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The election is over and the votes, for the most part, have been counted. The vast attention is now over the "fiscal cliff" with both sides overwhelmingly agreeing we can't afford to do nothing. That assessment is wrong. The president and democrats in congress could and should do nothing. Jumping off the  "fiscal cliff" would no doubt be bad for the US and global economy over the long haul, but the short term would do relatively little damage and none that couldn't be repaired. It would, however, give the president and democrats the upper hand in negotiations. If the US dove off the fiscal cliff all of the Bush Tax cuts would expire, the payroll tax cut would expire, massive spending cuts on defense and other areas of the federal budget would be triggered. Social security, medicare, and medicaid are mostly exempted so they wouldn't be affected.

The messaging would be simple republicans led us to the "fiscal cliff" through dangerous debt celling negotiations in 2011 and then failed to compromise on the president's tax policy. Democrats could then demand tax cuts for the middle class without being held hostage to taxes for those making over 250,000 dollars. A real discussion on issues such as tax overhaul, defense, and entitlement spending could take place. This is the key area where democrats could demonstrate bipartisanship by agreeing to some cuts in entitlements such as raising the age on social security and medicare in return for status quo spending on defense, raising capital gains tax, and removing the cap income subjected to social security. All of these policies could be retroactive to January 1st, thus entirely avoiding the pitfalls of the fiscal cliff.

One thing is for certain, if the president or congress bow down to pressure from Speaker Boehner or Minority Leader McConnell it's completely on them for losing a powerful position of negotiation. It's a bluff and it's important as democrats that we not only call them, but raise the stakes.

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Comment Preferences

  •  Wheeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee! n/t (1+ / 0-)
    Recommended by:
    ankae

    Float like a manhole cover, sting like a sash weight! Clean Coal Is A Clinker!

    by JeffW on Sun Nov 11, 2012 at 09:28:44 PM PST

  •  Frist! (4+ / 0-)
    Recommended by:
    ankae, Bulldozer, corvo, Aspe4

    I think you're right.

    Never-mind the mess - Call the bluff. Boehner and Yertle won't fold but in the long run the dynamics at the table do a 180.

    June or July 1864

    Unimaginable change.

    Maybe one day the Fourth Estate will take their jobs seriously. Or not..

    by Anthony Page aka SecondComing on Sun Nov 11, 2012 at 09:28:53 PM PST

  •  Can't remove the SocSec cap (9+ / 0-)

    It's important to understand some history and why there is a SocSec payroll cap, it's a fundamental part of the structure of the SocSec program.

    SocSec was designed as "wage insurance" with its own funding mechanism and not funded by general tax revenue. It is not an income redistribution plan, but rather a program where people earn a benefit by the contributions they make into the system, as well as their employers. There is a reason why there is a cap. The thought is that people at higher incomes likely have other retirement assets and don't need to "insure" all of their income. Investment income isn't included because investment income isn't tied to employment and doesn't end when we retire. Therefore, there is no logic to "insure" it. There are two issues with eliminating the cap, one is that if all the extra income is included in the benefit formula, SocSec payments to very high income earners could be six figures per year. If you take the cap off of contributions, and cap the benefits, you have changed SocSec as we know it and violated every principal that FDR set out for it when it was started. The program shares such bipartisan support because people think it is fair and your benefits are tied to your contributions. That link cannot be broken or you have an income redistribution program that FDR warned us would be perceived as welfare, he called it the "dole".

    Medicare earnings have no cap and starting in 2013 investment income, interest, dividends, and capital gains, will be subject to the Medicare tax. The Medicare program is completely different than SocSec. Medicare is a single benefit program, everyone who qualifies receives the same benefit regardless of your level of contributions.

    I favor raising the SocSec cap, and allowing benefits to rise to reflect the higher contributions. A staged increase in the cap, until it covers 90% of wages and salaries, solves nearly all of SocSec's financial problems.

    Deficit hawks would be happy to see all the tax cuts expire and the sequestration cuts implemented. The annual federal deficit could be cut nearly in half without any act of Congress.

    "let's talk about that"

    by VClib on Sun Nov 11, 2012 at 09:30:04 PM PST

    •  Good assessment however (2+ / 0-)
      Recommended by:
      VClib, Aspe4

      Social Security was never meant to be the entitlement it has become. In the 20s, 30s and 40s, 50% of seniors lived in poverty or were homeless. Social security gave them a supplemental income with the intention they could be self sufficient with the help of family. During this era, seniors could contribute to the household income of their family and not create an undue financial burden. Today senior rarely live with their families and thus social security has a larger role in the income needs of seniors. As the American way of life has changed so must social security.

