Republicans propose new fiscal offer to Obama

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  • -1

    Molenir

    Presidents plan to cut the deficit... Raise taxes on the wealthy, including and especially small businesses, cut the military, do nothing to address the looming bankruptcy of social security and medicare. Oh, and of course raise spending in other areas. And Obama wants the ability to not have to worry about the debt limit.

    Republican plan, close tax loopholes, (ie raise taxes on the wealthy), restructure medicare and social security to make it slightly more sustainable, and cut the military. No increase in spending, no ceding spending limits to the President.

    To be honest, I'm not sure that going off the cliff wouldn't be a better choice then either of these 2 plans, though the Republican one seems slightly less bad then the Presidents plan.

  • 0

    Deplore

    Step 1: Target an arbitrary % of GDP for government spending. Step 2: Cut/increase spending in order to reach that level. Step 3: Raise/lower revenue to match spending.

    Unfortunately, I think Republicans and Democrats can't even agree on Step 1.

  • 0

    Herve Nmn L'Eisa

    " Unfortunately, I think Republicans and Democrats can't even agree on Step 1."

    Deplore, that's very true. Neither side can really agree to any step one. Except if you consider raising taxes. Revenue isn't the problem, but expenditures. Neither side will endanger their sacred cows; the Dems won't spare any entitlement and Repubs won't spare Pentagon

  • 0

    lucabrasi

    Neither side will endanger their sacred cows; the Dems won't spare any entitlement and Repubs won't spare Pentagon

    Mmm... Food on poor folks' tables and heating in the winter, or more drones for taking down Pakistani toddlers... I know which of those two "sacred cows" I prefer.

  • 0

    Herve Nmn L'Eisa

    " Mmm... Food on poor folks' tables and heating in the winter, or more drones for taking down Pakistani toddlers... I know which of those two "sacred cows" I prefer."

    Hmmm, how utterly disingenuous and lefty-looney.

    Obama has eagerly expanded the use of drones, with the cooperation of neo-con repubs all on the taxpayer dime, credit card actually, money that would have been better not spent obliterating people in faraway lands or increasing US hatred.

    Likewise, the small-medium size business UNfriendly policies have only worsened the employment opportunities for the struggling masses to not be forced into destitution and thus be made dependent on guberment largesse.

    Too big to sustain itself. Face it, the hole dug is a bottomless abyss.

  • 0

    SuperLib

    The Republican plan calls for increasing the eligibility age for Medicare, the federal government’s health insurance program for older Americans, and lowering cost-of-living increases for Social Security pension benefits that go to Americans of retirement age. It does not, however, meet Obama’s demand that tax rates be raised for American couples earning more than $250,000 a year

    The tax issue on the $250,000+ earners just needs to go away. It's just taking time away from negotiating other things.

  • 0

    lucabrasi

    @Herve

    There wouldn't be any struggling masses if American society was run on well-planned, socialist lines. But that would make God angry, along with gays, women's right to choose, and science.

  • 0

    paulinusa

    "...looming bankruptcy of social security and medicare."

    Social Security is solvent(until I believe 2030) and doesn't contribute to the deficit. So why do the Republicans want to reduce benefits?

  • 0

    paulinusa

    And it's incredible how far the Republicans will go to protect the rich at the expense of the poor and middle class. Guess they just can't see that they'll continue to lose middle class support. These negotiations could become a public relations disaster for them.

  • 0

    Alphaape

    The Republican plan calls for increasing the eligibility age for Medicare, the federal government’s health insurance program for older Americans, and lowering cost-of-living increases for Social Security pension benefits that go to Americans of retirement age.

    So in other words, you will have to pay more into a system, that will make you wait longer to get the benefits from it, and when you do get them, they will be smaller than before. And the government says that they know better how to handle our money, thus it is smarter to pay SS taxes to them vice put it in our own control with a 401k plan since we can't be trusted to do the right thing with it.

