Thursday, December 27, 2012
Political Mayhem Thursday: Hello? Fiscal Cliff?
I'm really wondering if our government will get its act together to resolve the "fiscal cliff" issue before the new year. If you have been napping (and who hasn't?), Congress and the President left a time bomb for themselves the last time they negotiated an extension of the federal debt limit. While averting a government shutdown, they put in place a provision that if certain budget drafting goals weren't met by January 1, 2013, then several things would occur-- a relatively drastic cut in all spending (including the military) and the expiration of several tax cuts enacted over the past decade or so. In short, unless a deal is cut soon, taxes will go way up for many people, and at the same time government functions will restrict uniformly.
Some people think that wouldn't be a bad thing.
Others, though, worry about one aspect or another-- the effect on defense, for example, or the sudden jolt to middle class incomes, or the return of the "marriage penalty" within the tax code.
What do you think?
Some people think that wouldn't be a bad thing.
Others, though, worry about one aspect or another-- the effect on defense, for example, or the sudden jolt to middle class incomes, or the return of the "marriage penalty" within the tax code.
What do you think?
Comments:
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One item not often discussed is the estate tax changes. Currently the exemption is $5.12 million with a rate of 35%. Under the current snap back, it would go to $1 million and 55%. That means a lot more people will need a lot more estate planning if they wish to avoid such taxes. While that would be good for my practice, I really hope that the most likely alternative compromise of $3.5 million exemption with 45% rate would be agreed upon.
Obama is taking a big risk that History will not condemn him as the one for causing this mess. But he's the President and the buck has to stop somewhere. I just don't think he can count votes in the same way that a wily politician like FDR or LBJ or Reagan could. They each got bills through Congress, with a lot of amendments, and claimed victory despite the compromises they had to make along the way.
Bill Clinton, with Welfare Reform, took a defeat and dressed it up as a victory.
Boehner could probably get his "Plan B" passed if the Democrats would go for it. At least 20-30 Republicans would vote for it too.
But I don't know if Pelosi would be willing to whip her party into voting for Plan B.
Of course if she did, that would probably mean that Boehner would lose his job as Speaker in the new Congress.
My guess.... some sort of last minute half-assed compromise and agreement to push this down the road another six months.
Bill Clinton, with Welfare Reform, took a defeat and dressed it up as a victory.
Boehner could probably get his "Plan B" passed if the Democrats would go for it. At least 20-30 Republicans would vote for it too.
But I don't know if Pelosi would be willing to whip her party into voting for Plan B.
Of course if she did, that would probably mean that Boehner would lose his job as Speaker in the new Congress.
My guess.... some sort of last minute half-assed compromise and agreement to push this down the road another six months.
A Couple of Loosely Connected Thoughts:
1. The Fiscal Cliff should NOT be confused with the looming fiscal crisis.
2. The Looming Fiscal Crisis is an existential threat to the USA as we know it; the Fiscal Cliff is an arbitrary set of deadlines created by Congress.
3. Congress could easily avoid the Cliff with "some sort of last minute half-assed compromise and agreement to push this down the road another six months" (IPLG). So, are we willing to poke ourselves in the eye, if we don't have to?
4. While the Fiscal Cliff is extremely unlikely to yield any positive solution for our very serious national problem, our very serious national problem remains--like a super storm off our coast gaining strength and promising future destruction.
1. The Fiscal Cliff should NOT be confused with the looming fiscal crisis.
2. The Looming Fiscal Crisis is an existential threat to the USA as we know it; the Fiscal Cliff is an arbitrary set of deadlines created by Congress.
3. Congress could easily avoid the Cliff with "some sort of last minute half-assed compromise and agreement to push this down the road another six months" (IPLG). So, are we willing to poke ourselves in the eye, if we don't have to?
4. While the Fiscal Cliff is extremely unlikely to yield any positive solution for our very serious national problem, our very serious national problem remains--like a super storm off our coast gaining strength and promising future destruction.
First - let me say I can't believe Boehner named his proposal Plan B; but I'll let you all figure that one out.
There are obvious, huge issues if we go over the cliff; Estate taxes, Alternative Minimum Tax and a whole host of tax issues that are constantly kicked down the road each year with no real resolution.
There are many things I like about the sequestration concept(or whatever it is called). And agency's have planned for this event.
I should get to watch some TV and listen to NPR with a clearer head next week when my Mom leaves town. In the mean time we listen to music so we can avoid the topic of politics and keep the house peaceful during the holidays.
In the mean time I'll check my parachute.
There are obvious, huge issues if we go over the cliff; Estate taxes, Alternative Minimum Tax and a whole host of tax issues that are constantly kicked down the road each year with no real resolution.
There are many things I like about the sequestration concept(or whatever it is called). And agency's have planned for this event.
I should get to watch some TV and listen to NPR with a clearer head next week when my Mom leaves town. In the mean time we listen to music so we can avoid the topic of politics and keep the house peaceful during the holidays.
In the mean time I'll check my parachute.
Mostly agree with Waco Farmer. The way to deal with the looming fiscal crisis is tax increases for all and cuts that are actually felt. The upshot is that people feel poorer. Flying into Dallas this week and seeing rows of McMansions into exurbia I was reminded of our maxed out private debt, not to mention too little savings and disappearing pensions. Things could get ugly.
With all due respect Christine, the kabuki theater is actually us blaming our elected officials. We are the REAL problem. Our elected representatives are just soulless puppets at the end of our string doing our bidding. We want MORE government for LESS money--and they are doing their best at trying to make us happy on the national credit card.
I am growing excruciatingly tired of blaming the pols; the fault, dear friends, is in ourselves.
I am growing excruciatingly tired of blaming the pols; the fault, dear friends, is in ourselves.
WF, I wish I had a string to pull but I don't.
They are starting act 4 of 5 and no one will be happy with the end of the play. And unfortunately for all it will involve financial pain of all sorts and some more kicking of the can down the road.
As an aside, I do not like 'omnibus' bills of any sort. They need to vote on the matter at hand and leave all the 'BS' baggage for another day.
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They are starting act 4 of 5 and no one will be happy with the end of the play. And unfortunately for all it will involve financial pain of all sorts and some more kicking of the can down the road.
As an aside, I do not like 'omnibus' bills of any sort. They need to vote on the matter at hand and leave all the 'BS' baggage for another day.
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