11/14/2012 8:00 PM ET|
Now we need the old Obama
We need a return of the 2008-vintage president to reach across the aisle and restore confidence if we’re going to avoid another recession.
The yard signs have come down. The political ads have mercifully stopped. And now, the task turns from campaigning to governing and compromise.
The "fiscal cliff" of tax hikes and spending cuts worth $720 billion, or 5% of gross domestic product, threatens on Jan. 1. Just beyond that, we have to contend with the Treasury's debt limit -- and the tussle over raising it last time nearly torpedoed the economy in August 2011. To focus the mind even more, we also have the threats of credit rating downgrades, further loss of CEO confidence and a potential new recession.
The ugliness of our politics hit a new nadir this year as President Barack Obama's message of hope and change devolved into character attacks while Republicans focused on the makers versus the takers, the 47%, and so on. The focus was on things like Mitt Romney's tax returns, binders of women, and horses and bayonets. For the next step, we need the old Obama back -- the one who talked of post-partisanship, kept Republicans in his Cabinet and seemed more interested in results than ideological purity -- to navigate the fiscal cliff that has markets and businesses so worried. (See what's in the fiscal cliff.)
Republicans, against all odds and in a reversal of the post-2010 Tea Party ascendance, seem ready to strike a deal. And if it happens, the market will surge.
The change we need
As I've said in recent columns and blog posts, including "Obama, GOP face off at the edge," the stakes couldn't be higher. Businesses have pulled back and capital expenditures are dropping at a pace not seen since the 2008 meltdown because uncertainty about Washington is so high. Analysts at Société Générale estimate that, since 2007, political bickering has shaved 2.5% from GDP and resulted in 2.1 million lost jobs.
In dollar terms, that's nearly $400 billion in lost output and wages for average Americans.
Yet despite this, and despite that $6 billion spent on some 1.2 million political ads, the electorate largely returned the status quo to power in Washington. Obama lost a few states in the Electoral College. Republicans lost a few seats in Congress. But Americans are sending the same group back, ostensibly with the wish that a compromise is found.
Thankfully, with a demographic wave working against them, Republicans have changed their tack. They could be realizing that obstructionism -- deployed since the 2010 midterms -- and their commitment to Grover Norquist's Taxpayer Protection Pledge are failing.
Yes to new taxes?
The key to unlocking a bipartisan deal is taxes.
House Speaker John Boehner R-Ohio kicked off the wave by saying that this was the president's moment to succeed and that Republicans would be willing to accept new taxes -- if they came from tax reforms and a reduction in credits and deductions rather than increases in marginal tax rates. This would raise revenues but do so in a way that wouldn't further damage business confidence, because a simpler tax code would reduce compliance costs and end-of-year headaches.
If we're talking about replacing the revenue from ending the so-called Bush tax cuts on the wealthy, then only around $60 billion per year is needed -- and that is doable, according to research from the Tax Policy Center (.pdf file). Conservatives are falling over themselves to walk through the opening made by Boehner and to support a tax idea originally pushed by Obama as well as his 2010 Simpson-Bowles deficit committee.
Rep. Paul Ryan, R-Wis., the GOP's vice-presidential candidate, has come out in support of the revenues-via-reform idea as he prepares to return to his post as House Budget Committee chairman to play a key role in the coming fiscal cliff negotiations.
Glenn Hubbard, Romney's economic adviser, wrote in the Financial Times that to avoid the fiscal cliff, we need to raise average tax rates through revenue-via-reform instead of simply raising marginal rates -- something that will "distort behavior and reduce activity." For the rich, popular deductions on things like mortgage interest, charitable giving and health insurance should be on the table.
And Weekly Standard editor Bill Kristol wondered why Republicans haven't been willing to negotiate with the president on taxes. Appearing on Fox News Sunday, he said: "The Republican Party is gonna fall on its sword to defend a bunch of millionaires, half of whom voted Democratic, and half of whom live in Hollywood and are hostile to Republicans."
Obama, in his postelection speech, emphasized the need for the wealthy to pay a little more. The revenues-via-reform idea gives him that. But we cannot solve the fiscal cliff merely by raising taxes, since the real, long-term driver of the deficit is unfunded entitlement programs going broke because of out-of-control health care costs.
