Fiscal Cliff

Fiscal Cliff Deal Raises Taxes, Delays Sequestration…And Will Cut Spending!

|

The so-called fiscal cliff—that combination of automatic tax hikes, expiring tax breaks, and supposedly ironclad cuts in government spending—has been averted. Who says government can't get anything done? Not only did president and both houses of Congress pull together at the very last minute to designate Salem, Massachusetts "the birthplace of the National Guard" (seriously), they also managed to:

  • Keep income tax rates the same for most Americans. People making over $400,000 as individuals and $450,000 as joint filers will see their top rates go back to what they were under Bill Clinton. Capital gains taxes for the wealthy go up and personal exemptions for those making $200,000/$250,000 are subject to new limitations. The Alternative Minimum Tax (AMT), originally designed to capture a handful of millionaires during the Nixon era, has been "patched" so it no longer snags an increasing number of households.
  • End the payroll tax holiday, which allowed wage earners to keep 2 percentage points of FICA taxes for Social Security. That means all people earning a paycheck will take a hit on the first $113,000 or so of wages.
  • Create a one-year "doc fix" so physicians handling Medicare patients will be paid more than they would if previous law (passed in the 1990s) was allowed to go into effect; extend a ton of tax breaks and supposedly stimulative tax policies to small sub-groups; delayed implementation of supposedly mandatory "sequestration" cuts to defense and other programs; and more.
  • Keep extended and emergency unemployment benefits going for another year without any offsets.

Go here for a full rundown of the details by the Tax Policy Foundation.

It's a rotten deal, filled with precisely the sort of sad-sack posturing that we've come to expect and maybe even demand from our elected officials. But I am confident for two reasons (explained below) that this whole episode will mark the high-water mark of out-of-control government spending at the federal level. That's despite the best efforts and worst intentions of big-government Republicans and Democrats alike.

Despite all the drama and handwringing, the final package passed pretty easily, with large majorities in the Senate and House going for the bill. In the Senate, only eight voted against (including Tea Party faves Sens. Rand Paul, Mike Lee, and Marco Rubio) and in the House, folks such as Rep. Paul Ryan fell in with the party leadership to say aye. Some House members said no way, including Rep. Justin Amash (R-Mich.), Sen.-elect Jeff Flake (R-Ariz.), and Rep. Jason Chaffetz (D-Colo.) (R-Utah). Characters such as Sen. Tom Harkin (D-Iowa) voted against it because it didn't tax the wealthy enough (I disagree with him but admire his willingness to vote his conscience). A more thorough account of the votes for and against is here.

Alot of Republicans and Republican-friendly folks are claiming this as a victory (because Obama had originally set his mind on raising tax rates on lower levels of income) or the best deal that could be had given the circumstances (i.e., a hapless Republican leadership). The least convincing in this line of thought comes from libertarian Grover Norquist of Americans for Tax Refrom, who says that voting for the deal means "we're not raising taxes." On the other side of the aisle, many liberals and those further left are, like Harkin, livid that Obama caved quickly on income levels and didn't put in more spending provisions in whatever deal he struck.

Is a bad deal—from whatever angle—better than no deal at all? That remains to be seen, since this deal really doesn't set anything in stone. First and foremost, there are large budget issues that have not been addressed in any way, shape, or form. The federal government has not passed anything resembling an actual budget in over three years. That process—back when it actually happened—starts soon in the new year. While both the president and the GOP-controlled House have produced their legally mandated documents, the Senate Democratic leadership has refused to execute what is arguably its most basic function. The result has been a government run on continuing resolutions (not a bad outcome, if you dislike spending; government expenditures have essentially been flat since 2009, when they ratcheted up dramatically due to last-minute Bush admin actions such as TARP and first-rush Obama initiative such as the stimulus). The government has also just about reached its debt limit again, too, which means that Congress needs to again raise the limit of money the feds can borrow. The last time that happened was in the summer of 2011, which gave rise to the plan that helped create sequestration.

So the government has effectively kicked the can so far down the road that they've run out of road. That's quite an accomplishment but it's one that will be very short-lived (the feds seem capable of always building more roads than they need; bridges too). We will be in the same sort of impasse that we've been at for years now. The problem is usually denigrated as gridlock and laid at the feat of historically obstructionist Republicans. But none of that is true. Congress has been able to pass all sorts of stupid and generally terrible legislation under Obama and the fiscal cliff deal, whatever its particulars, merely underscores that fact. The true obstructionists in Congress, at least when it comes to budget issues, are the Senate Democrats who haven't completed any serious work in years. More specifically, the blame falls to Majority Leader Harry Reid of Nevada and budget committee chairman Kent Conrad of North Dakota. After a decades-long career in which he is inevitably held up as a great statesman—despite his inability to produce, much less push through, a budget—Conrad is finally retiring. So maybe that will change finally.

At this point, the only interesting questions for the next couple of months are these:

1. Does Obama and the Democrats' extension of the Bush income tax rates for 99 percent of taxpayers represent an upper limit on federal revenue? We live in an era of trillion-dollar deficits and hollow insistence that spending isn't the problem (indeed, barely a day can go by without Paul Krugman or someone like him bleating that the real problem is government spends too little). Now that Obama has ratified a revenue plan, is that the upper limit of income we can reasonably expect the feds to live within? If the GOP can't make that case, they are even sadder than they look.

2. Will spending finally be a front-burner issue? There is no reason to think that stimulus—or massive government-spending more generally—works to "jump-start" an economy. Indeed, there are many reasons to acknowledge that the opposite is more likely to be true. Now is exactly the moment to be discussing serious year-over-year cuts in spending. Obama is still pushing the line that he believes in a "balanced approach" to budgeting. Late last year, he defined that as $2.50 in spending cuts for every $1 in new tax revenue. While that ratio is certainly too small (Canada reduced its debt-to-GDP ratio and goosed its economy in the 1990s by cutting $6-$7 for every $1 in revenue), it represents a starting bid in a process that could lead to a smaller government and a bigger economy. If Republicans insist that defense spending not be cut (they've flipped out over minor trims to a year or two of defense reductions), they have already lost not just this battle but every fight they'll be in until they disband as a party. Nor is it any good to say that all cuts will come from poverty programs (however ineffective, inefficient, and counterproductive some of them may be) or from entitlement spending circa 2020 or later.

Here's why I'm hopeful that the next few years might actually swing toward smaller government spending and reductions in debt—and as a result, a better economy. Over the past several decades, real per-capita spending outlays have followed a predictable though generally ignored pattern: They go up under Republican presidents and stay flat under Democratic ones. Liberal and conservative partisans don't want to acknowledge this because it's the exact opposite of what they sell to the voting public. The GOP is the party of skinflints and the Dems are the crew that stands for massive handouts, right? Well, no:

Obama got his bump up during his first year or so in office. Part of it was due to George W. Bush greasing the skids by bailing out the big banks and GM and Chrysler, part of it due to Obama's decisive win over John McCain. But even his re-election hasn't given him political capital to spend after a first term spent pushing through a still-unpopular health-care plan that's gonna be a total bear to implement over the next couple of years. And everyone knows he's got no second-term agenda (if he had, we would have heard about it sometime during last year's campaign, wouldn't we have?).

Anything can happen of course. You can't underestimate the lack of vision and leadership represented by Mitch McConnell and John Boehner and Harry Reid. But we can now estimate what federal tax rates are gonna be for the next several years, so we know how much money the feds will have to play with. The only thing left to do is to focus on the spending side. And there's nowhere to go but down on that side of the ledger.