    Also, the Dems keep saying we should go back to the tax rates under Clinton when we had a surplus. I say fine, let's go to that rate, as long as we also spend at the same rate that we had under the last year in Clinton's term. We would then have almost a trillion dollars in spending cuts across the board, in defense as well as other entitlement programs. If the so called tax rates that are raised will then somehow bring us back into a surplus, then I say we should look at tax cuts. But neither Dems or Reps will offer that. They will just keep on dancing along until the music stops.

  • 0

    Alphaape

    Social Security is solvent(until I believe 2030) and doesn't contribute to the deficit. So why do the Republicans want to reduce benefits?

    @ paulinusa: If you go back a week or so and listen to the words of Dem Sen Dick Durbin from IL, he makes that point. The reason why he is not worried about it because to paraphrase him, somewhat, they are not worried about SS because right now they are not carrying it on the books. In other words, they know that it is out there, the payments that they will have to make for SS, but they just aren't carrying it on the books as a liability now. If they were to actually show it, we would be in a much worse mess than we are now.

    We still have not had a signed budget since 2009. Congress just keeps kicking the can down the road, relying on these temporary measures to get us by rather than making a hard choice. Another thing to also remember, they don't have to pay out SS that people have paid into. They (Congress) at any time can cut or change the requirements as to who is eligible to receive the benefits.

  • 0

    Herve Nmn L'Eisa

    lucabrasi, " There wouldn't be any struggling masses if American society was run on well-planned, socialist lines."

    Name one. France, Spain, Greece, Italy, Cuba? Oh, wait, there AREN'T ANY!! How many more times must the same experiment be repeated in failure?

  • 0

    Herve Nmn L'Eisa

    AlphaApe, exactly! But the dopes who support their party plans just don't get it. As Forrest Gump's mama said: "Stupid is as Stupid does."

  • 0

    paulinusa

    "The reason why he is not worried about it because to paraphrase him, somewhat, they are not worried about SS because right now they are not carrying it on the books. In other words, they know that it is out there, the payments that they will have to make for SS, but they just aren't carrying it on the books as a liability now. If they were to actually show it, we would be in a much worse mess than we are now."

    Really? I'd like to see that quote because I doubt he said that.

  • 1

    Laguna

    So now Boehner calls Obama's proposal a “la-la land offer, which couldn’t pass the House, couldn’t pass the Senate.” Added to the unhinged comments made by him and his cohorts over the past week, one might suspect the election has caused them to hit the bottle hard.

    The fact is that Obama's proposal does not HAVE to pass the House or the Senate thanks precisely to the brilliant legislative engineering Boehner himself cooked up. Obama has proposed essentially the very same he did in his 2011 budget; Boehner is proposing essentially what Romney had proposed during his presidential bid. Bit of news for you, Boehner: your guy lost; the American people rejected your ideas.

    The question is not whether the upper bracket will revert back to 39.5%; it is simply how. The most likely scenario at present is for the House to allow a vote on extension of the Bush tax cuts for all but the top 2%, with the GOP members voting simply "present" so as to assure a quorum but not leaving a voting trail. Presumably they will do so with their fingers in their ears, chanting, "Nyah, nyah, nyah, I can't hear you!"

  • -1

    TheQuestion

    Bit of news for you, Boehner: your guy lost; the American people rejected your ideas.

    More like they accepted the status quo as there were negligible changes in the house, senate, and gubernatorial elections. It's a pain to unseat an incumbent even when you have a good opposing candidate which the GOP lacked.

    Raising bracketed rates won't really help any of this anyway, it's ceremonial at best. Raising rates on earned income over 250k will mostly hit small and midsize companies that employ 20 to 500 people and gives a considerable advantage to larger corporate entities that can handle the increased tax burden. The net result will be that the guy that owns a local chain of restaurants will get hit a lot harder compared to Donald Trump.

    That said Capital Gains could probably afford to get brought up to 20% without to much difficulty, that will still be more favorable than European rates, but we'd have to revamp corporate tax rates. 2011 integrated capital gains rate stands at around 50.8 percent according to the tax foundation, that is foolish. Raise capital gains, eliminate corporate double tax and we'll talk about raising bracketed rates.