Two sides of the coin
As I've said before, the deficit isn't just about taxes and spending. It's about short term versus long term and cyclical versus structural.
There is the short-term, cyclical deficit (caused by our middling economy) that results in more spending on things like disability benefits and food stamps and which lowers tax revenues, since the employment-to-population ratio is at early 1980s levels.
VIDEO ON MSN MONEY
THE DEMOCRAT PARTY, SCHOOLS, GOVT, MEDIA HAS BEEN INFILTRATED BY LEFT WING LIBERALS AND BRAINWASHED HALF
THE COUNTRY IN BELIEVING IN THIS BIG SPENDING OVER REGULATED TAXED WELFARE SOCIETY! THEY DO IT WITH LIES
PROPAGANDA AND THE LEFT WING BIAS MEDA AND EVEN NETWORK TELEVISION AND MOVIES! OBAMA WAS A STUDENT OF
COMMUNISM! HE'S ON VIDEO RANTING THE SAME KIND OF SPEECHES! HE EVEN HIRED VAN JONES AND ANTIA DUNN AND
VALARIE JARRED AND OTHERS WHO ARE ON RECORD SAYING THEY ARE COMMUNIST! HE'S A SOCIALIST!
The only time he'll do that is to pick their pockets to buy a little crack.
whats wrong with obama? he is what we all need . his atty general got a border parol agent killed and the old obama used executive priv. to get him off the hook. what the hell is one stinking bp agent in obamas world? the old obama watched in real time as our muslim brothers murdered our ambassador and other expendable americans and did nothing. thats the kind of guy this now fourth rate pile of manure needs for a leader (of selfish, spoiled and greedy welfare recipients) soon the hated rich will be packing up thier detested butts and thier money and leaving. obama will replace them with high paid union workers, as promised. (when the high paid union workers can find a job) if all of the old obamas tricks dont work we can always print more money. on a cold winter night you can use it to start a fire in your tent.
i am a republican and will do all i can do to prevent any stupid concessions by my party to obama, the old one or the new one. you can tell the difference as the country begins to fall apart and people start taking lessons in chinese or russian. its over people and even obama cant fix it. you made your bed now go lay in it
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The "old Obama" who talked transparency but rammed Obamacare down our throats when NO ONE even knew what was in the bill which is now law. Or maybe the "old Obama" who spent way more time golfing and campaigning than he ever did governing. Ask his jobs council which he didn't meet with for months. Ask the folks at the daily intel brief which he rarely attends. I'm sure if you ask the folks at the bankrupt Solyndra (billions of tax dollars wasted) they would love the "old Obama. After all, the "old Obama" knows that business owners "didn't build that" and "they didn't make that happen."
Anthony is not a journalist but just another in the media involved in the slobbering love affair with Obama.
On the first day of the new session in January, the Senate will have a unique opportunity to change the filibuster rule with a simple majority vote, rather than the normal two-thirds vote. The change can be modest: If someone objects to a bill or a nomination in the United States Senate, they should have to stand on the floor of the chamber and defend their opposition. No more ducking responsibility for bringing the work of this country to a dead stop.
Let's fix the filibuster. Please sign this petition: reformthefilibuster (dot) com
Anyone else want to know why the Dims and Obama did not change the tax laws when they expired the first time in 2011, they had control of the country for two years and they could have passed new tax laws during that time to take affect when Bushes expired. If the dims had changed the tax laws in 2011, we would not be hanging off a cliff and our countries rating would not have dropped. For the past six years, the demarcates have been in control of this country, Bush was president but looking at the last four years you can imagine what was happening Bushes last two years under a democratic administration. Have any of you posting who have managed to stayed with the same employer threw this mess had any benefit cuts in the last year or so, such as lost of pay vacations and mandatory unpaid time off, employer cuts to 401k plan, upper management layoffs. I ask because I want to know if this is going on all over the country, I know the employees of Hostess where striking on these issues and Hostess is closing their doors and going out of business. Has anyone herd any thing about the government charging a transaction fee on all transactions people, companies and banks make, direct deposits, check cashing , credit cards, debit cards, cash with draws. This rumor has been speeding like wild fire in my state, it has many people upset and concerned, no one has said if this is something, the government is trying to pass or if it is part of the Obama care passed behind closed doors.