NEXT: Kansas Trying to Force Sperm Donor to Pay Child Support to Lesbian Couple

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. While both the president and the GOP-controlled House have produced their legally mandated documents

    That is easy for the President, as he doesnt have to produce anything.

    Budgeting is solely a congressional responsibility (except for signing/vetoing by the prez).

    1. Well, umm no actually, the President legally has to submit a budget to Congress in Jan/Feb every year. See 31 USC 1105. That’s the plan that Congress starts with when it begins producing its budget.

      1. That seems like an unconstitutional abrogation of authority on the part of congress.

        1. abrogation

          Im not sure I used that word correctly. What word did I mean?

          1. Abnegation – renunciation of your own interests in favor of the interests of others.

          2. Arrogation, probably.

        2. Why? The constitution just says that Congress has to enact appropriations laws and tax laws. That’s the sum total of the constitutional budgeting provisions.

          31 USC 1105 doesn’t say that the President gets to set the budget. It just says he has to submit one for Congress’ consideration. And frankly, that makes a lot of sense. What does Congress know about how many fighters the Air Force needs? Or how many prosecutors DOJ needs? The agencies build up and justify their budgets to the President based on what they think they need, who then looks them over (actually OMB does that) and sends them together to Congress. Congress can then call in the agencies for questions, etc. before adjusting or approving their budgets.

          Or at least that’s theoretically how it works.

        3. I believe that what he has to submit is a proposed budget. As the Executive, charged with operating the many functions of the Federal govt, he presents a proposal for what’s needed to do that.

          I believe that’s what Congress generally starts from when developing a budget. I don’t think that Congress is legally required to start with the President’s budget proposal.

  2. “The problem is usually denigrated as gridlock and laid at the feat of historically obstructionist Republicans. But none of that is true.”

    It is true that we would have had a deal with a lot more spending if it hadn’t been for Republican backbenchers in the House.

    A budget with a lot more spending than we have now wouldn’t be better just because it was a proper budget.

    No, we didn’t really address the problem of overspending, but we’re not as bad of as we would be if Obama got what he wanted.

    Unfortunately, in this political environment and with this president in the White House, that has to be considered progress.

  3. The problem is usually denigrated as gridlock and laid at the feat of historically obstructionist Republicans.

    Everyone has been trained to do whatever will get them the least negative press from economically-illiterate journalists and talking heads. Until that changes, nothing else will.

    1. Interesting, no, that when two parties historically have a hard time agreeing, only one of them is “obstructionist”.

      Query: why is it that the Dems aren’t equally obstructionist? Aren’t they just as capable of compromising with Republicans as Republicans are with Democrats?

      1. Republicans are always being obstructionist. Don’t you recall after the 08 election when Democrats had 60 votes in the senate, a house majority, and the presidency, yet the republicans were still taking marching orders from Rush Limbaugh and using black magic to mind control the economy into tanking despite the heroic efforts of the president and the stimulus?

      2. If your assumption is that progress/prosperity results from more government, then those fighting for less are obstructionists. If your assumption is that progress/prosperity results from less government, then Democrats and most Republican congresspersons are obstructionists.

  4. I think this “deal” has given Republicans enough political cover that they can extract major concessions during the debt ceiling debate in a few months. That is when we will see if Republicans are serious about cutting the debt or not.

    1. HA HA HA! Good one!

    2. It will depend on whether the Reps can sell the line, “we’ve agreed on taxes, not let’s do spending,” or if the Dems successfully push their counter-line that “the agreement on taxes was just to avert the cliff, and we still need a balanced approach on deficit reduction.” Obama was already pushing that line the day before the Senate passed its bill.

      1. Its going to be hard for the Democrats and their allies in the sycophantic media to paint the GOP as protecting “millionaires and billionaires” when they just agreed to a tax hike for those making $450k and up.

        1. Perhaps, but they sure will try.

        2. What country do you live in? Americans have been told by the press and Dems that millionaires and billionaires are evil. Most Americans agree with that now. Combine that with the fact that the GOP is incapable of getting their message across and you will definitely have more “rich” bashing by the Dems and the press. Obama will continue to get his way.

        3. The definition of millionaires and billionaires will just come down to anyone making over $50k. That’s Demspeak for filthy rich.

          1. In Demspeak the filthy rich is anyone who has more than you. It’s the American version of the Ivan’s goat story.

    3. That’s odd. I took this deal to mean that there was no possibility of the Repubs ever extracting meaningful spending “cuts” from the Dems.

      The Dems now have their roadmap for peeling off enough Repubs to get a House majority for more spending.

      1. They didn’t have to peel off anyone. Which is a fairly clear sign Republicans have made the strategic decision to pass this “deal”, and live to fight during the debt ceiling debate.

        1. They didn’t have to peel off anyone.

          Sure they did. Over 150 Repubs voted against it, more than half the caucus. The Dems got their House majority by peeling off a minority of Repubs.

          And they will do it again and again.

          Eighty-five Republicans and 172 Democrats backed the bill, which had sailed through the Senate by a lopsided 89-8 margin shortly after 2 a.m. Opposition comprised 151 Republicans and 16 Democrats.

          http://news.yahoo.com/blogs/ti…..itics.html

          1. Thats still not peeling off. I was watching the vote live, and when it was clear that 90% of Democrats were supporting the bill and it was going to pass that is when a lot of no votes started coming in from the Republicans. A lot of Republicans voted no, knowing the bill would pass anyway.

            1. The House Republican leadership allowed it to come to a vote.

              Because “Plan B” failed.

              “Plan B” failed because they couldn’t get enough Republicans to vote for a deal that was MUCH MUCH better than this.

              So blame that minority of retarded Republicans who voted against “Plan B”.
              Imbiciles.

              1. That is a bit harsh considering their were rumblings from Senate Democrats that why would never support a tax increase on only those making $1 mil plus. Boehner probably could have gotten Plan B passed by the House, but almost certainly would never have gotten it past the Senate or the President. Facing criticism from both the left and the right, Boehner wisely shelved it.

                1. The reason the D’s unified against it is because they were afraid of it. “Plan B” would have turned the tables and made the D’s the ones who were obstructing the deal and holding “middle class tax cuts” hostage.

                  Yes, they were screeching about how it wouldn’t pass. But you put that on the table, wait to go over the cliff, and then force the D’s to either accept it or be responsible for tax rates going up on the middle class.

                  That was the plan. It would have shifted the pressure to the other side, and then the R’s could have negotiated a better deal.

                  1. That is highly optimistic. Consider that Republicans are the ones who wanted all the tax rates made permanent and Democrats are the ones who were holding up the tax cuts unless the rates went up on the top bracket. Wouldn’t a sane, unbiased person say that its the Democrats who are being obstructionist by holding the tax cuts hostage unless the tax bracket they dont like goes up? That is not the narrative Americans got from the media, just the opposite. In other words, their is just about no way Republicans would benefit from this, no matter what they put out.

                    1. Except that Obama explicitly campaigned on rate hikes and he won the election. And the rate hikes were already law.

                      The R’s job is to pass just enough tax cut extensions (but no more) so that the D’s don’t have a fig leaf to vote against it. Passing ALL the extensions gives them a fig leaf to vote no.

                      The only way to twist their arm is to give them what they want – rate increases on the “1%”.

                      The $1M cut-off isn’t exactly what they were asking for, but it puts them into the position that we’re no longer fighint over whether tax rates iwll rise for “the rich”, we’re no fighing over where the cut-off point will be. And then suddenly it’s a lot harder for the D’s to vote against something just over the difference between $250K and $1M.

                      Not to mention that they could send it to reconcilliation and come up with a compromise figure.

