deductions or corporate subsidies. History shows we won’t take in more than 19%, AT BEST, revenue to GDP. The math shows that even in a best-case scenario, we’ll still have a $750 billion deficit. Nothing the President or Congress can do will change these facts.

      1. To be honest, we could get our country above 19 or 20 percent tax revenue to GDP; many European countries have done this.

        But the truth that dishonest lefty hacks like Chony Krugnuts will NEVER admit is that to get to these higher levels, you have to tax the broad middle class out the ying-yang, which is exactly what they do in Europe.

        And while the lefty scum would absolutely love to pull this off here in America, they don’t have the guts to openly try it, because they would never win another election again. And given the choice, they would rather have their team be in control than have the revenue.

        1. To be honest, we could get our country above 19 or 20 percent tax revenue to GDP; many European countries have done this.

          It’s irrelevant if countries in Europe have done it; the point is that we never have, regardless of the tax rates in place. Any politician has to deal with that history before trying to craft a budget.

          1. Throw in state and local taxes, and we’re already at Euro levels of taxation.

            1. Well, it depends. France, Denmark, Norway, and Sweden, for example, are all north of 40%. Switzerland is appx 30%. Even Greece with all of its tax-dodging is about 30%.

              We’re somewhere between 25-27% over time when you throw in state and local taxes. One interesting thing the OMB charts show, though, is that state and local taxes as a percentage of GDP in 1948 were about half of what they are now–5.5%. They haven’t been below 8.5% of GDP since 1968.

              1. Thanks, Red.

                Why did I think our total tax burden, all in, was around 40%? Are the Tax Freedom Day guys just flat wrong when they put it in June? Should it actually be in March?

                1. I’m honestly not sure how the Tax Freedom Day guys calculate it. And to be honest, I’m not sure if the OMB includes property taxes in their own calcuations for state/local revenues. I’m presuming they do, but if not, that would obviously skew the total revenue-to-GDP up further.

                  1. Don’t forget to count what your employer pays in SS and Medicare taxes.

                2. “Why did I think our total tax burden, all in, was around 40%?”

                  That’s the spending level.

        2. And while the lefty scum would absolutely love to pull this off here in America, they don’t have the guts to openly try it, because they would never win another election again.

          Not yet. If the electorate keeps rewarding leftist failure like in this last election, VATs are possible.

        3. “To be honest, we could get our country above 19 or 20 percent tax revenue to GDP; many European countries have done this.”

          Yeah, they get around the Laffer Curve with VAT taxes, which are regressive. The last VAT tax proposal in the US sunk in the Democrat-controlled congress by an 85-13 margin back in 2010.

    2. Spare us Tony, we dealt with BOOSH! from Shrike yesterday.

    3. federal total receipts since 2000
      2000 2.025T
      2001 1.991T
      2002 1.185T
      2003 1.782T
      2004 1.880T
      2005 2.153T
      2006 2.406T
      2007 2.524T
      2008 2.105T
      2009 2.162T
      2010 2.162T
      2011 2.303T
      2012 2.468T(est)

      Yes that’s right, 2012 is estimated to bring in the second highest all time revenue for the federal government.

      Even assuming that the scope of federal government is anywhere near reasonable, I don’t see a revenue problem.

      These numbers are not hard to find, Tony

      1. and the same list next to the deficits. Hmmmmm….

        federal total receipts since 2000
        2000 2.025T +236B
        2001 1.991T +128B
        2002 1.185T -157B
        2003 1.782T -377B
        2004 1.880T -412B
        2005 2.153T -318B
        2006 2.406T -248B
        2007 2.524T -160B
        2008 2.105T -458B
        2009 2.162T -1412B
        2010 2.162T -1293B
        2011 2.303T -1299B
        2012 2.468T(est) -1326B

        Not a revenue problem

        1. And those figures are wrong, because we never ran a surplus in 2000 and 2001.

          It’s deficits all the way down.

        2. You have owned a drooling moron. I’m not sure whether to congratulate you or pity you.

        3. The most interesting thing in those numbers is the correlation. The magnitude is not tremendous, 0.34. But the sign is fascinating, it’s negative. The more money the federal government brings in, the worse the deficit.

      2. What is inflation, Alec?

    4. If the government robbed all assets from every millionaire and billionaire in the country right now, how long do you think it would fund the government’s current spending?

      1. Approximately 3 months.

      2. Yeah that is the problem. The “lets tax em all” crowd does not understand that there is not a big pot of cash sitting around for them to take.

        The money I earn in a year gets spent over that year and when I spend it it goes into the salaries of literally 1000s of other workers who in turn also spend it over the year…this goes for the rich and poor.

        The bulk of government tax revenues comes from essentially taxing the same dollars (unit of wealth) 1000s of 1000s of times from 1000s and 1000s people.

      3. just short of a single year, more than 9 months, I think, but not by much. Oh, and good luck collecting enough taxes to run the country the following year.

    5. Seems to me I remember the Dems being knee deep in the swamp of tax cuts, wars, and recession. Maybe it was some other country I’m thinking of.

    6. OK fine, let’s go back to Clinton era tax rates. Can we also go back to Clinton era spending levels?

      I already know the answer to this question: no. Because apparently old people were forced to live on catfood and poor people were dieing in the streets in the late 90s. Somehow I managed to not notice all that.

    7. Please study classical economics. Gov’t spending crowds out private spending. Less private spending leads to less tax revenue.

      Then, to increase revenue, taxes are increased, which again lowers private spending, and the cycle continues until it is reversed, or there is no more private sector.

      It is economic fact that the gov’t does things at a higher cost and lower quality than the private sector, which is why the Fed gov’t’s only purpose should be national defense, foreign affairs, and federal courts. If the people decide gov’t needs to do more, that needs to be setup at a local or state level.