  • -1

    sailwind

    Obama has proposed essentially the very same he did in his 2011 budget;

    Yes the one that went over so well the first time he throw out that La La land fantasy his own party couldn't even stomach as realistic.

    The Senate voted unanimously on Wednesday to reject a $3.7 trillion budget plan that President Obama sent to Capitol Hill in February.

    http://thehill.com/homenews/senate/163347-senate-votes-unanimously-against-obama-budget

  • 2

    Laguna

    TheQuestion, the Treasury Department’s Office of Tax Analysis conducted a study on who would be affected by Obama's tax proposal and found:

    • Only 8 percent of small-business owners have income of $200,000 or more. So 92 percent of small-business owners wouldn’t be affected by Obama’s proposal.
    • Of the 1,191,000 taxpayers who fall into the top two tax brackets that would see increases under Obama’s plan, only 239,000 (20 percent) qualify as small-business owners.
    • Furthermore, despite Boehner repeatedly referring to small businesses and “job creators” interchangeably, the notion that small businesses are necessarily “job creators” is also a big exaggeration. “Slightly more than one-fifth of small businesses” qualify as an “employer,” the report states.

    http://factcheck.org/2012/11/facts-falling-off-the-fiscal-cliff/

    I would add that a small-business owner could also simply incorporate and pay him or herself a salary below the $250,000 level; that is what my mother, a small business owner, does.

    At any rate, allowing the million or so super-rich avoid higher taxes simply to protect the few hundred thousand who are indeed business-owning job creators is a false choice; other methods are available to help these people.

  • -2

    Alphaape

    Looking at an article from Bloomberg, if Congress does nothing, a typical middle-income household earning between about $40,000 and $60,000 a year would see a tax increase of about $2,000. The average federal tax rate, including all taxes, would reach 24.3 percent, up five percentage points.

    Will that settle the deficit, probably not. I read that if you took all of he net worth of those on the Forbes top 400 richest in the USA, it would come out to about $1.5 trillion, enough to just last one year in the Federal spending. Then after that, what would we do, we still have a huge deficit. So trying to tax the top 2% would not do that much difference if we keep spending the way we do unless some cuts to entitlements are made.

    Also, I seem to remember last year, that the whole OWS movement was against the top "1%", now I see that the Dems are going after the top "2%" I'm afraid that this "top %" will continue to creep down to the point that it will no longer be those who are making $250,000 and above who will get higher tax rates, but those who make much less than that. One famous Dem, (Gov Brown of CA), when he was pushing for their "Millionaire's tax" for CA said that it should be applied for those who make $250,000 a year, since in his logic, in 4 years they will be millionaires. That was a true quote of his, and surprisingly that tax rate for CA was passed. I imagine that those who did vote for it will feel a bit different when their tax bill comes due for state taxes next year. The bill passed, and it wasn't publicized much at the time but it is retroactive to the beginning of 2012. So now they will probably get his with a higher Fed tax bill, and then add an increase on the taxes for the state, and that $2000 will surely be missed by some.

    As they say, all politics are local, the same could be said about all taxes. What someone who makes a million or more pays in taxes is frankly not on my scope. I am more concerned with the extra $2,000 I will probably have to pay next year. That may mean I don't go out to eat as much (Outback in Japan dinner for 2: 10,000 yen), and other smaller little things that one may do when you find you have an extra bit of money in your pockets after all your obligations have been met. But without an extra $2K, that will make some families change the things that they do.

  • 1

    bruinfan

    cut the military.

    Spending here need to be leaner. Still far more than any other country, but leaner.

  • -1

    TheQuestion

    Only 8 percent of small-business owners have income of $200,000 or more. So 92 percent of small-business owners wouldn’t be affected by Obama’s proposal.

    Yes but a majority of small businesses in the US are non-employers. There are roughly 27,281,452 firms, what we refer to as small businesses, operating in the US, of those 21,351,320 are non-employer firms that consist of 78% of all small businesses. These businesses are typically self employed plumbers, craftsmen, and the like. This is based on the US census.

    These non-employment firms make, on average, around 45,000 per year. They would be unaffected but since they don't employ anybody they are not a priority for legislative purposes. Rather it is the remaining 22% that actually employ people that are of interest to me.