      2. The Dems now have their roadmap for peeling off enough Repubs to get a House majority for more spending.

        Only because there is a small faciton of Republicans who are too stupid to make the best deal possible within the Republican majority, and would rather allow a “bipartisan” majority to form and pass whatever it wants than to actually play politics and negotiate with their own side.

        The Republicans who obstructed “Plan B” are responsible for this. Not the Democrats. The Democrats are doing the best job they can gettting the best deal they can given their beliefs. You can’t blame them for fighting for what they believe in.

        You can blame the Republicans for being too stupid to seize an opportunity when it smacks them in the face.

    4. “I think this “deal” has given Republicans enough political cover that they can extract major concessions during the debt ceiling debate in a few months. That is when we will see if Republicans are serious about cutting the debt or not.”

      It extends their opportunity to obstruct Obama’s plans for 2013 moving forward, and that’s great news for fiscal conservatives.

      If Obama tries to push through his stimulus, he’ll have to contend with it in terms of a new budget deal.

      Want $300 billion in new stimulus, President Obama–then let’s talk about $300 billion in cuts elsewhere.

      Kicking the can into next year was the best thing a fiscally conservative libertarian could hope for.

      …because the world where Barack Obama signs real and significant budget cuts also features flying unicorns that shit rainbows.

      1. Kicking the can into next year was the best thing a fiscally conservative libertarian could hope for.

        No. The best thing a fiscally conservative libertarian could hope for would have been going over the fiscal cliff, then passing just the tax rate extensions. “Plan B” was the closest we came to that.
        Some R’s are retarded is all.

        1. You’re right. Going over the cliff and then passing the tax cuts would have been better.

          I think the reason we didn’t do that was just because the media would have declared open season on Republicans for being so irresponsible. And by making a deal, the Republicans avoided giving the media so much ammunition to shoot at them with.

          So, maybe you’re right and going over the cliff would have been better, but given the reality of Obama in the White House, the deal they made was pretty good from a fiscal conservative’s standpoint.

          I thought we were likely to get a whole lot worse. People on the left are mad as hell right now because given the Democrats’ leverage in the Senate and the White House, they thought they were going to get a lot more than they did.

          Sometimes not losing is a great win.

          1. Well if the R’s had passed “Plan B”, then it wouldn’t be the R’s who were responsible for going over the cliff.

            They could have rolled it together with a payroll tax cut extension and then had a situation where the R’s already passed a plan that would keep taxes the same for almost everyone, and the D’s are obstructing it to get bigget tax increases on those making between $250K and $1M. Which frankly, most peole aren’t going to give a shit about.

            Had the R’s managed to pass “Plan B” they could honestly claim that it wasn’t their fault we went over the cliff, the D’s were just being pig-headed about the exact rate cut-off, and wanting to attach a bunch of additional spending.

            1. I wish they had done that.

      2. It extends their opportunity to obstruct Obama’s plans for 2013 moving forward, and that’s great news for fiscal conservatives.

        Because America has been conservative in its spending since the Republicans gained the majority.

    5. Spoiler alert: They aren’t.

  5. And there’s nowhere to go but down on that side of the ledger.

    Famous. Last. Words.

  6. All this makes me kinda wistful about the possibility of Al Queada nuking DC.

    1. Just what we need… another Superfund cleanup site and a multi-trillion dollar rebuilding project.

      1. Yeah, but talk about stimulus! Krugman will probably orgasm from the news coverage.

  7. I am confident for two reasons (explained below) that this whole episode will mark the high-water mark of out-of-control government spending at the federal level.

    I’m confident this marks the high-water mark of out-of-control government spending, too — but only because henceforth federal spending will be “deemed” to be under control.

  8. “And there’s nowhere to go but down on that side of the ledger.”

    hahahahahhahha. And it’s not even Friday yet. Thanks for the back to work hilarity though!

  9. *walks in, turns over a table, kicks a chair over, walks out*

    Fuck this.

  10. I’m pretty sure this was all a media invented hype. And all those very serious news people went for it.

    1. Of course they went for it, it was good for the ratings of all the news-entertainment people.

  11. I think I need to read up more on Argentine history. Those folks, at least some of them, seem to do alright in an ongoing economic collapse.

  12. The problem is usually denigrated as gridlock and laid at the feat of historically obstructionist Republicans…The true obstructionists in Congress, at least when it comes to budget issues, are Senate Democrats

    First, it’s “feet”, but past that, this is so true. It astonishes me, even though I should be sufficiently cynical about it, that the party in charge of the Executive Branch and the Senate gets absolutely no blame in this whatsoever, even though Sens. Reid and Conrad haven’t even bothered to pick up any piece of paper that says “budget” on it in three years.

    Even worse, if Republicans did the responsible thing and refused to pass a CR, the partisan morons would blame them for “shutting down the government and killing our Men and Women in Uniform” or whatever the fuck else they’d go on about – as if the House is just supposed to keep on keepin’ on without any regard for what the other house of Congress does or does not do.

    It’s fucking unbelievable.

    1. even though Sens. Reid and Conrad haven’t even bothered to pick up any piece of paper that says “budget” on it in three years

      I too am still confused about why this isn’t featured more prominently in news reports…what % of the population do you think has any idea that Congress hasn’t passed a budget since 2009? Like, 5%? Maybe? Probably around the same proportion as know such bills are supposed to originate in the House.

      1. Like, 5%? Maybe?

        no way. that’s too high.

        1. Yeah, I thought it was pretty high myself.

      2. I too am still confused about why this isn’t featured more prominently in news reports

        Because it would reflect poorly on the President, that’s why. How many media talking heads explicitly said “Whew, now that Obama’s re-elected, we can stop carrying his water”?

        Plenty.

        1. They will never stop carrying water for him. His re-election vindicates their belief that the president is doing the right thing but needs their help to sell it.

          1. I mean, once you get in the habit of being dishonest, it snowballs. They tell themselves they are going to stop, but they’re too addicted at this point.

            1. Yup. The more you lie, the harder it is to go back to telling the truth because telling the truth involves admitting to more and more lies. They are past the point of no return on Obama. To admit the truth means admitting they have been lying for five years.

          2. That is why they hated Carter and consider him a loser. Not his policies, most of which they agreed, but because he didn’t get that second term. Just by getting a second term, Obama is deemed a success according to their fucked up metrics.

    2. The problem is that Obama and Reid are not interesting in solving any problems. They just want to divide the country and humiliate the other side. Even the worst Presidents of the past, would have used their clout after winning re-election to get a good bargain with the Republicans on the Hill and told the world how great and bi-partisan they were. But Obama and Reid seem incapable of doing that. They honestly seem to think that the entire point of their being in office is to humiliate the other side.

      Think about this. After months of negotiations over the cliff, I and I don’t think anyone else can tell you what a complete win for the President would have looked like. What the hell did he actually want? He doesn’t seem to know. And worse still, I don’t think he cares. He wants this huge government with all of these goodies, but then refuses to spend any political capital to achieve the kind of tax rates necessary to pay for it. All of his conservative critics say he wants to turn the country into a socialist one. It is actually worse than that. If he were an actual socialist, he would at least try and pay for the government he wants. He won’t even do that but still refuses to do anything to cut spending. It is reached the point of insanity.

      1. “The problem is that Obama and Reid are not interesting in solving any problems.”

        There is a limit to how good a budget deal can be so long as Barack Obama is president.

        He would never sign a deal that actually cut spending. Never.

        Whatever deal the Republicans had to make, it had to be made with that reality in mind. I don’t think some of my fellow libertarians appreciate that reality.

