Skip to comments.Obama's Playing a Game of Chicken With the Economy
Posted on 11/30/2012 12:42:17 PM PST by Kaslin
It is clear by now that President Obama and House Speaker John Boehner are not going to work out a full blown deal on taxes, spending and entitlements by the end of this month.
The task before them and Congress is so fraught with fiendishly complicated and politically-charged issues that the idea that a couple of people behind closed doors can come up with a broadly acceptable solution is laughable.
In fact, I'm going to go out on a cliff on this one (no pun intended) and say that there will be no final disposition of these thorny issues, known as the "fiscal cliff", until next year. Wrapping up a grand, multi-trillion dollar compromise bill in four weeks or so wasn't in the cards to begin with, and the two most important people needed to do this sent out a number of signals that they were in no rush to meet this or any other deadline.
Since the president met with congressional leaders in a post-election love-fest, pledging they were ready to work together to avoid a fiscal leap into the abyss, Obama and Boehner haven't met in two weeks. And it is reported they haven't even talked on the phone for at least a week.
Even Erskine Bowles, the Democratic co-chairman of the president's deficit-reduction commission that proposed a sweeping tax and spending reform plan to steer clear of the cliff now doubts anything will get done before the clock strikes 12 on New Year's Eve.
"It would be insane to breach this fiscal cliff, yet I think there is only a one-third possibility we'll actually get something done before December 31," Bowles confessed Tuesday at the Christian Science Monitor's newsmakers breakfast forum. "There has been no serious discussion yet about entitlement reform."
"Am I optimistic? No, but I am hopeful." he told reporters as he left a meeting in the Capitol with Boehner and other House Republican leaders this week.
The compromise Budget Act of 2011 requires Obama and Congress come up with a $1.2 trillion deficit-cutting plan for the next decade by year's end. If not, $100 billion or so will be automatically cut from defense and domestic (non-entitlement) programs on Jan. 1.
Quite frankly, if Congress can't find $100 billion in cuts in a waste-ridden, inefficient, over-staffed $3.5 trillion budget -- absent serious defense cuts -- they are not really trying.
But Obama is threatening to veto any deal that does not significantly raise tax rates on investors, small businesses and other sectors of our economy.
For his part, Boehner has sketched out part of a plan to deal with the revenue side of the equation that would raise the tax flow into the Treasury by getting rid of dozens of exemptions, credits, deductions and other loopholes that will broaden the revenue base in order to lower tax rates on individuals and corporations to boost economic growth.
Obama, who still doesn't know how to balance a budget, keeps saying the "math doesn't add up." But the tax code is filled with tax preferences worth trillions of dollars over time, without touching the holy grail of tax deductions for mortgage interest and charitable contributions. It was done in the Reagan tax reforms of 1986 that slashed the top tax rate to 28 percent.
Obama often talks about standing his ground on raising the two top individual tax rates and the White House has threatened to let all the Bush tax cuts expire if he doesn't get his way. That will raise taxes for every American -- lower, middle class and upper income alike -- including the 10 percent tax rate for those in the lowest income bracket.
But Boehner feels his good faith compromise on raising new revenues by reforming and simplifying the tax code is as far as he and his party are willing go. "We're willing to put revenue on the table as long as we're not raising rates," he told reporters this week for the umpteenth time.
There is new evidence that a majority of Americans favor Boehner's approach. A national poll by the Winston Group, a Republican research firm, found that 65 percent of the Americans surveyed favored a plan to boost tax revenues that ends "special interest tax loopholes and deductions commonly used by the wealthy" rather than one that raises tax rates on "Americans earning more than $250,000."
The frightening fiscal cliff and tax cut expiration deadlines that we face are a creation of Congress that was agreed to by Obama who signed them into law. He agreed to extend all the Bush tax cuts at the end of 2010, including the top rates, for two more years because the economy was weak and unemployment was hovering over 9 percent, despite his $800 billion "stimulus" plan.
Well, unemployment remains at 8 percent, or more if you count part-timers who can't find full-time jobs, and the economic growth rate this year is averaging a mediocre 2 percent that insures high unemployment will persist for the foreseeable future. The Obama economy, economists agree, remains sluggish.
But Obama is obsessed with increasing the tax rates on investment in a severely under-capitalized economy and on small entrepreneurs who are the largest job creators.
Higher tax rates have been his all-purpose prescription for just about everything: Unemployment? Raise taxes. Weak economy? Raise taxes. Yearly trillion dollar deficits? Raise taxes.
When the history of Obama's presidency is written, it will be known as "The Age of Uncertainty." That is the legacy of his policies in a sputtering economy. Businesses are keeping their cash on the sidelines because they do not know what next year will bring. Medical device makers are laying off thousands of workers in anticipation of higher tax costs under Obamacare. Millions of Americans are getting letters announcing their health care premiums are going up next year.
As for the fiscal cliff, no sweat. Congress can extend all the tax cuts before the end of the year and rescind the automatic budget cutting deadline, giving lawmakers time to fashion the tax, spending and entitlement reforms that are needed to keep America from tumbling into insolvency.
But will Obama agree to sign such a stop-gap bill, or will he continue to play an obsessive, ideological game of chicken that threatens to send our economy into another recession?
He wants it to collapse. It's his goal.
He and his fellow travelers think that they will get to rebuild it in their own totalitarian image.
It's our job to make sure that they become victims of their own chaos.
Obama is not “obsessed” with raising taxes on people making over $250,000 a year. He’s putting on a show for Democrat voters.
“Look at me! I want to raise taxes on the rich and give that money to you!”