    Of the remaining 5,930,132 firms 4,661,829 employ less than 10 individuals. So the bulk of the country is employed by less than 5% of the businesses that employ 10 or more individuals and I'd think it's fair to say that such businesses are likely the ones with income exceeding 200k.

    Only 8% may be influenced but it's that 8% that employs most of the country. I like to focus qualitatively rather than quantitatively.

    Furthermore, despite Boehner repeatedly referring to small businesses and “job creators” interchangeably, the notion that small businesses are necessarily “job creators” is also a big exaggeration. “Slightly more than one-fifth of small businesses” qualify as an “employer,” the report states.

    I believe I addressed that point adequately. This actually reinforces my point that the tax increase will hit large scale employers considerably harder than small scale ones. It's kind of like how I don't mind if a Walmart puts a local grocery store out. Each Walmart employs dozens of workers while the local only hires 2-5 tops and I assure you the pay was no better, no small business is going to pay any more than the minimum wage for a 16 year old stock boy.

    I would add that a small-business owner could also simply incorporate and pay him or herself a salary below the $250,000 level; that is what my mother, a small business owner, does.

    Incorporation is more for liability reasons than for tax purposes in my experience. If you're the sole owner of a corporation you're probably an S-Corp or LLC and aren't subject to corporate taxation but any income you get is taxed as normal. Because they only have 1 owner they'd be considered pass through entities for tax purposes. It offers a few advantages in terms of overall tax planning but unless you're establishing the S-Corp with the specific intent of modifying your tax liability the difference in how much you end up paying is negligible.

    At any rate, allowing the million or so super-rich avoid higher taxes simply to protect the few hundred thousand who are indeed business-owning job creators is a false choice; other methods are available to help these people.

    Frankly I'm loath to give any more money to the US federal government regardless of the source. They have no interest in either party of reducing the deficit in a meaningful way, all they cuts they've proposed thus far have been reductions in projected spending increases. It's a pointless endeavor and the idea of giving them more funds to move around as they please sickens me when they have already managed to take the most prosperous country on the planet and bury it in debt.

  • 0

    lucabrasi

    Face it, Americans, your entire nation is based on pure greed. The "American dream" is to arrive with nothing and make a billion, with no reference as to whether you actually improve the lot of your fellow man or not. It's all about "me". That's why you were tearing yourselves apart at the last elections, you can't bear the reality you've created for yourselves.

  • 0

    sailwind

    That said Capital Gains could probably afford to get brought up to 20% without to much difficulty, that will still be more favorable than European rates, but we'd have to revamp corporate tax rates.

    Reading your posts over time it's pretty obvious that you are quite well versed in the financial and tax world and this is meant as a compliment. As such though I am curious on your view about raising capital gains to twenty percent. It would be my impression that this in the long run would hurt existing jobs and dampened new job creation. I know a hike on capital gains would affect decisions regarding my rather modest portfolio if I wanted to shift funds around.

    I do not think I would be unique in that and I would really think that it would have dampening effect on job creation all around as millions(?) of small time investors are keeping money bottle up in the less performers then helping to really prime the pump for better performers to expand or hire as they aren't moving money as they used to to avoid the increased tax hit.

    I would think lowering the capital gains tax in a bad economy would be a much better way to go for helping our unemployed get back to work. And would like your perspective on that.

    Oh and on this.......

    Frankly I'm loath to give any more money to the US federal government regardless of the source. They have no interest in either party of reducing the deficit in a meaningful way, all they cuts they've proposed thus far have been reductions in projected spending increases. It's a pointless endeavor and the idea of giving them more funds to move around as they please sickens me when they have already managed to take the most prosperous country on the planet and bury it in debt.

    Amen to that.

  • 0

    sailwind

    The "American dream" is to arrive with nothing and make a billion, with no reference as to whether you actually improve the lot of your fellow man or not.

    Typed by a man using the internet on a computer using windows invented by some guy in a garage in California following his American dream years ago and enabling all of us to go from writing letters to instant communication over the entire planet vastly improving his lot and the lot of his fellow man and made billions in the process.