        So long as Barack Obama is president, there will never, never, never, never, never, never, never, never, never, be actual spending cuts.

        The best we can hope for in the real world is to limit the growth of spending–somewhat. Some of our fellow libertarians are living in a world with unicorns.

      2. They got a good bargain by using their clout. They got a bipartisan majority to support their bill. That’s smart politics.

        Quit bitching about how the D’s are so good at playing politics and start wondering why your side isn’t.

        1. I still think the Republicans got the better of the deal, but it isn’t about one side being good at playing politics.

          It’s about one side having their man in the White House, and the White House’s signature being required on any budget deal.

        2. Hazel what are you talking about? They couldn’t even raise taxes on people making 250K a year. And they didn’t even make a decent start on raising the kind of money they need to to get the deficit inline.

          That is the whole point. All they know is attacking the other side. They have no idea what they actually want. They don’t have and wouldn’t spend even if they had it, the political capital to get a meaningful tax increase. Yet, they refuse to cut spending by even a dime. That is not politics. That is insanity.

          1. They got the spending cuts delayed for 2 months. They got UI benefits extended YET AGAIN. They got the payroll tax cut to expire. And they don’t CARE about the deficit, as you know. The difference between $250K and $400K is symbolic.

            They got a better deal than they would have gotten had the R’s managed to pass “Plan B”. Which they could have used as leverage against the Democrats.

            But the R’s couldn’t get their act together to propose an alternative, so they let the D’s take the lead. This was a Senate negotiated deal. It was passed by most Democrats in the House an a Republican minority.

            1. So neither side got everything it wanted.

              1. What didn’t the Democrats get? The trivial difference between $250K and $400K ?

                The R’s could have gotten a much much better deal had they passed an alternative bill in the House. Blame it on the few R’s who would not support “Plan B”.

                1. The Bush tax rates are now permanent for 98% of the country. And that is a ‘win’ for the Dems? The Republicans couldn’t do that when they owned the whole government hazel.

                  1. It is a win because the D’s are going to get the credit for it.

                    And tax cuts mean nothing if spending isn’t also cut. Which it wasn’t.

          2. I think Obama did once show his hand.

            http://www.csmonitor.com/USA/D…..deal-video

            He wanted $255 billion in new stimulus.

            He wanted to raise taxes substantially on people making more than $450,000 $250,000 a year.

            He wanted to take the ability of Congress to raise the debt ceiling away and have it for himself.

            And he got none of it!

            That’s a win/win/win for libertarians.

            1. And Obama will never have more political clout than he has now. He will only get weaker, especially after the 14 midterms.

              1. I sure hope so!

                That’s another win, too, as far as I’m concerned.

                Obama cannot propose any of those things for 2013 without contending with another budget show down–and 2014 is a congressional election year.

                We libertarians and fiscal conservatives did not get the actual budget cuts we want–but they were never on the table. Actual budget cuts was never one of the options. Given the reality of Obama in the White House, this was probably the very best way to address the budget possible.

                Republicans should celebrate their victory by getting rid of Boehner as their Speaker.

                1. We libertarians and fiscal conservatives did not get the actual budget cuts we want–but they were never on the table.

                  Like the expiration of the Bush tax cuts, the spending cuts were already law.
                  So of course they were on the table. All they had to do was refuse to let this bill come to a vote, and it owuld have happened.

                  What was NOT on the table was “zero tax increases”.

                  1. I’m talking about actual spending cuts. The kind where we spend less money next year than last year.

                    Even with the cuts built into the cliff, we weren’t about to spend less money next year than last year.

                    Those were just cuts in the rate of growth, which are a good step in the right direction. It’s just that…

                    I guess I’m resigned to the idea that spending just isn’t going to be in check–at least–until John Boehner is no longer Speaker of the House and Barack Obama is no longer president.

                    1. Spending cuts aren’t going to happen unless the yield on 10 y bonds increases by 2 basis points. Then they’ll shit their pants and cut.

                    2. And the interest rate on the ten year treasury is trading at 1.82 percent right now.

                      Part of the reason for that is because of the funny stuff the Fed is doing, but, yeah, nobody’s worried about inflation right now.

                    3. you mean 200 basis points? – move up 8 bps today

                    4. yeah, sorry, 200 bps.

                    5. I guess I’m resigned to the idea that spending just isn’t going to be in check–at least–until John Boehner is no longer Speaker of the House and Barack Obama is no longer president.

                      That’s just stupid. They could have gotten a deal with spending cuts, but they couldn’t unify their own party behind any alternative plan that actually cut any spending.

                      The problem is the R’s political incompetence, not the Democrat’s free-spending beliefs.

                    6. It isn’t stupid! I do this all the time with people on the city council. If there aren’t enough votes, after you’ve tried everything, then you have to change to do whatever needs to be done to get the votes.

                      If the budget cannot be addressed without the signature of Barack Obama, then why wouldn’t you take the fact that Barack Obama will never sign any ACTUAL spending cut into consideration.

                      I’ve already agreed with you that having more spending cuts without a deal would have been better than what we have now; I just don’t think going without a budget like this is something the Republicans were willing to suffer the consequences for at the ballot box.

                      That’s why libertarians need to work on the voters, but in the meantime, if a deal was going to be reached (and I think really going over the cliff was probably politically unfeasible), then this is the best deal we could have gotten given that Barack Obama is in the White House.

                      It would have been better, probably, if someone other than Barack Obama were in the White House, but my fellow libertarians think lodging a protest vote for Johnson is more important than fiscal sanity, apparently.

                    7. If there aren’t enough votes, after you’ve tried everything, then you have to change to do whatever needs to be done to get the votes.

                      If the budget cannot be addressed without the signature of Barack Obama, then why wouldn’t you take the fact that Barack Obama will never sign any ACTUAL spending cut into consideration.

                      But he already DID sign it. Just ike the R’s already DID pass the tax rate expirations. It was already LAW!! It had been passed years ago! Obama didn’t have to sign ANYTHING!

                      The only reason to pass any bill at all is because the R’s want to get something out of it. Namely, tax cut extensions. So they gave up all of the spending cuts, in exchange for making tax rates permanent for those under $400K.

                    8. I know you’re right about the spending cuts.

                      What I’d like you to consider is whether the Republicans would have held the line after going over the cliff in the face of all the media criticism. I doubt they would have.

                      That’s one of the other things Republicans bought with this deal–they don’t have to defend themselves against the mainstream media. If they would have held the line on spending despite the media storm, then they wouldn’t have caved in on the cuts now.

                      They knew that! Everybody involved in the negotiations knew that the Republicans didn’t want to get blamed for irresponsibly sending the country over the cliff. If they weren’t willing to hold the line before going over the cliff, what makes you think they’d hold the line on spending after going over the cliff?

                      I don’t think a budget deal was as easily avoidable as you think–not with Obama in the White House. The chances of Obama taking any heat for the Republicans sending the country over the cliff were nil.

                      We basically agree on a lot here, Hazel. I agree that it would have been better to go over the cliff, but negotiations are about leverage. The fact that the Republicans weren’t willing to suffer the media storm blaming them for being so irresponsible is a real fact that has to be accounted for.

                    9. When I go to get plans approved, I can just let the city council vote down my plans and tell my investors, “Oh, I wouldn’t have lost you any money if only the world was the way it should be!”, or I can do what’s necessary to get my plans approved given the way the world really is–and make my investors some money!

                      Take your pick.

                      The Republicans not being willing to take the heat is the way the world really is. Given that fact (and Obama in the White House), what’s the best we can hope for?

