The Fiscal Cliff thread.

[Larry]

Yahoo/CNBC: 'Plan B' Would Actually Raise Taxes on the Poor

One of the touted benefits of "Plan B" is that it only raises taxes for those making $1 million or more. As Eric Cantor said this morning, the plan would raise revenue "without hurting many small businesses" or taxpayers.

But a closer look at the tax impacts of Plan B shows that while it raises taxes on most million-plus earners, it also raises takes for many low-income earners.

The non-partisan Tax Policy Center found that the average taxpayer earning $1 million or more in cash income would see their taxes go up by an average of $72,000. A small number of those million-plus earners will see a tax cut, due to an anomaly in the Alternative Minimum Tax.

But lower income earners will also see a tax hike. People making between $10,000 to $20,000 will see their taxes go up by an average of $262. People making $20,000 to $30,000 will see their taxes go up by $219. (Read more: How Much Would Taxing the Rich Raise?)

Granted, those are minor increases. But drilling down deeper, you find that some of those low-income earners could see a sizable increase. One in five of Americans who earn less than $20,000 a year will see an increase of $1,070 -- a sizeable amount for low-income earners.

Wondering if these numbers are in addition to the "2% payroll tax increase on all earned income below $110K"

I don't necessarily have a problem with phasing out tax cuts on both the rich and the poor. But I wonder if this might not be lopsided, the wrong way.

[PeterMP]

There are a lot of reasons that spending goes up $1,000,000,000,000/year in 4 years, one of which is the inability to reduce costs during those 4 years. Getting into peeing matches about whose laws/recessions/regulations/implementation policies account for which proportion of that increase, or semantics about the size of government, misses the forrest for the trees.

If you don't want me to talk about the trees then don't post a link that spends a lot of time talking about the trees.

When I look at the last 4 years, I see two real growths of government. The global nature of the WoT, which Obama seens from a spending point of view willing to do something about (i.e. cutting the military) and the ACA, which I'm pretty sure is suppossed to be neutral.

And you don't save forest by ignoring the trees.

I don't know what specifically goes into that prediction, but I assume it accounts for current law that includes baseline projected increases based on CPI, or whatever index Medicare, Social Security, etc. are all tied to today. The entitlement problem is driven by both enrollment and cost of services/benefits.

Okay, but that sort of thing matters.

I don't know what current law is either, but I don't think Medicare is really tied to normal CPI. I'm pretty sure that a driver of medicare costs have been prices of healthcare being higher than normal CPI. If medicare costs are estimated in the future based on healthcare costs over the last few decades and things like Pharma products have a "patent cliff" (http://blogs.nature.com/news/2012/10...ent-cliff.html), it isn't hard to imagine such estimates are way off.

[Fergasun]

LOL @ GOP
"Plan B" vote cancelled.

---------- Post added December-20th-2012 at 05:43 PM ----------

The GOP was able to pass a bill that holds off sequester by adding a bunch of spending cuts (which were identical to the House budget's they passed earlier this year and I bet 2011 too).

So am I right when it looks like the Tea Party wants everyone taxes to go up and wants to cut spending?

The Tea Party is pushing the GOP over the fiscal cliff?

The Senate already passed a bill that extends the tax cuts for those under $250k.

If the House can't pass a bill extending the cuts for those under $1M with GOP alone; maybe they will go for one that extends the cuts at something like $400k. Obama just got some added leverage for a more Democratic number on tax cuts . I would be it gets extended for everyone under $400k to $600k. And in exchange we go chained CPI? And the debt limit...?

[JMS]

How much of the increase has to do with increased size of goverment vs. the same size government spending more money?

Actually Obama has cut the deficit over 4 years. He inherited a 1.5 Trillion dollar deficit from bush and he got it down to about 1.1 Trillion. When you add the reduced deficit to the growth in the economy the deificit to GDP ratio has actually gone down about 20-25% since Obama took office.

Obama has actually held government spending in check to a greater degree than any president since Ike.

Who Is The Smallest Government Spender Since Eisenhower? Would You Believe It's Barack Obama?
http://www.forbes.com/sites/rickunga...-barack-obama/

Bottom line on Obama isn't that he's increased spending... It's that he hasn't been able to reduce spending quickly enough. The massive deficites we currently enjoy are entirely a remnant of the Bush administration.

