Fiscal cliff talks

Jared Bernstein on economic fallout from the election:

I spent the whole day yesterday arguing fiscal cliff issues with conservatives, specifically, whether new revenues should be raised through higher tax rates–expiration of the upper-income Bush tax cuts–are by lowering rates and broadening the base. Here’s my field report:

–It is big–HUGE–for conservatives that the President has not mentioned higher rates since Tuesday, including in his comments yesterday. His spokesperson did say that he’d veto a bill that fully extended all the cuts, but the White House has been careful not to come down on one side or the other of the rates/base question. His opposition is quite emboldened by this.

My view: I’m not saying he should say “my way or highway” but he should clearly open negotiations with them next week with the plan he ran on: rate expiration on households above $250K (the top 2%).

-I encountered two camps of Republicans on this: dynamic scorers, full stop, and partial dynamic scorers. The former are those who say: just lower the tax rates and watch the revenues flow in… problem painlessly solved! They’re very, very wrong, and thankfully most of the folks I argued with yesterday are in latter camp. In fact, this is their concession from the election: the recognition that we cannot achieve a sustainable budget path on spending cuts and dynamic scoring fairy dust alone.

–Some, though not Leader Boehner yet, are starting to make sounds about taking unearned income, like capital gains and dividends, which current enjoy favorable treatment in the tax code, off the base-broadening table. I suspect leaves them with a mini-Romney math problem.

–They are not constrained by meeting the $1 trillion in revenues over 10 years we’d get from upper-income rate sunsets. Sen. John Kyl, for example, on the Larry Kudlow show, cited Sen. Toomey’s budget plan as a great place to start. That raises $250bn in new revenues, one-quarter of the top rate sunset amount.

–The President was absolutely right to begin his comments with the imperative of any deal protecting and strengthening the current recovery through additional jobs measures. My experience from yesterday: he will not find willing partners on this among Republicans.

–Yesterday, CNBC anchor Brian Sullivan made what I thought was an intuitive point that’s under-appreciated: it would be a lot simpler and cleaner to just raise the top rates than to have a battle of which loopholes to close. The point above about taking unearned income off the table underscores Sullivan point. Me, I’m a huge advocate for simplicity in the code. Once they start moving around income definitions, watch out.

No matter how strong a hand the Democrats have in these talks, the fact remains that the president is more than willing to trade it away. Stay tuned.

8 Responses to Fiscal cliff talks

  1. paul j November 10, 2012 at 11:21 am #

    Barack Hussein has already sent his usual signals to the other side that he’s willing to give till it hurts if only they’ll like him. Results will be similar. He is who he is, and the election wasn’t going to change that. Better than Willard, but not my idea of a leader.

  2. jawbone November 10, 2012 at 11:29 am #

    A Democrat was not elected to the presidency, either in ’08 or this year.

    We’d better be bombarding other elected pols, who might still act as Dems and act in our interests and the interests of the party, telling them that if Obama hits on SocSec/Medicare the Dem Party will be the dying party.

    If he pulls another fast one on the electorate, the Dem base, at the least, will be writing him and the party off for generations.

    Letters, emails, telephone calls, start local political discussion groups (lots more difficult, truth be told). Other ideas? Get working with Occupy?

    Too bad more votes didn’t go to Jill Stein and fewer to Gary Johnson. With the results as they are it will be hard to impress someone like Obama. He believes he has the answers and is in the right, in both senses, to go after the great social safety net programs put together by FDR and LBJ.

    All hail the new St. Ronnie! Who will never be recognized as such by the die hard Republicans, but, oh, he wants to be the successor to, even betterh than, St. Ronnie so very, very, very, very much.

    FSM help us.

  3. imhotep November 10, 2012 at 1:49 pm #

    To some degree “a” president can’t do anything unless he’s allowed to by us citizens. And he won’t do anything unless he’s forced to by we the people. The pressure point is our elected representatives. Get to them and the president is done for. So….hammer the House members and the Senators with non-stop opinions. Call them. E-mail them. Send them letters. Follow them around screaming at them at the top of your lungs (carry nothing on your person or in your car that could be construed as a weeapon because your screaming will attract law enforcement).

  4. lless November 10, 2012 at 2:03 pm #

    Jawbone: Reading between the lines here, you and I are among too few who carried through and voted for Stein. We don’t own this directly (except by failure to persuade). It would take something like 50% of the true left resolving to walk to neutralise the triangulation of the neo-liberals running the Democratic shell game. We both know that a third party win is beyond the horizon. So how do we muscle up when there is no resolve on our side of the aisle? I intend to inform vacillating Democrats within reach of my vote that I will double down on this issue alone and vote for ANY Republican opponent if they sell us down the river with unbalanced cuts. Then when they do, I will. There is absolutely no point in winning elections just to lose them.
    Senator Franken had better be listening. Sorry Al, I mean it.

  5. imhotep November 10, 2012 at 2:19 pm #

    lless, when did you cut off your nose to spite your face? “I will double down…and vote for any Republican opponent…” Didn’t slicing off your nose the first time teach you a lesson? Or are you of the “I’m gonna pound my head agaist this wall over and over and over again becuase it feels so good when I stop,” school of life? Get a grip man. The game of politics can’t be played in a one dimensional space like chess. It’s multi-leveled.

  6. quixote November 10, 2012 at 7:29 pm #

    imhotep, politicians need your vote. There’s nothing else you’ve got of any value to them. Once they have your vote, they’re on to the next item on their agenda: how to curry enough favor with the moneybags to have a cushy post-politics life.

    Iless has it right. The only way to get their attention is to withhold your vote. Yes, you have to be willing to let the world fall. If you keep paying into the protection racket, you know what will happen? You will be paying more and more for less and less protection forever. Or until they let you die just for the hell of it.

  7. Izquierdo November 11, 2012 at 2:44 am #

    I voted for Jill Stein too.
    The Barr/Sheehan ticket was also tempting.

  8. imhotep November 11, 2012 at 12:03 pm #

    Power…..who has it….who wants it… to get it…..? Gary Johnson got a million votes. So what? Johnson and those who voted for him had no power before the election and they have no power after the election. None. That goes for Jill Stein, Roseanne Barr, Rocky Anderson and all of the other third party candidates. You don’t win the Irish Sweepstakes by buying a New York lottery ticket. The Democrats and the Republicans hold ‘ALL’ the power. You will never wrest power from either of those parties from the outside. But you very well could take power away from them by ripping them apart from the inside. Note: the Tea Party is playing the political game properly. Progresssives, especially those who vote for third party candidates, should learn from them and stop jousting at windmills.

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