                    10. That’s why they had to pass “Plan B” BEFORE going over the cliff.

                      That way they would make the Democrats responsible for going over the cliff if they refused to pass it.

                    11. “but my fellow libertarians think lodging a protest vote for Johnson is more important than fiscal sanity, apparently.”

                      Right, because our singular votes for Romney-Ryan would have made all the difference in the world in the final election outcome. Even if it would have, their plan didn’t balance the budget until at least 2040, spent only 5% less than Obama’s plan, paid for entitlement promises with imaginary money and seemed slightly more likely to start a new war or two. In full perspective, Obama looked like the comparative fiscal conservative and might result in less actual federal outlays than Romney-Ryan would have, which is really saying something about Republicans and their apologists.

                    12. It’s just an observation!

                      The fact is that we’ll never get real spending cuts so long as Obama is president.

                      There was some hope with Romney that if his party in Congress managed to pass some real spending cuts, he would have followed their lead and signed them.

                      There is no hope that Barack Obama will ever sign real spending cuts. None.

                      And anyone who criticizes the Republican backbenchers in the House needs to take that into consideration. First, they need to deal with the reality of their own speaker, but they’ll never be able to do anything about our out of control spending until Barack Obama is no longer president.

                    13. They could have gotten a deal with spending cuts

                      Not real cuts.

                      I think they should have gone over the cliff and gotten the fake “cuts” from summer.

                      But, they arent listening to me or they would be attaching Obamacare repeal to every bill.

                      Like this one. The House should have attached Obamacare repeal to it.

                      Hell, give the Pres his 250k cutoff in return for repealing it.

            2. Ken, how do you know that all that stuff wasn’t just a negotiating tactic?

              Demand something absurd and then compromise back to what you actually are hoping to get.

              Don’t compare the deal to what they ASKED FOR. Compare it to the previous policy baseline.

              The difference between this week and last week is that taxes are higher, the payroll tax cut is expired, UI benefits have been extended, and all of the sequestration cuts have been delayed.

              There is NO part of that that in any way even slightly inches in a more libertarian direction.

              1. “Ken, how do you know that all that stuff wasn’t just a negotiating tactic?”

                They were perfectly consistent with what he’s done in the past and what he campaigned on.

                Are you suggesting he wouldn’t take any one of those things if he could?

                “The difference between this week and last week is that taxes are higher, the payroll tax cut is expired, UI benefits have been extended, and all of the sequestration cuts have been delayed.

                You shouldn’t just compare it to the way things were–you should also compare it to the way things could have been. I doubt the Republicans would have stuck to their guns in the face of the mainstream media flogging them like they did to Newt Gingrich in his budget showdown. Republicans just lost a humiliating defeat nationally.

                If there was going to be a deal anyway, then this is probably the best deal we could have gotten from a libertarian perspective. That’s the way I see it.

              2. Don’t forget the increase on cap gains.

                1. Yeah, that sucks.

                  There shouldn’t be any tax on capital gains. That’s gotta be the most socialist form of taxation possible.

                  I guess socialism is really just a system where the capital gains tax is 100%.

                  If I were the King of America tomorrow, getting rid of the capital gains tax is the third thing I’d do.

                  The first would be to require that all taxes are due on election day. You fill out your tax form on one side, and then you vote on the other! And believe me, by the time the second vote came around, the form would be so small, you’d be able to do you taxes on the back of a simple ballot.

                  1. Most people disagree because capital gains taxes appear more like speculative gambling than actual work. Why should money made from actual labor be taxed higher than money made investment? Don’t get me wrong – I don’t think either should be taxed, but I don’t consider cap gains particularly more egregious than the income tax.

                    1. If capitalism has to do with the accumulation of capital gains, then taxing capital gains must be extremely anti-capitalistic.

                      “Most people disagree because capital gains taxes appear more like speculative gambling than actual work.”

                      These people have never spent the time, effort, and energy necessary to build a company and sell it.

                      I assure you, finding a suitable site, spending 18 to 24 months getting the plans approved, designing the site for the market, building the project, and then marketing and selling it to users–it involves a lot of work.

                      And I don’t owe anybody anything just because in doing all those things I increased the sale value of my land.

                    2. How is what you did different from any other form of labor that gets taxed as income? Why is taxing what you do purportedly more socialist than taxing what we do?

                      Also, most stockholders are not involved with spending time, effort and energy to build companies. They are simply hoping their investments are wise and pay off. Now, I think that in a free market where liability and debt are fully assumed by the stockholders, that would change. But we don’t have a free market, we have corporate capitalism.

                    3. Yes, but for many those dollars have already been taxed once as income. You earn a buck, set it aside, invest, and earn back a small premium, then pay cap gains on that premium. That just sucks.

                    4. “How is what you did different from any other form of labor that gets taxed as income? Why is taxing what you do purportedly more socialist than taxing what we do?”

                      I pay income taxes, too, you know?

                      There’s nothing different about the taxes I pay. Actually, I may have to pay higher income taxes than you do–if I earn more. Which is bizarre, because the idea that I owe people money because I earned it is so absurd as to be laughable. It’s just that people have become so accustomed to the absurdity, that it doesn’t seem odd anymore.

                      But think about it: I earned money so I owe money to someone else, why?

                      “Also, most stockholders are not involved with spending time, effort and energy to build companies.”

                      The due diligence they do is often time consuming. And putting their money at risk and forgoing easy interest isn’t exactly effortless. That money could be put to easier use for lower returns.

                      Also, since when do the qualitative aspects of labor determine how taxable something should be?

                      If office workers and construction workers make the same amount of money, should office workers have to pay more?

                      “But we don’t have a free market, we have corporate capitalism.”

                      I’m not willing to wait for a perfectly free market to enjoy the benefits of low taxes. I want the benefits of capitalism no matter how imperfect the market is.

                    5. “Also, since when do the qualitative aspects of labor determine how taxable something should be? If office workers and construction workers make the same amount of money, should office workers have to pay more?”

                      That’s my point: say a day trader and a laborer earn the exact same amount of income in a year. Why is the stockholder charged a lower rate per dollar earned than the laborer? The fact that the day trader earned and paid taxes on the income he’s investing already is no different than the money a laborer might have paid post-income taxes to learn the skills to do their job. Income is income, and fostering economic growth by artificially incentivizing direct investment over indirect investment is not a function of the government or even necessarily logical economic engineering.

                    6. “That’s my point: say a day trader and a laborer earn the exact same amount of income in a year. Why is the stockholder charged a lower rate per dollar earned than the laborer?”

                      Day traders aren’t paying a lower rate than the laborer!

                      Laborers pay capital gains taxes on the same rate that day traders do.

                      Day traders pay income taxes on the same scale that laborers do.

                      That was Warren Buffet’s argument–why should he pay less taxes than his secretary? His secretary doesn’t pay lower income taxes than he does! And if she buy stock and sells it at a profit, then she pays capital gains taxes, too!

                      Neither form of taxation–income or capital gains–is fair or just or efficient, which is why I’d replace both income taxes and capital gains taxes with sales taxes…both of which are far superior for a number of reasons.

                      In the meantime, the cost of actively discouraging investment in this country by raising capital gains taxes to the same rate as income taxes would be far worse than whatever benefit you imagine would come from equalizing those rates.

                      Just because we do retarded things like tax income (which drives up the cost of hiring unemployed people and paying them their take home pay–among other stupid things), that’s no reason to go full retard on capital gains, too. …just for the sake of the both being the same?

                      If we shoot ourselves in one foot, that’s no reason to shoot ourselves in the other foot, too!