[Buford]

GOP is looking awful at the moment. Can't agree to cut taxes for those making under a million. Best line I read from a elected GOPer that this was the hardest vote of his/her career. Really? Keeping rates low for those making under a million was the hardest? Tough life there.

[Wrong Direction]

Somebody starts a discussion about why spending goes up, and you:

1) Give your reason why spending goes up
2) Claim that this topic needs no further discussion

I gave a reason that the chart shows spending expanding big time in the future. I didn't get into specifics about the last 4 years and I didn't try to end discussion about it. The point of both articles is that spending must be curtailed, regardless of changes in tax policy. I think Rand Paul has credibility in this regard particularly because he's not beholden to the military like many R's.

[JMS]

There are a lot of reasons that spending goes up $1,000,000,000,000/year in 4 years, one of which is the inability to reduce costs during those 4 years.

The United States budget has been over 1 trillion dollars since 1987, Ronald Reagan.
The current United States budget is about $3.729 trillion
The United States has been running 1 trillion dollar deficites since the Bush Era.. Bush's last 2 budgets ran deficits above 1 Trillion, 2008 and 2009. budgets...

see the debt by year to get an accurate picture of the deficit by year.
http://useconomy.about.com/od/usdebt...bt-by-Year.htm

[Elessar78]

Plan B, uh, aborted?

[Larry]

Plan B, uh, aborted?

That was bad.

[Wrong Direction]

The United States budget has been over 1 trillion dollars since 1987, Ronald Reagan.
The current United States budget is about $3.729 trillion
The United States has been running 1 trillion dollar deficites since the Bush Era.. Bush's last 2 budgets ran deficits above 1 Trillion, 2008 and 2009. budgets...

see the debt by year to get an accurate picture of the deficit by year.
http://useconomy.about.com/od/usdebt...bt-by-Year.htm

Annual spending has increased 1 trillion since 2008. It's not the point of those articles, which is that future spending has to be addressed, but that's what 1T was referring to.

[megared]

I think this may be the nail in the coffin for Boehner as the speaker. Obama should just suspend negotiations, let us go over the cliff, then introduce legislation to retroactively keep everyone under 250K at the same rate, and wait for a new speaker of the House. Boehner can't negotiate with his own party, let alone Obama, so he's of no use to anyone.

[Larry]

Annual spending has increased 1 trillion since 2008.

Actually, no, it hasn't.



Link to the actual data, if you're having the same trouble squinting at that chart as I am.

It is forecast (the red bars on the chart are spending forecasts. The blue bars are actual spending) that, when the final numbers for FY12 are in, that spending will have increased by $1T, from FY07.

(If you measure in nominal dollars. Meaning no adjustment for inflation, population growth, or GDP growth. In short, if you chose the scale that makes the government look like it's growing faster than it is.)

But what those numbers also show is that virtually all of that increase occurred in FY08 and FY09.

That's because by far the biggest reason for that spending increase is not because of any piece of legislation that got passed, but because the economy went down the toilet. And when the economy goes down the toilet, spending goes up automatically, without any actual bill or legislation being passed.

When the economy tanks, spending goes up, and revenues go down, without anybody in Washington doing a thing.

[Elessar78]

I think this may be the nail in the coffin for Boehner as the speaker. Obama should just suspend negotiations, let us go over the cliff, then introduce legislation to retroactively keep everyone under 250K at the same rate, and wait for a new speaker of the House. Boehner can't negotiate with his own party, let alone Obama, so he's of no use to anyone.

But a chastened Boehner might actually be better than a new speaker. A new guy doesn't want to be seen as the Republican that Obama walks all over, so he's going to be as obstructionist as all get out.

[zoony]

So Boehner decides to take his toys and go home... But he fails at that too.

http://www.cnn.com/2012/12/20/politi...html?hpt=hp_t1

Could this guy be a bigger dip****?

[Larry]

OK, so it looks like PART of Plan B was the 34th attempt at "let's replace the bipartisan debt ceiling agreement that called for cutting $X from defense, and $X from entitlements, with one that cuts nothing from defense, and twice as much from entitlements".

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That said, though. I wonder if what appears to have been unanimous D opposition to the thing was warranted.