      As an aside, I can only imagine what my generation will do now that most employer based pension plans are extinct. The burden put on employees who have no idea how to invest in corporate 401K and IRA investment plans. It's not that Americans aren't saving, it's that they aren't saving enough because they don't know what they need to save.

      •  political22 - that's one of the reasons why I (3+ / 0-)
        Recommended by:
        tardis10, johnny wurster, Aspe4

        favor raising the cap which would provide higher income earners with larger SocSec benefits. It would help with the shortfall of no defined benefit pensions.

        "let's talk about that"

        by VClib on Sun Nov 11, 2012 at 10:51:06 PM PST

        [ Parent ]

      •  Actually, many workers in the US have (9+ / 0-)

        such low wages that saving for retirement is as likely as  jetpacks.

        "George RR Martin is not your bitch" ~~ Neil Gaiman

        by tardis10 on Sun Nov 11, 2012 at 11:21:44 PM PST

        [ Parent ]

        •  True. (4+ / 0-)
          Recommended by:
          The Hamlet, bluezen, corvo, Aspe4

          And some of us once had good middle-class incomes that we were downsized out of.

          Yes, me too.

          So if I'm making a bit above minimum wage and offered a 401K, how does it make any sense for me to invest in that?

          When I know that the plutocracy is going to do everything in its power to take all my investment -- via fees and so forth -- and leave me with nothing?

          That is their strategem.  They prey on those who don't understand how our putative masters are undermining our potential wealth... sucking our earnings up into their offshore accounts.  Since Reagan got into office, it has all been downhill for anyone who was not born rich, nor interested in clawing their way to the top.

          Which is most of us.

          To make the argument that the media has a left- or right-wing, or a liberal or a conservative bias, is like asking if the problem with Al-Qaeda is do they use too much oil in their hummus. Al Franken

          by Youffraita on Mon Nov 12, 2012 at 02:15:37 AM PST

          [ Parent ]

          •  The tax benefit ... (1+ / 0-)
            Recommended by:
            tardis10

            ... if you can afford it, and were going to be doing any long term saving.

            However, the fraction of those making a bit above the minimum wage who can afford to save long term is probably well under half.

            Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

            by BruceMcF on Mon Nov 12, 2012 at 09:00:33 AM PST

            [ Parent ]

            •  Probably well under half? (0+ / 0-)

              "Probably well under half" the man says.

              You betcha it's well under half.

              Just over minimum wage is not a LIVING wage, sir.  Try living on eight bucks an hour.

              It is an "I can survive paycheck to paycheck as long as I don't get sick" wage.

              Typical deductions for people who have health benefits are more than two months of gross income.  That is:  Two to Five thousand in deductibles, versus take-home pay of less than three hundred dollars a week.  (More if you're lucky enough  to get time and a half when you work fifty hours.)

              To make the argument that the media has a left- or right-wing, or a liberal or a conservative bias, is like asking if the problem with Al-Qaeda is do they use too much oil in their hummus. Al Franken

              by Youffraita on Mon Nov 12, 2012 at 01:44:32 PM PST

              [ Parent ]

        •  Well, when I was a kid, everybody (2+ / 0-)
          Recommended by:
          Aspe4, tardis10

          was going to have a jetpack (AND a flying car) in five years.

          And that was 50 some years ago, so they're due any day now, for sure!

    •  Can too . . . (2+ / 0-)
      Recommended by:
      bluezen, corvo

      remove the cap and apply the tax to all income . . . interest, dividends and capital gain included.

      It does not matter how it was born, it can always be amended to become what it should always have been.

      Fake Left, Drive Right . . . not my idea of a Democrat . . .

      by Deward Hastings on Sun Nov 11, 2012 at 11:31:29 PM PST

      [ Parent ]

      •  I would go further (6+ / 0-)

        We need clawbacks for all the sheltered income in havens like the Caymans, Switzerland, etc.

        Rich bastards like Romney need to pay ALL their taxes, and they need to be put in jail for offshoring in an attempt at tax cheating.

        I will not call it tax avoidance:  they are cheats and liars and they should be put in jail just like any other crook.

        To make the argument that the media has a left- or right-wing, or a liberal or a conservative bias, is like asking if the problem with Al-Qaeda is do they use too much oil in their hummus. Al Franken

        by Youffraita on Mon Nov 12, 2012 at 02:19:19 AM PST

        [ Parent ]

        •  Absolutely hate this rhetoric (2+ / 0-)
          Recommended by:
          VClib, the autonomist

          Not only are you vilifying people earning a high income, you are also calling them criminals. Attack the laws all you want, that's fair game. Attacking the people who've made money by following the existing laws, that's not only awful politics but also unfair. If the left chooses this kind of terminology, we'll get nowhere. Furthermore, these sort of sentiments should rightly make some Democrats - myself included - nervous.