  • 0

    ubikwit

    The Commander in Chief should stop wasting his breath talking to front men tools of the propertied class like Boehner and Ryan.

    The public understands that they are going to pretend to make a stalwart principled stand on their bogus and debunked ideology, so Obama should assume the helm in an authoritative manner, reassuring the people in a confident manner that the situation is well in hand.

    Force march the republicans off the fiscal cliff, and then see what isn't smashed up on the rocks below or swept out to sea. Maybe the trauma will bring some of them back to earth.

  • 0

    gelendestrasse

    The Commander in Chief should stop wasting his breath talking to front men tools of the propertied class like Boehner and Ryan.

    Isn't that "con artist in chief?" Obama has more money than any of us ever will, I expect. He is right up there with Boehner and Ryan, etc. etc. The idea that he wants to do something for the middle class is rather lame. He's just using the bully pulpit to try to force his own agenda through without compromise.

    And that's the problem. Obama won't compromise any more than a tea partier is willing to. With this kind of "discussion" going on not much is going to get done.

  • 0

    TheQuestion

    As such though I am curious on your view about raising capital gains to twenty percent. It would be my impression that this in the long run would hurt existing jobs and dampened new job creation. I know a hike on capital gains would affect decisions regarding my rather modest portfolio if I wanted to shift funds around.

    While I'm not really gung-ho about the idea as a non-insubstantial amount of my yearly income is taxed at capital gains rate I concede that the rate could increase if appropriate measures were taken as a concession. Bringing the capital gains rate would put a mild damper on investing activities but it would likely be ofset by shuffling the money through payroll and the like. As a concession I would like to see corporate double taxation ended. Right now integrated capital gains are 50.8% due to double taxation which is ridiculously high. A 20% capital gains rate would still be preferable to European markets and more stable than asian markets and would leave us in a stable position.

    I like my 15% rate but if it means that we can have an honest discussion about corporate tax structure and spending cuts than I'm game.

    I do not think I would be unique in that and I would really think that it would have dampening effect on job creation all around as millions(?) of small time investors are keeping money bottle up in the less performers then helping to really prime the pump for better performers to expand or hire as they aren't moving money as they used to to avoid the increased tax hit.

    Dampening is going to occur regardless of which rate goes up. Personally I'd rather see capital gains go up while raising the exemption and leave the bracketed rates alone. Like if you make less than 20k a year off of capital gains they are taxed at 0 or a reduced rate. Idealy we would have a flat or fair tax that would be less suceptible to the whims of Washington but I don't see that being discussed in either party so I work with what I'm given.

    I would think lowering the capital gains tax in a bad economy would be a much better way to go for helping our unemployed get back to work. And would like your perspective on that.

    Idealy yes in reality it's a little mixed. If capital gains was lowered on a long term basis it would ramp up investing rather well but Washinton has a habit of passing 1 or 2 year rate reductions that are constantly in flux. These kinds of reductions get a luke warm response from investors and only serve to drive the speculation markets instead of investment in businesses and capital assets. Kind of like how people stop getting excited when a business has a going-out-of-business sale every month of the year.

    Do you honestly believe it's a worthwhile use of human life to create (for example), Coca-Cola, rot people's teeth and spread diabetes around the world?

    Can't speak for others but I do. I like Coke (although I like Faygo more) just like I like coffee, cigars, and liquor. People who make them are providing me with destructive consumables, I understand the risks and side effects of the consumption of these products but elect to consume them of my own free will because I enjoy them. Why do you hate my fun? That's what confessions are for. Judgements on the morality of self-destructive behavior are above my paygrade.

  • -1

    sailwind

    The Question,

    Thank you interesting perspective, appreciate the feedback. I have to agree with that even lowering Capital Gains to spur job growth it can only do so much if the Government doesn't make it clear that the rate it sets is locked more or less in stone and isn't going to be jerked around every few years or so to deal with whatever crisis is next. Hadn't really considered that part of the equation for the long term side of it or even the short time side if it was done without that sort of promise locked in, again appreciate your thoughts on this.

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