                    7. *EDIT*

                      Laborers pay capital gains taxes on the same [capital gains] rate [scale] that day traders do.

                    8. Come to think of it, I screwed up on this one, too:

                      His secretary [does] pay lower income taxes than he does!

                      I got a call halfway through this one…that’s my excuse, and I’m stickin’ to it!

                    9. But you’re missing the point that both income and cap gains should be taxed as income if we’re taxing income, since that’s what they are: personal income. Setting different rates for different kinds of income is pure economic engineering and gives preferential treatment to one kind of investment over another.

                      It’s like the mortgage interest deduction: why does the government give homeowners preferential tax treatment over renters? Because they want to incentivize homeownership rates. Is that not a government market distortion that has potential negative effects? Likewise incentivizing direct corporate investment over other the other forms of investment is also a market distortion.

                    10. “But you’re missing the point that both income and cap gains should be taxed as income if we’re taxing income, since that’s what they are: personal income.”

                      Equity isn’t income any more than equity is debt.

                      Capital gains are just not income, and even if they were, getting some of our income taxed less than others is preferable.

                      The idea is to keep as much of the economy out of the hands of the government as possible. If you want to lower the top income tax rate to the level of the current capital gains tax, I’m all for it. But anything that limits the reach and size of the government is a good thing.

                      P.S. I don’t think you’re getting that people who accrue capital gains don’t owe anybody anything. If the problem is envy from some people, then the solution isn’t to raise the capital gains tax. All rich people owe the poor is respect for the rights and liberties. Poor people owe that to rich people, too.

                      I’m not here for your benefit. I’m not here for the government’s benefit either. Poor people should go make their own money–and stop imagining that rich people owe them something because they’re rich.

                    11. But you’re missing the point that both income and cap gains should be taxed as income if we’re taxing income

                      And again, cap gains held for less than 1 year ARE taxed as ordinary income. The reason for the reduced rate on long-term capital gains is that the invested capital has already been subject to taxation! Since the evil corporations get to pay income taxes just like individual human beings, any distributed dividend is a surplus AFTER that tax has already been paid, and any gain realized on the sale of the stock reflects the value AFTER that tax has already been paid. Collect as much tax on income as your Marxian little heart desires, but don’t pretend that collecting it more than once on the same dollar of income is somehow fair.

                    12. say a day trader and a laborer earn the exact same amount of income in a year. Why is the stockholder charged a lower rate per dollar earned than the laborer?

                      He wouldn’t. Day traders flips stocks that they hold for sometimes less than a minute, certainly less than a month in most cases. Hence the “day” in “day trader”. Capital gains realized on investments held for less than a year are subject to the regular income tax rate. You’ve slain this windmill enough times – I’m getting really fucking tired of having to point it out every time you trot out this line of bullshit.

                    13. Still didn’t get the memo that the cap gains rate only applies to investments held for over a year that have ALREADY BEEN FUCKING TAXED at the corporate level, huh? I’ve only pointed this out to you like, what, 50 times on here?

      3. All of his conservative critics say he wants to turn the country into a socialist one. It is actually worse than that. If he were an actual socialist, he would at least try and pay for the government he wants.

        It’s this that almost makes me wonder if the tin-hat wearers who believe that he’s out to “destroy the country” may not actually be as crazy as they sound. Think about it, what’s the best and apparently easiest (because it’s not like the Repubs can/ will do anything to stop it) way to destroy a country? Run up massive debt while simultaneously debasing the currency. And no one’s going to stop it before it’s too late.

        1. I think he is just stupid. But if he were an evil genius, i can’t see how he would act any differently than he has.

          1. Obama has said he wanted to have a transformative presidency. He’s just never said what that means.

        2. The cycle is brilliantly cynical: spend until everyone is dependent upon the government, lambaste critics of perpetual government dependency and fiscal instability as hate-filled sociopaths, raise taxes on the miniscule minority that “can afford it” to pretend that they care about the debt and the fiscal comfort of the middle class voters, monetize the debt accumulated then blame price inflation on corporate greed. Someday the jig will be up, but with the media completely complicit in it, it will be far too late when the public realizes it.

        3. Hey, it worked for (Chile’s communist dictator) Allende. That, and the roving gangs of socialist psychopaths destroying BMWs and throwing acid in the faces of the rich.

      4. Paying for the socialist government would require getting a Republican Congress to go along with his budget and get it passed. That isn’t possible, so just continue the 2009 spending in the manner they have. That 2009 spending was the socialist government as best he could achieve and it is ongoing with the current method. Socialists (at least American ones, are nothing if not patient. Take what you can get and keep it as best you can. Aggression will be punished.

        Slow and steady wins this race and Obama/Reid know it. They may be monumentally stupid in thinking socialism is good, but they are smart enough to know how to achieve it in a land of religion/gun clingers. That’s what makes them so dangerous.

  13. It’ll be interesting to see how much additional revenue the tax raises actually produce.

    1. Yeah. What amazes me, though, is that so few people seem to question the idea that rate increases equal revenues. I think you can pretty well count on revenues not rising in proportion to the increase in rates.

      1. Oh, my God, yes. This. What happens when revenue only marginally increases or not at all?

        What about the increase in cap gains and the additional Obamacare 3.5% on top of that? How can that not be a huge drag on investment?

        My assumption is that Obama and the dems believe the economy will either coast along at 2% growth or do even better, with stable unemployment. What happens when the unknown unknown hits the fan (currency war, bond bubble bursting, Japan or EU exploding, inflation)?

        They’re way optimistic and NOT prepared for a bad scenario let alone a worst case one. We are fucked.

        1. What happens when revenue only marginally increases or not at all?

          Well, they say we need to raise rates even more until we have the revenue we need. Obviously, the filthy rich aren’t paying their fair share.

        2. When confronted with the fact that raising the capital gains tax rate has historically resulted in less revenue from the tax, Obama said that it was a matter of fairness, not revenue, and that he would still support it. I think that pretty much answers your question.

    2. None to negative is my guess.

      The only part of the Bush tax cuts that would raise revenue is the 10% bracket.

      Take it back to 15% and that will raise a bunch of revenue.

  14. “And there’s nowhere to go but down on that side of the ledger.”

    Mr. Gillespie, you better write another article explaining how you come to that bizarre conclusion.

    1. It’s an allusion to numerous articles published by this news magazine arguing that the U.S. govt is collecting the maximum revenue as a percentage of production that it is capable of, that any increase in tax rates will result in people altering their behavior either to evade the taxes or to reduce the taxed behavior because it ain’t worth it.

  15. You left out that they saved us from a milk debacle too.

  16. They go up under Republican presidents and stay flat under Democratic ones.

    This is a completely meaningless statement without looking at the makeup of Congress during those terms. Seems like when Congress is divided or in Republican control spending stays falt and goes up when Dems are in control. Looking at the party of the POTUS is the wrong thing to look at.

  17. Gee, isn’t it great the “compromise” means they’ll only spend more of my money instead of all of it?

    1. What is funny is that when it came right down to it, the Dems were unwilling to raise taxes on people making from 250 to 400K a year. They really desperately want to tax the evil Republicans. But they can’t do that without also hitting a lot of the right people in high cost of living states.

    2. Hey, you didn’t want to get fucked in the ass, they wanted to fuck you in the ass, so they fucked you in the ass with lube! Sounds like a compromise to me!

  18. The battle has shifted from taxes (Obama got what he wanted) to spending. The country has gone from needing an agreement between the parties to prevent an automatic tax raise to needing an agreement to keep spending. All that is left is for the idiot republicans to actually strategize and pass a house bill that allocates priority of revenue to interest on debt and other “possible default” avenues leaving any fight over debt ceiling over spending and not a “default”. Repubs can win argument on spending and debt.