        •  Youffraita - there are no clawbacks (1+ / 0-)
          Recommended by:
          side pocket

          in US tax law. If you didn't pay what you owed, or committed fraud, or some other illegal activity, the IRS has a long period to reach back and collect what is due, plus penalties and interest and time in federal prison if the activity was criminal. However, the code for each tax year is set by the end of the year and there cannot be any retroactive tax that goes back beyond January 1st of any year. At this point nothing can be changed for the tax year 2011 and anything prior. 2012 will be added to that list once we pass 12/31/12.

          There is nothing illegal about any US taxpayer having offshore accounts, as long as those accounts are disclosed to the IRS. The taxes due for financial assets domiciled offshore are the same as if those assets were located in the US. While some of these locations are considered "tax havens" that description isn't applicable to US taxpayers because the IRS collects taxes on a worldwide basis. For some other countries that is not the case.

          What you are proposing would be a violation of the foundation of the current US tax laws. It is certainly admirable to advocate for changing the laws, but for people who have followed them there is no basis for trying to collect more taxes than were due.

          "let's talk about that"

          by VClib on Mon Nov 12, 2012 at 08:20:35 AM PST

          [ Parent ]

      •  DH - protecting its history and foundational (2+ / 0-)
        Recommended by:
        side pocket, tardis10

        principles is our best defense against people who would like to see fundamental changes in the program that we don't support, like allowing private accounts. When you toss the fundamentals out the window, and start with a blank sheet of paper, we run the risk that we will end up with a SocSec system that we like less than the one we have.

        I personally think that FDR had great foresight to demand a separate funding mechanism for SocSec so that it was not just another income tax disguised as something else. SocSec has a very modest redistribution element to it but it is viewed as fair by nearly everyone. Turning SocSec into a welfare program that redistributes income would be a very high risk proposal, and one I do not support.

        "let's talk about that"

        by VClib on Mon Nov 12, 2012 at 08:27:41 AM PST

        [ Parent ]

        •  Social Security has a strong redistribution effect (1+ / 0-)
          Recommended by:
          VClib

          Marginal benefits paid by Social Security are paid out at 6 times the rate for low income contributions compared to the high income contributions.  In addition, the benefit it subject to income tax for higher income households.  In a very real sense, Social Security is about 6 times more progressive than the income tax.

          Lastly, for the very wealthy, the Social Security benefit never gets spent and is fully taxed through the estate tax.

          see http://www.ssa.gov/...

          The most important way to protect the environment is not to have more than one child.

          by nextstep on Mon Nov 12, 2012 at 10:03:05 AM PST

          [ Parent ]

      •  Yes, but the way it was born is a big part ... (1+ / 0-)
        Recommended by:
        tardis10

        ... of why it is so politically robust. Lot of programs done the way "they should have been" were stripped down and dismantled over the past three decades, but not social security. All they can yell is the absurd "Ponzi Scheme" lie.

        Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

        by BruceMcF on Mon Nov 12, 2012 at 09:01:59 AM PST

        [ Parent ]

    •  Assess a levy ... (0+ / 0-)

      ... on payroll income above the cap, that starts at 0.1% when an account has projected 10yrs or fewer and increases by 0.1% every year that the trust fund balance drops further. Cap it at the Social Security rate.

      We wouldn't even see a levy on the Social Insurance fund for at least three Presidential terms, because the 0.1% or 0.2% for the Disability Insurance fund extends Social Insurance well past 20 years in the future.

      Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

      by BruceMcF on Mon Nov 12, 2012 at 08:57:13 AM PST

      [ Parent ]

  •  Defense spending does not need to stay the same nt (7+ / 0-)

    Why hello there reality, how are you doing?

    by Future Gazer on Sun Nov 11, 2012 at 09:59:07 PM PST

    •  I agree, but... (0+ / 0-)

      I don't think there is much support in reducing federal defense spending. Defense contracts are spread across the country to evenly and reducing even the most common sense things would cost defense contracting jobs, at least in the short run. Though if we do go off the fiscal cliff it is possible that we end up with a less bloated defense budget, since those cuts which are politically unattainable are automatically triggered.

      •  Well... (2+ / 0-)
        Recommended by:
        corvo, Aspe4

        Status quo is going to change because of the troop withdrawals that will occur.

        The defense contractors will need to adjust themselves accordingly or they will find themselves being eaten by the bigger ones.

