Government Spending

Even Speaker Boehner Calls White House Proposal on Fiscal Cliff Ridiculous

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Earlier today, the Washington Post circulated the White House's opening bid on fiscal cliff negotiations. The Post says it got the plan from Republican aides. Here 'tis:

Taxes

  • Immediate increase in both top marginal rates, as well as capital gains and dividends: +$960 Billion
  • Additional taxes: +$600 Billion
  • 2009-level estate tax
  • AMT and business tax extenders: -$236 Billion
  • Payroll tax extension or alternative policy: -$110B
  • Bonus depreciation extension

Spending/Extras

  • $50 billion stimulus package in FY13
  • Mass refi mortgage proposal
  • Deferral of sequester
  • Savings from non-entitlement mandatory programs
  • Extension of unemployment insurance: $30 billion
  • Medicare SGR Patch: $25 Billion
  • Increase in the debt limit to avoid requiring Congress to vote to increase

STAGE TWO:

  • Tax reform consistent with $1.6 trillion tax increase
  • Entitlement policies from President's FY13 budget that could total $400 billion in savings

So basically, what we're looking at here is the same thing Politico was reporting yesterday: Substantial net increases in federal revenue that start in 2013 with the promise of meager savings ($400 billion) somewhere way down the road. Politico suggested that Obama would make do with "just" $1.2 trillion in tax hikes and that House Speaker John Boehner (R-Ohio) would be happy with a deal that averts the cliff, even if it raising taxes three dollars for every one dollar in spending cuts.

Today, Boehner told the press, "There's a stalemate. Let's not kid ourselves" and that Obama's proposal was not a "serious" offering.

Given Boehner's weak limited government bona fides, thank heavens for small miracles.

All members of Congress should read Reason's special November 2010 issue—so special it was printed in 3D! The issue is chock full of real-life examples of countries (including the United States right after World War II and Canada and New Zealand in the 1990s) that cut spending, right-sized debt-to-GDP ratios, and were rewarded with booming economies.