    1. The country has gone from needing an agreement between the parties to prevent an automatic tax raise to needing an agreement to keep spending.

      Funny how that agreement means nearly everyone’s taxes will go up.

      The budget deal passed by the U.S. Senate today would raise taxes on 77.1 percent of U.S. households, mostly because of the expiration of a payroll tax cut, according to preliminary estimates from the nonpartisan Tax Policy Center in Washington.

      http://www.bloomberg.com/news/…..holds.html

      1. I was wondering about that. Great, what is that, another couple of percent of my money lost down the sewer?

        1. The only difference is that this is present money headed down the sewer, instead of future money that was heading down the sewer last year.

          1. Call me crazy, but I bet I could find a better use for that money than the jokers in Washington.

    2. In order to win an argument you must be able to make that argument. Republicans are the worst “case makers” in the business. This is one reason the Dems run circles around them.

      1. I don’t think Democrats are any better at this, they just have the mass media and entertainment industry available to make their message more palatable and get it out there. It takes a rare talent (e.g. Ronald Reagan) to go over their heads and speak directly to the people.

  19. The only thing left to do is to focus on the spending side. And there’s nowhere to go but down on that side of the ledger.

    Hahaha. Don’t we all wish. It will go up. When was the last time spending actually decreased in real terms from one year to the next? After WW2?

  20. I can see that I wasn’t clear in 2012. So allow me to reiterate: “No, fuck you, cut spending!”

    1. I’ve never thought much of John Boehner, but this made me smile:

      “It was only a few days before the nation would go over the fiscal cliff, no bipartisan agreement was in sight, and Reid had just publicly accused Boehner of running a “dictatorship” in the House and caring more about holding onto his gavel than striking a deal.

      “Go f? yourself,” Boehner sniped as he pointed his finger at Reid, according to multiple sources present.

      Reid, a bit startled, replied: “What are you talking about?”

      Boehner repeated: “Go f? yourself.””

  21. Everybody is happy we averted the ‘fiscal cliff’. That right there is part of the problem – the selling of this as a fiscal cliff instead of what it really was, a promise.They weaseled out of keeping their promise and we are supposed to believe that this is something to celebrate.

    16 months ago, government promised that if we bought them one more bottle of booze they would take a good, hard look at themselves, get some counseling, go into rehab, quit drinking. As a show of their sincerity, they even put out a contract on themselves – if they weren’t clean and sober by January 1, 2013, some goons would come around to rough them up and drag them off to dry out. Well, they didn’t quit drinking, they didn’t sober up, they didn’t seriously take a long, hard look at themelves, the counselors threw up their hands and walked away saying it was hopeless – all we had left was the knowledge that come January 1, 2013, the goons were going to show up and force them to quit drinking. But the bastards managed to get the hit called off. And there was much rejoicing.

    But that’s all this ever was – a bad reality-TV drama to see how our heroes are going to avoid sobering up this time. Well, congratulations, they pulled it off just in the nick of time. Wasn’t that exciting? But don’t you think we are cheering for the wrong guys?

    1. Americans have no one to blame but themselves. Paul Ryan actually had a start of a plan. Sure it was a joke in many ways. But at least it was a joke on the subject. It was better than this. And the American people refused to even engage with him. Instead, they voted based on free birth control and feeling good about voting for the black guy.

      We are truly getting the government we deserve.

      1. Rand Paul had the start of a non-joke plan.

        1. And that got him nothing but a cult following. The fact that people wouldn’t even take the weak tea that is the Ryan plan, tells me that this is the government people want.

          1. A Mark Steyn piece from a few weeks ago had a quote that should probably become a mantra for us small government types.

            A few months ago, I dined with a (pardon my English) French intellectual who, apropos Mitt Romney’s stump-speech warnings that we were on a one-way ticket to Continental-sized dependency, chortled to me, “Americans love Big Government as much as Europeans. The only difference is that Americans refuse to admit it.”

    2. (By ‘we’, I don’t mean you and I, of course. I mean ‘we’ as in ‘Whee! The People’.)

  22. Are the tax cuts that did get reinstated permanent this time? Or are they up for the debate/sacrifice/posturing/chopping-block again in N years?

    1. Or, uh, what he said.

      I guess I should have read all the way down.

  23. BTW, did this make the tax cuts “permanent” or is it just pushed off until another “crisis” can be created?

    1. Permanent, sadly it probably means the $450k bracket will not see another income tax decrease unless full out tax reform is taken up, so never.

    2. I think most of them are permanent now.

      But we won’t know what’s in the bill, etc.

      For damn sure, none of the Congressholes who voted for it knew the details.

    3. They have no automatic expiration date.

    4. If they are permanent, then I don’t think voting for this pile of crap is the worst thing ever. As soon as they were sunsetted, it was known that the tax raisers were going to eventually, someday, get something in trade value for either extending them or making them permanent. Just a bunch of the same-old-crap-as-before isn’t the worst trade ever.

      1. It’s a fairly reasonable trade, and it finally puts the “Bush tax cuts for the rich” to the sword. Now it’s the “Obama tax increases” (or will be, if Republicans have even an ounce of sense left).

        1. Unlikely, I’ve already heard a few conservative commentators goof and say “the Obama tax cut”. As if that buffoon in the White House had anything to do with tax cuts enacted in 2001.

        2. “Now it’s the “Obama tax increases” (or will be, if Republicans have even an ounce of sense left).”

          Ha. It will be called the Obama middle class tax cuts with the rich paying their fair share.

          1. I see… the “Obama fair share tax cuts.” Barfman, call your office.

    5. If the tax rates are now permanent, that’s a win in my book.

  24. Alot of Republicans and Republican-friendly folks are claiming this as a victory (because Obama had originally set his mind on raising tax rates on lower levels of income) or the best deal that could be had given the circumstances (i.e., a hapless Republican leadership).

    “Plan B” was a much better deal.
    And if they could have passed it, they could have used it as leverage ot get a better deal than THIS.

    The problem is there seems to be a retarded faction in the Republican party that couldn’t get it through it’s head that a deal not raising tax rates was never in the cards.
    So rather than pick up “Plan B” and use it as the best trump card they could get, they decided to sit on their hands and refuse to play. Imbiciles. Morons. Idiots.

    1. The problem is there seems to be a retarded faction in the Republican party…

      Yeah, it’s called the Republican party. Or at least the leadership and rank and file of the party.

  25. I continue to believe the Repubs could have passed a standstill bill pushing everything off for, say, 60 – 90 days, and adjourned sine die, making it a take it or leave it deal.

    Let’s see the Dems refuse to pass that bill, making them solely responsible for the fiscal cliff.

    Would have at least gotten us past this faux crisis that was used solely to further damage the country.

    1. “I continue to believe the Repubs could have passed a standstill bill pushing everything off for, say, 60 – 90 days, and adjourned sine die, making it a take it or leave it deal.”

      Weren’t the Bush tax cuts set to expire?

      If one of their main objectives was to keep taxes down, then weren’t they under the gun to get a deal done as close to January 1st as possible?

    2. What would be the point of that? Delaying the ‘fiscal cliff” for 2-3 months does nothing to solve the problem. It’s a kick-the-can move. Easily swiped aside.

      The problem was the R’s couldn’t agree on any alternative plan that they could use as leverage against the D’s. Boehner handed the reigns to the D’s because he couldn’t get enough of his own caucus to follow him.