        Why hello there reality, how are you doing?

        by Future Gazer on Sun Nov 11, 2012 at 10:41:23 PM PST

        [ Parent ]

        •  Really (3+ / 0-)
          Recommended by:
          Youffraita, corvo, Aspe4

          They can try to push for another war in...Syria, Iran.....

          Oh wait a minute, they are already doing that.

          GOP: Get on the train or get the hell out of our way. Forward! This is our moment...this is our time! President Barack Obama

          by ankae on Sun Nov 11, 2012 at 11:51:27 PM PST

          [ Parent ]

          •  Ha (2+ / 0-)
            Recommended by:
            Youffraita, Aspe4

            No way we end up in a war with Syria or Iran unless our military agreements with Israel get us involved..... oh shit!

            •  I don't think Obama is stupid enough (2+ / 0-)
              Recommended by:
              tardis10, Aspe4

              to declare war on Iran.

              Too bad W. was stupid enough to blow off Iran when they offered us help after 9/11.

              But I digress.

              Syria?  Probably a NATO tragedy -- someone needs to give the people peace.

              Netanyahu is anathema.  He really needs to be pushed out of office.  I have nothing against Israelis...but their so-called leadership is way to the right of their heros, like Golda Meir.

              I can just imagine what Golda would say about N.  And what Moshe Dyan would say.

              Oy gevalt!

              To make the argument that the media has a left- or right-wing, or a liberal or a conservative bias, is like asking if the problem with Al-Qaeda is do they use too much oil in their hummus. Al Franken

              by Youffraita on Mon Nov 12, 2012 at 02:25:21 AM PST

              [ Parent ]

              •  heh. (2+ / 0-)
                Recommended by:
                Aspe4, tardis10
                I don't think Obama is stupid enough to declare war on Iran.
                But we never declare war anymore.  The last time was World War II.
              •  Well... (0+ / 0-)

                I think Israel electing hardline PM's is more in response to the hardline Iranian government. It's problematic because dialog doesn't progress at all. Netanyahu and republicans can scream until they are blue in the face that Iran is 5 years closer to a Nuclear Weapon. They base this all on fissal material, but Iran is not closer to a delivery system today than they were five years ago so it's a mute point.

                The issue won't be on of choice for the United States, much like WWI. I think if we get involved in Iran it will be due to defense agreements that we have with Israel. If Israel moves unilaterally against Iran we could be in serious trouble.

      •  The focus on cutting defense spending should ... (0+ / 0-)

        ... be our massive and counter-productive foreign base network.

        The Okinawa or Rhineland-Palatinate vote is not going to lose many House seats.

        Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

        by BruceMcF on Mon Nov 12, 2012 at 09:04:41 AM PST

        [ Parent ]

    •  In fact it needs to be (3+ / 0-)
      Recommended by:
      bluezen, corvo, Aspe4

      cut in half every year for the next four years.

      As do "black ops" and the CIA . . .

      Fake Left, Drive Right . . . not my idea of a Democrat . . .

      by Deward Hastings on Sun Nov 11, 2012 at 11:35:19 PM PST

      [ Parent ]

  •  As one of my Business Professor's used to say... (4+ / 0-)

    "...use time to your advantage."

    This time, WE are in the drivers seat.  And if we let the tax cuts expire, that whole pact that Norquist strong armed the GOP congressman to sign becomes null and void and a new chapter begins.  One can only hope, anyway.

    •  Didn't Norquist Give Repugs an Out? (0+ / 0-)

      A while back, I could have swore he said that letting the rates go back up automatically, as they were designed, did not constitute a tax increase.

      "The problem with posting quotes off the Internet is you never know if they're genuine."--Gen. George Washington at the Battle of Gettysburg, February 30, 1908

      by Aspe4 on Mon Nov 12, 2012 at 07:23:55 AM PST

      [ Parent ]

  •  Boehner to Reid: (1+ / 0-)
    Recommended by:
    Bulldozer

    Get your chamber to pass a budget resolution. We have ours. Then we'll talk.

    •  Reid to Bonehead: (1+ / 0-)
      Recommended by:
      bluezen

      We have one already.  The President will sign ours.  What's your problem?  Get your caucus in line.  Do some leadership, if you can figure out what that is.

    •  umm. no. the budget passed by the house was (0+ / 0-)

      introduced in the senate as a corrupted version of the prez's that didn't allow for expiration of tax cuts for the rich -- which was exactly why it went down in flames when it came up for a vote.

      as usual, you've left out the uncomfortable parts of the argument b/c they don't support your claim.

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