    8. Here’s something to consider. Maybe we need leadership to get us out of this mess, no matter who is at fault. Obama clearly isn’t it. The guy that comes in behind Obama will have a tougher job trying to deal with this debt (unless as Peter Schiff predicts, it all crashes before then).

      So if most of this is Bush’s fault, just for the sake of argument, shouldn’t Obama be doing something to fix it rather than make it worse?

    9. How mentally disabled do you have to be to come on a libertarian website and bash Bush, yet never say anything negative about Obama?

      Obama has double downed on all of Bush’s policies, plus added Obamacare and NDAA to the mix.

    10. So you are saying you need to cut taxes to 0% before the problem becomes revenue?

      It’s pretty funny you said taxes to zero, not abolish state revenue or federal revenue.

      Straight to zero.

      Only when its zero can you make the argument that spending isnt the prime obstacle.

    11. fuck you Tony, Bush is long gone. time to own it:
      Obama tax cuts
      Obama wars
      Obama depression

      1. We will probably have another recession over the next 4 years.

        I wonder how Tony’s story will change when that happens.

        1. You can’t blame 2nd term Obama for that. He inherited it from 1st term Obama.

        2. Four years? I’ll be surprised if we make it through the next four quarters without entering a recession.

    12. Tony said:

      How is there not a revenuespending problem? Suppose we cut taxesboost spending to zero500% GDP. No revenuefiscal restraint whatsoever. Would the problem still be too much spendingnot enough revenue? As in, we were spending too muchtaxing too little by spending at allnot confiscating more than the national GDP annually? How low do taxeshigh does spending have to be before revenuespending becomes an issue with respect to the gap between revenue and spending?

      Say you want government to do…BUUUUUSH screwed precious revenue!

      1. The funny thing is that revenue to GDP during the Bush years was about 17%, which is average.

        When you look at GDP growth from the end of FY 01 through FY 11, growth was about $4.7 trillion. The debt went up by $9 trillion in that time frame, which means all our GDP growth has been thanks to deficit spending.

        “Real” GDP growth was actually NEGATIVE, and the declining labor participation rate over the same period correlates perfectly with this.

        Christ, the data shows that Tony ought to be thanking Bush for keeping the economy from going into a decade-long GDP tailspin, if you buy into the Keynesian recipe for keeping the liquidity trap open.

    13. Don’t you mean the Obama tax cuts? I mean, he did extend them to great fanfare from his fluffers like you, right?

      That must solely explain why we’ve had relatively stable revenue while accumulating over 1 trillion dollars per year in deficits in each year since Obama was elected, piling nearly 6 trillion dollars onto the national debt in half the time it took BOOOOOOSH to accomplish the same feat.

      Disingenuous fuck is disengenuous

    14. Good grief what a lot of tosh…

  9. Alt Alt-Text: “You have the ring! And I see your schwartz is as big as mine!”

  10. It’s funny, in the completely-not-humorous sense of the word, that the so-called “Buffett tax” won’t apply to its namesake, because he manages to take very little of the compensation he receives from Berkshire Hathaway as wages.

    Also, Bloomberg was reporting this morning that Kindly Old Grandpa Buffett has begun kicking some of his less profitable newspaper properties to the curb. But he’s totally a different sort of capitalist!

    1. Yes, and bad at math too. Good at investing, bad at math.

    2. Let’s not forget, one of Berkshire’s biggest product lines is insurance policies designed to serve as tax shelters. But that’s got to be a coincidence. Kindly old Uncle Warren would never rent seek.

  11. Could someone explain to me why Obama would be opposed, in principle, to the fiscal cliff? Doesn’t it just mean taxes go up (which he likes) and military spending gets cut (which I’m sure he likes)? Sure, there’s a little entitlement trimming in there, too, but isn’t his sole concern on the fiscal cliff whether or not he takes the blame?

    And he can’t be very worried about that, really. The media will be sure to hang it on the Republican “obstructionists”.

    I’m not sure which Dem strategist came up with the whole fiscal cliff scenario back in the last debt limit crisis, but it was sheer genius on their part. Boehner and his “brain trust” were totally pwned. Obama can’t lose, he holds all the cards now. The Repubs will have to swallow an awful lot to get him to agree to anything.

    So, yeah, we’re fucked.

  12. I hope they go ahead and raise taxes on the rich. Give it to them good and hard.

    Then, when we see it producing practically no effect, maybe we can try serious solutions.

    Honestly, though, it’s a total contradiction to simultaneously claim that the rich control the government, and now we’re going to use the government to really stick it to those rich bastards. If that’s what people are waiting for, I hope they can wait a long, long time.

    1. In that case, the problem was tax shelters, off-shoring, foreign bank accounts and loopholes. Also, BOOOOOOOSH

  13. The left’s built in animosity to the wealthy is something to behold. Especially among the non white folks.

    No one comes here to smoke dope and marry someone of your choice. You come here for all the glamour and perks – the elite colleges, trendy malls, Hollywood, cushy suburban existence – all more or less made possible by the odious 1 percent. The tech and entertainment industry is still enabling CA big time.

    Wealthy folks does seem to lean left. Even people on this side of the political spectrum will get burnt out advocating tax cuts / reforms and spending cuts every time when the agenda is rejected by the very people who will benefit from them in the long run.

    Let the chips fall where they may. If massive layoff and the like happens, we’ll get to say “I told you so” to some people. Small comfort.

  14. We know the GOP has already lost the Fiscal battle.
    Obama got re-elected…

    Nothing we can do but realize that the HOUSE was also re-elected .. The GOP is in the majority and needs to act like it.

    No compromise.

  15. Um, just like Romney was sayin’, Dave. It’s all about “free stuff”. Stop being so insensitive.

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