The effects of going over the cliff: An opposing view (Some economists don't think it's that bad)

American Thinker ^ | 12/04/2012 | Rick Moran

[SeekAndFind]

Are we really headed for disaster if Congress and the president fail to come to an agreement over taxes and budget cuts before the first of the year?

Some economists dispute that notion.

New York Times:

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While data on the tax status of all stockholders is hard to come by, many economists agree than an increasing proportion of the entire equities market is now held by retirement investors whose holdings are not subject to current tax law; by foreign investors who don't pay American taxes, or by institutional investors like insurance companies and pension funds that are exempt from taxes.

Sam Stovall, the chief investment strategist at S&P Capital IQ, said that even among individual investors who do pay the taxes, many have incomes under $250,000 and would not be subject to the increased rates on investment income proposed by the White House. The result Mr. Stovall is anticipating is that the coming changes will cause "a lot less of a hit than most people are making it out to be."

Mr. Stovall and others who share his views are not discounting the potential disruption to the financial markets if the White House and Congress fail to reach any agreement on the broad set of tax increases and spending cuts scheduled to hit at the start of the year. The largest of these changes are not on investment income. An increase in the payroll tax, for example, could remove $95 billion from the take-home pay of Americans.

[ClearCase_guy]

We might get to the edge of the cliff and turn back -- or we might go over the cliff. Politically, I have no doubts at all:

If things are good 6 months to a year from now, Obama will get all the credit.
If things are bad 6 months to a year from now, Republicans will get all the blame.

Republicans have made themselves useless, toothless, and clueless.

[plain talk]

It seems a lot of people seem to equate the “cliff” with automatic increased taxes of bush tax cuts expiring. Not sure how much that represents exactly compared to obama’s $1.6T. But if obama is recommending more taxes than what occurs with automatic expiration of bush tax cuts then isn’t Obama advocating we go over even a larger cliff than the automatic one at end of year? Appreciate input.

[longfellowsmuse]

I think that what the president is proposing is extending the Bush tax cuts for those who make under 200,000 ( 250,000 for those filing jointly) while letting them expire for those over the above income limit and at the same time increasing tax rates on those higher earners as well.

so those who make over 250,000 will get a “double increase” and Obama and the democrats can “save the day” for the middle class who is incidentally about to get clobbered with obamacare

[plain talk]

Right. But my question is whether the 1.6T is smaller or larger than letting all bush tax cuts expire? I know I read expiration of the bush tax cuts on top 2% was somewhere between 0.8 - $1T. But not sure about the amount if all bush tax cuts expire. In any event 1.6T seems like a cliff by itself and if so obama is recommending we “go over the cliff”. Yeah he can claim middle class is spared but that’s a lie.