If you are making more than $500K/year you are NOT in the middle class. Pay up for the bennies. If you spent it all on multiple homes and Mercedes--or Bentley's or a nice big boat, then you can afford a few thousand more in taxes. You'll get it back as the economy grows because the Gov will send the money back to people, who will then spend it on goods and services and maybe a better infrastructure so that workers can travel more speedily and efficiently to jobs.
I don’t share what I perceive as your guarded optimism even if they do “reach across the isle” with soft remedies. Reality is in 4-5 years the deficit will be 22 trillion+ and climbing. Combine that with the worlds 3rd largest economy Japan straining under debt and the problem compounds. Their debt percentage to GDP is 192. Maybe they’ve been able to handle it so far because of their high rate of savings and large manufacturing/export base. They are now into QE7 or something ridiculous but like us - You can’t keep interest rates at zero or print money forever.
Things could possibly start to buckle in 5-6 years. Sooner if there is a recession. I’m not sure what the economic calamity will look like but a lot of people are going to get a haircut. Heck – they’re going to be all but bald.
I’m not sure any kind of a long term soft landing is within reach at this point. We are not the country we were. More like fat, lazy, uninspired and under educated couch potatoes who feel entitled due to past accomplishments. A record number of Americans get govt goodies and there is no way they’ll vote in any way they think will cut that assistance off.
I pity the next republican who gets in the White House. You think Obama inherited a mess………sheesh……
screw you - Obama NEVER reached across the aisle.
He shoved ObamaCare down our throats, then let the thug unions opt out.
Why do we allow the Media, government, and the Federal Reserve to disseminate false information dealing with both economic and foreign policy?
Between a rock and a hard spot
The United States federal government will spend 3.8 trillion in 2012; it will take in 2.5 trillion, which leave a debt of 1.3 trillion. To balance this budget Americans will have to raise taxes by 50% or cut spending by 35%, or a combination of the two. Plus we must start making payments on our 17 trillion dollar federal debt. If we raise tax sufficiently to reduce the 2012 debt, the American people will revolt. Congress will not cut spending by 35% because they will have to cut the programs of the vested interest groups that keep them in power. If we don’t start paying on the federal debt lenders will question whether we are going to pay our debts, and interest rate will increase as the risk of not getting paid raises. With the reelection of Obama it is obvious the American people have no understanding of our economic condition. With Obama wanting a tax increase of 1.6 trillion over 10 years and congresses wiliness to negotiate on this should tell us that our leadership doesn’t have clue either. We are going bankrupt!!!
Bankruptcy does some good things; it gets rid of the debt, it reevaluates the assets, gets rid of bad management and obsolete ideas and America can start again.
If the past four years has taught us anything, it's that house Republicans have had a MUCH bigger problem reaching across the aisle. Obama and the Dems have tried doing that repeatedly. As usual, they've had to swallow more concessions than the other side. Even Health Care Reform's final bill ended up filled with Republican meddling and demands. I have no doubt Obama IS reaching across the aisle now but it doesn't mean Republicans get their way on everything. I often see people twisting this around, of course, as if Obama's the one who isn't reaching. Those people are in a bubble and clearly haven't been paying attention, they just think what they want to think. Frankly I don't see much difference between the Obama of then and now.
The only thing we've learned from his first four years is that reaching across the aisle to the Republican extremists didn't help a whole lot.
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[BRIEFING.COM] Equity indices closed out the month of August on a modestly higher note. The Russell 2000 (+0.6%) and Nasdaq Composite (+0.5%) finished ahead of the S&P 500 (+0.3%), which extended its August gain to 3.8%. Blue chips lagged with the Dow Jones Industrial Average (+0.1%) spending the bulk of the session in the red.
The final week of August represented one of the quietest stretches for the stock market so far this year. The first four sessions of the week produced the ... More
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