Skip to main content

View Diary: Are talks between Obama and Boehner already breaking down? (194 comments)

Comment Preferences

  •  Austerity Bomb Question (6+ / 0-)
    Recommended by:
    ferg, bluezen, elwior, WheninRome, tikkun, Timothy J

    What I haven't seen addressed is this: if ALL the Bush tax cuts go away, AND sequestration goes into effect, is it really still the case that the debt ceiling will need to be raised? Don't those two things together put the gov't into the black? If not, might they not get the gov't close enough to being in the black that the Admin can ride out a gov't shutdown with minimal closures? Of course, the Admin would rather spend more, reduce taxes on the middle class, and have the debt ceiling extended. But wouldn't the negotiation to achieve those goals, already expected to be easier after the 1st just because of the tax cuts expiring, also be easier (however ironically) because of sequestration austerity?

    •  it's not enough to balance, (4+ / 0-)
      Recommended by:
      HeyMikey, elwior, akmk, Timothy J

      because the economy still stinks, but it would be much closer, and would definitely give the Admin more room to work around the debt ceiling.

      So you're basically right.

    •  what i heard someone say was, once the tax cuts (4+ / 0-)
      Recommended by:
      HeyMikey, elwior, Timothy J, CwV

      expire it automatically pushes the deadline further down the road as far as raising the debt limit ceiling is concerned b/c there's more revenue coming in, therefore, that delays the need to raise the ceiling.

      i don't think it answers your question, tho :)

      •  Not necessarily. Look at Europe. (3+ / 0-)
        Recommended by:
        tikkun, Ottoe, mightymouse

        It's critical to understand that the "cliff's" cut-spending, raise-taxes approach is the austerity approach that Britain and Europe have used to cut their debt.

        And it's backfired. It's made their GDP shrink, which means even with higher tax rates, tax revenues have gone down. There is every reason to think the same thing could happen here. And if it does, then we'll hit the debt ceiling sooner, not later.

        "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

        by HeyMikey on Mon Dec 10, 2012 at 01:34:29 PM PST

        [ Parent ]

        •  Not at all. (0+ / 0-)

          Our situations are in most ways not analogous. First off, the individual European states do not control their own currency, so there's that. Secondly, Europe's tax rates were higher than ours to begin with, no?
          So therefore, it is eminently possible, if not probable, that raising our rates will increase tax revenues, just as logic and experience have shown over the many decades since our tax structure was created.

          "Lone catch of the moon, the roots of the sigh of an idea there will be the outcome may be why?"--from a spam diary entitled "The Vast World."

          by bryduck on Mon Dec 10, 2012 at 01:40:18 PM PST

          [ Parent ]

          •  I disagree. (0+ / 0-)
            the individual European states do not control their own currency, so there's that
            That would matter if we were willing to print a lot of money and get it into the hands of people who might spend it, like via increased unemployment benefits and stimulus spending. But our Federal Reserve is up against the zero lower bound for interest rates; its quantitative easing only puts more money into the hands of banks and investors, who already have a lot of idle money, so the QE money sits idle as well; and Congress refuses to enact more stimulus. So our ability to control our currency is a potential advantage that we refuse to use.
            Europe's tax rates were higher than ours to begin with, no? So therefore, it is eminently possible, if not probable, that raising our rates will increase tax revenues
            Increased taxes on the rich and corporations, yes, since as I noted above they have a lot of idle money.

            But the "fiscal cliff" would also raise taxes on our working poor and middle class, who currently spend nearly every dollar of disposable income they have. So these tax revenues would come directly out of GDP.

            "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

            by HeyMikey on Mon Dec 10, 2012 at 02:23:58 PM PST

            [ Parent ]

            •  Please (0+ / 0-)

              You know as well as I that if we went off the cliff on Jan 1, a middle-class tax cut would be passed on Jan 2. And even if it took a few weeks, it would be retroactive.

              Neither party wants middle-class tax rates to go up. They just want to get as much leverage as they can from it.

              matthewborgard.com ~ @MatthewBorgard

              by zegota on Mon Dec 10, 2012 at 02:35:32 PM PST

              [ Parent ]

              •  I'm not so sure Republicans really care about (0+ / 0-)

                middle class tax rates. They're way past pretending they're main objective is serving the very rich. I think they'll see how long they can push it before Obama blinks and agrees to at least some tax cuts for the rich. It won't be back to the Bush rates but I don't think they'll ever support a stand alone tax cut for the middle class.

                Let's not let 2014 be anything like 2010. Republicans only win when we stay home!

                by Tim D M on Mon Dec 10, 2012 at 04:06:26 PM PST

                [ Parent ]

                •  you could be right, but the r's will pay for it at (0+ / 0-)

                  election time.  2014.  2016.  2018, etc.

                  •  According to them, the reason they lost (0+ / 0-)

                    in 2012 was because they weren't conservative enough so in their minds, they still think total obstruction and ideological purity will be rewarded. Plus, any deal that Obama will accept will be a violation of Norquist's pledge according to Grover.

                    Let's not let 2014 be anything like 2010. Republicans only win when we stay home!

                    by Tim D M on Tue Dec 11, 2012 at 07:58:20 AM PST

                    [ Parent ]

        •  There's something to this I think (1+ / 0-)
          Recommended by:
          HeyMikey

          The austerity bomb does push off the debt ceiling question, but if it DOES trigger a recession, then the debt ceiling becomes more of a problem, exactly in the way that we know  (but the supposed fiscal hawks will not admit) that austerity is bad ...

        •  Read that as (2+ / 0-)
          Recommended by:
          HeyMikey, bluezen

          "It's made their GOP shrink,..."

          and was wondering why that would be bad :-)

    •  Neither expiring the Bush Tax cuts or (2+ / 0-)
      Recommended by:
      Ottoe, dharmafarmer

      sequestration will reduce the deficit in the budget to zero.  It would have to be zero in order not to have an increase in the debt ceiling.

      Expiring the Bush tax cuts won't generate new real revenue for a while and the sequester cuts were only about $80billion in year 1 of the sequester.

      We are running a trillion a year deficit.  None of this can make it possible to balance the budget in 2013.

      Mitt Romney rides off into the sunset in his Audi.

      by captainlaser on Mon Dec 10, 2012 at 02:00:56 PM PST

      [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site