Take away his stage. Let the tax hikes go through. “To be or not to be” sounds pretty stupid when you perform it in the bathroom.
The two top tax rates rising are gonna happen. The Pub leadership should know that they’ll get little blowback over this. No use to whine over them anymore and give the Dems a club to use until the next election.
Just announce agreement and then say “Do you actually have any substantive cuts you’ll put in writing?”
Obama has no intention of coming to any kind of a deal - the Pubs should get out ahead of him on this.
(picture of a smiling John Boehner superimposed over photo of a closed women's clinic)
Screw waiting for Obama... he’s never had a legislative thought in his life.... voted present rather than take a stand in Illinois... let Pelosi’s staff write the crappy health care laws we plebes are stuck with.. didn’t even have a clue what it contained when he signed it... and now won’t present any substantive way out of the fiscal mess he’s helped create!
Raising tax on the upper two brackets is window dressing for his politics of envy crowd not something that will really address the issue. Increased taxes on anyone will be squandered by his out of control spending! Geitner proposed MORE spending yesterday !!!
No, the House needs to forget compromise. Go to work, pass substantive cutting legislation...bill after bill...send them to the senate knowing there is no way in Washington Harry the pip-squeak Reid will let it get a hearing or a vote. Sit back, target with real conservative opposition the 10 dems up for re-erection (after all they are all real pricks!) in 2014 so the senate can eventually get done what adult, mature, civic minded Constitution-loving Senators should be doing! We are going to have to go through real tough times to turn this ship of state around thanks to an ill-educated, gimmie-cultured electorate...no different than treating an alcoholic or drug addict... they have to hit bottom before they seek and accept help..some eventually succumb first...some find the solutions...the nation is no different...let’s pray we come out the other side at least by 2016!
Obama has no intention of coming to any kind of a deal - the Pubs should get out ahead of him on this.
I think you are right on this.
I was going to post nearly the same thing.
Let taxes be increased with no spending cuts
Raise the Debt Ceiling
This is a ONE PARTY Communist Country now, and this posturing and bullshit spit-in-the-ocean "Fiscal Cliff" can in NO WAY stem the Spending into Oblivion.
” President Cloward-Piven is not “playing chicken with the economy.”
He wants it to collapse. It’s his goal. “
And no public figure or politician will state the obvious.
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It’s not chicken, it’s treason.
The House is scheduled to adjourn on 12/14 and Obama has scheduled a three week vacation in Hawaii starting on 12/16. There is no way they will get this done in the next two weeks. Obama thinks he will be in a stronger position after 1/1/2013 when he can blame the Republicans for taking us over the cliff. This may be true for a few weeks, but the longer the stalemate goes on, the more the "cliff" will begin to actually have a negative affect on people and the worse his legacy begins to look.
Keep the tax cuts in place one more year now that everyone knows it isn’t only “Bush’s tax cuts for the rich” anymore.
And raise the debt ceiling to 20 tillion.
Everyone wins except Americans.
Boehner should get a bill through the House that increases the top bracket tax rate by a small percentage and limit it to those making over 1 million in taxable income. It could further add some revenue by limiting some tax breaks to the same group. The bill should also make all the rest of the Bush tax cuts permanent. Pass this bill and send it to the Senate and see what Harry Reid does with it.
Then Republicans from both houses should make it clear that there will be NO spending limit increase without a budget that can be agreed upon by both sides.
Why do we have one conservative after another acting like Obama is mistaken, or that he is stupid, or that he is a failure if the economy remains bad, or he just does not understand economics, and other such banalities?
Obama understands lower rates bring more revenue. He and the libs do not want revenue. What they want is to stake their claim on our lives. The tax rate makes a claim that says “If we wish we will take X% from you but perhaps, if you modify your behavior in ways proscribed by us and you support keeping us in power, we may allow you to keep more.
They do not care about the poor either. More revenue would help the poor but it is not about care for the poor again is about control. So they keep the poor jobless and stupid and morally decrepit and give them just enough that they get the votes to keep them in power.
“He wants it to collapse. It’s his goal.”
That is so patently obvious its hard to understand why everyone doesn’t see it. Obama has never shown any interest in solving the country’s problems; all he ever does is criticize it. From day one, he has worked to undermine our economic strength, culture and military readiness.
People should be judged by their actions, not their words. Everything the Kenyan has done has been bad for this country.
Maybe then we can officially start the Tea Party and run some conservatives who have gonads and backbones. That is the only way feasible to take on the RAT party and their propaganda machine.
Correct. This may come as a shock to Republicans, but to win in any endeavor, you must be stronger than your opponent. A simple truism, and you nailed it.
You’re right. Its all about power. Dems want to control everything. Taxes, Obamacare, regulations, spending, etc. The only way you can deal with bullies is to stand up to them and fight back hard.
The shipdit has no idea how many business will close shop on 12/31 because of Obamacare and his regulations.
He has no Idea how many business will have 28 hr work weeks for employees and have to hire more of them, I know I saw one today, my friend talked to him while I was finishing lunch.
And this will all hit on 1/1/13.
The numbers for Jan and Fed IMHO and maybe Dec will be awful for employment.
And these Tax increases? See my post about 2 hrs ago with my meeting with my CPA.
Are people in for "suprises"....
...as well as setting the S Corps free with a nice low, say - 15% tax rate.
I emailed my Congressman and asked him to fight to get a solid, can't be gone back on, set of spending cuts before agreeing to anything.
His response was thorough, but has me concerned because he indicated that the Repubs were really concerned that the sequestration would gut the military and they want to find a way to prevent it. I don't know if that's an indication of a coming cave or not.