      I understand the sentiment amount Republicans that they don’t want to raise ANY taxes, but to negotiate the best policy outcome you have to form a unified front with your own party.

      Right now, we don’t have a two-party congress. We have a three party congress with a Democratic plurality in control, and the Republicans divided into the (small) stupid faction and the (larger) big spenders.

  26. Fiscal cliff, schmiscal cliff.

    The real cliff is the monetary cliff. Though statist propaganda depicts fiat money as new and civilized, with sound money slandered as old fashioned and backwards, history and reality tell a different story. Fiat currency has no value (since it does not represent actual production) and it always leads to wanton printing, which leads to collapse. The real collapse has nothing to do with Mayans or space aliens or any of that junk–it’s gonna be the dollar, which will take fedgov down with it.

    The dollar is going to go off a cliff, folks. But you don’t have to go down with it. Buy gold to unplug from the collectivism matrix (of which Bernanke is the Architect).

    1. Good advice, but I would be very cautious about buying pieces of paper that just say you own some gold.

      1. Yes. I am physical gold all the way.

  27. Just what “spending cuts” do you expect the Republicans to offer?
    Defense? Medicare? Hell, Rep. King is running around outraged that
    the House neglected to pour $60 billion into Hurrican Sandy victims who neglected to get insurance. I think the best we could hope for is an across the board freeze on spending. But the Dems will never go along as long as one goofy kid still hasn’t been frogmarched off to the shrinks or one snowflake is saddled with big debt because he pursued his dream of a degree in artisanl mayonaisse making.

    1. I made the mistake of being in the room while my wife was watching the Today show over the weekend. The news had a spot on the evil Republicans killing the Sandy relief bill. There wasn’t a single word about the bill being loaded up with totally unrelated pork (which it was) or a single word about the moral hazard of constantly rebuilding everyone’s homes every time a storm comes. Just a 30 second sound bite about the evil Republicans killing aid to poor hurricane victims. It was classic propaganda by omission.

  28. But we can now estimate what federal tax rates are gonna be for the next several years, so we know how much money the feds will have to play with.

    Don’t forget to factor in the currency-debasement tax thanks to the Fed facilitating Treasury’s emission of credit in lieu of tax revenue. That’s a stealth tax on everyone’s income and savings, and IIRC it’s running about 25% of current spending.

    1. (err, emission of debt, post-party brainfart)

  29. The reason spending goes up under R’s and stays flat under D’s is probably because it is Congress, not the President, that controls spending.
    And they way the two party system works tends to result in Democratic presidents being paired with Republican congresses and vice versa. Not to mention the fact that the R’s and D’s are both trying to “triangulate” to the center to stay in power, so they tend to overcompensate to look like a centrist to the voting public.

    1. True, Presidents really don’t have that much control over spending. They can pick one or two things they really want done and will probably get it, but beyond that there isn’t that much they can realistically do without constantly threatening to “shut the government down.” Which is not really a winning tactic, no matter how much we all long for it.

    2. Presidents have the power to veto spending bills. They jointly control spending.

      1. Karl F| 1.2.13 @ 5:05PM |#
        “Presidents have the power to veto spending bills. They jointly control spending.”

        They can also lean on sleazebags like Pelosi to pass things like Obamacare to force spending into the stratosphere. You did know that, didn’t you?

  30. Not only did president and both houses of Congress pull together at the very last minute to designate Salem, Massachusetts “the birthplace of the National Guard” (seriously), they also managed to:

    Don’t overlook this. There’s a long-range second amendment gun control angle in this somehow, I know it.

  31. The American people should pretend to pay their taxes since the American government just pretends to govern !!

  32. You don’t honestly believe the feds will limit spending to the “money [they] will have to play with,” do you?

  33. The graphic on federal outlays per capita is both misleading and wrong.

    The graph is misleading because FY 2009 (October 1, 2008 to September 30, 2009) was President Bush’s last budget year and FY 2010 was President Obama’s first. FY 2009 was about 30% in the history books before President Obama took office. Yes, about $108 billion of ARRA stimulus spending occurred in FY 2009, but the vast majority of the spending was President Bush’s policies.

    The graph is wrong because it uses preliminary FY 2012 data even though actual data has been available for 2.5 months at http://www.treasury.gov/press-…..1734.aspx. Spending actually declined in FY 2012.

    The story is misleading because FY 2009 was the high water mark for spending at 25.2% of GDP. Spending in FY 2010 = 24.1%, FY 2011 = 24.1%, and FY 2012 = 22.7%. Spending actually declined in nominal dollars in FY’s 2010 and 2012. The next most recent time that occurred was FY 1965.

    1. “The graph is misleading because FY 2009 (October 1, 2008 to September 30, 2009) was President Bush’s last budget year and FY 2010 was President Obama’s first.”

      Did you not notice the little notch? It indicates a transition year, where the spending is split between administrations.

      “Spending actually declined in nominal dollars in FY’s 2010 and 2012. The next most recent time that occurred was FY 1965.”

      This source indicates otherwise:
      http://www.usgovernmentspendin…..g_2008USrn

      US spending
      2008 $3.0T
      2009 $3.5T
      2010 $3.5T
      2011 $3.6T
      2012 $3.8T

      Which pretty much matches the graph.

    2. Karl F| 1.2.13 @ 5:03PM |#
      …”but the vast majority of the spending was President Bush’s policies.”…

      Hey, Karl F! We’re pretty tired of lefty assholes claiming “It’s Bush’s Fault ™”, after Obozo has had 5 years and running to fix it.
      Presuming stupidity rather than cupidity, how stupid are you?

  34. The primary characteristic of the two “stable” Democratic periods (pre-Obama) from a budget perspective was a shifting of spending away from defense. This enabled the expansion of social programs without a matching increase in overall spending. The Republican “increase” periods were both marked by an expansion in defense spending, without cutting the programs that had expanded during the prior round of cuts.

    In any event, looking at spending based on the current president has an obvious flaw – federal budgeting is not a zero-based exercise where the President gets to target a given level of spending. Instead it is adjusting the spending on programs that have built up over the years, and were signed into law by other presidents. Most of the runup in domestic spending over the last 20 years comes from Johnson’s Great Society – Medicare/Medicaid in particular. Outside of the changes in defense spending, the bulk of the increase in spending shown on that chart stems from programs passed before Carter was elected.

  35. Keep extended and emergency unemployment benefits going for another year without any offsets.L6562

  36. “Over the past several decades, real per-capita spending outlays have followed a predictable though generally ignored pattern: They go up under Republican presidents and stay flat under Democratic ones. Liberal and conservative partisans don’t want to acknowledge this because it’s the exact opposite of what they sell to the voting public.”

    Gillespie just barely points out that our politicians are liars (almost all of them). Republicans claim to be fiscal conservatives, but that’s not how they vote. Democrats make all kinds of promises, but what they do is typically the opposite (“You can keep your insurance if you like it.” “I will not raise taxes on the middle class”, “I will close Gitmo”, “We’ll hold the fraudulent bankers accountable” – by that we mean we’ll contribute taxpayer money to their accounts, “We’ll reverse Bush’s trampling on civil liberties”, “The plan is to protect US citizens by providing guns to the Mexican drug cartels”, etc.).

    Apparently the only thing most of our reps will vote for, is something that fattens their wallets and still allows them to hold office.

  37. they have already lost not just this battle but every fight they’ll be in until they disband as a party. Nor is it any good to say that http://www.cheapbeatsbydretradeau.com/ all cuts will come from poverty programs (however ineffective, inefficient, and counterproductive some of them may be) or from entitlement spending circa 2020 or later.

Please to post comments

Comments are closed.