11/1/2012 8:45 PM ET|
The fiscal cliff: Obama vs. Romney
Obama would still seek a grand bargain, while Romney favors taking on the looming budget crisis piece by piece. The key difference: Taxes.
As the hard-fought campaign moves toward an uncertain finale next week, President Barak Obama and Republican challenger Mitt Romney have begun offering solid clues as to how they would defuse a looming year-end fiscal calamity that many experts fear could send the struggling economy back into a recession.
Washington is awash with speculation and anxiety about the looming fiscal cliff of massive tax increases and spending cuts that awaits congressional action shortly after Tuesday's election. While there are many scenarios for how negotiations might play out in a sorely divided government, the path to resolution may be much simpler than many suspect once the votes are counted.
Obama envisions a $4 trillion bipartisan "grand bargain" of entitlement and tax reforms, spending cuts and tax increases on the wealthiest Americans to solve the country's long-term debt problem while averting a jarring year-end panoply of expiring tax cuts and defense and domestic spending reductions totaling $607 billion. Obama's last bid for a "grand bargain" was his failed secret talks with House Speaker John Boehner, R-Ohio, that collapsed in recriminations.
"It will probably be messy," the president told the Des Moines Register last week. "It won't be pleasant. But I am absolutely confident that we can get what is the equivalent of the grand bargain that I've been offering to the Republicans for a very long time."
Romney is dismissive of grand bargains and opposes tax hikes on the wealthy. He says that if elected, he wants Congress and Obama to delay any permanent solutions until after the inauguration in late January, and has suggested he would be open to fixing the problem with a series of separate bills.
Both men favor derailing the more than $50 billion of defense cuts set to take effect automatically in early January under budget sequestration. The two also agree that a stopgap measure is needed before Jan. 1 to temporarily extend Bush-era tax cuts and other measures set to expire. However, Obama has signaled his intent to veto even a few months' extension of tax cuts unless families earning more than $250,000 a year are made to pay higher rates.
The tax conundrum
Taxes have been the flash point in Obama's dealings with Republicans during the past two years. Romney, House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky., insist that the Bush tax cuts be extended for all Americans, arguing that any increase in rates would discourage investments and job expansion by small businesses.
If Obama were to lose, it remains to be seen would make good on his veto threat during a lame duck session, although he would likely find it difficult to defend that position if Romney and the GOP sweep to victory and claim a mandate for their economic and budget policies
"If Obama is re-elected, he will have to negotiate with a Republican House of Representatives whose leaders aren't sure they can do business with him and whose views are diametrically opposed to his own," said William Galston, a former senior policy adviser to President Bill Clinton. "So if Obama wants to make progress on fiscal questions or any other questions, he is going to have to consider hard compromises -- that is to say the kind of compromise that all parties agree to something, pieces of which each party fundamentally disagrees with."
If Romney wins, Galston added, "The Republicans will have a very strong incentive to agree to as little as possible -- for as short a time as possible -- until the White House is under new management. And then the question is how much of a price will Senate Democrats force them to pay for that short-term deal."
Senate Majority Leader Harry Reid, of Nevada, Sen. Charles Schumer, of New York, and other Democratic leaders are closely allied with Obama in arguing that the wealthiest taxpayers should pay more to help bring down the deficit while maintaining essential government services for the middle class. The Democratic Senate is a counterweight to the House and would be the only thing standing in the way of a Republican agenda if Romney beats Obama next week. If Obama and the Senate Democrats prevail the political status quo will be maintained at least for the next two years.
Amid dire predictions about the economic impact of going over the fiscal cliff, it's important to remember that most leading economists say the odds of that happening are slim. Mark Zandi of Moody's Analytics, in a report issued in mid-September, projected there was only a 15% probability of going over the cliff. He gave a 30% probability to Congress and the White House extending all current policies for a time -- the "kick the can down the road" scenario. His most likely outcome -- a 55% probability -- is that some "middle ground" will be reached during the lame duck session.
Recession: How bad, how fast?
Even if Congress ignores the cliff during its lame duck session, most of its spending cuts, tax increases and cuts in physicians' Medicare pay could be quickly reversed in the next session, which gets under way in mid-January. The nonpartisan Congressional Budget Office's most dire prediction -- that the economy would contract by about 0.5% over the course of 2013 with unemployment rising to 9.2% from current levels -- assumes those policies will be in effect all year.
The recessionary effects of the full "cliff" would take time to filter through the economy. And if the new Congress and president reach a compromise on taxes and spending, it could easily reversed such a downturn. "The economy doesn't go over a cliff immediately," said Chad Stone, chief economist for the Center for Budget and Policy Priorities. "It starts slipping down a slope."
Businesses, however, have a different problem. They're in the final throes of annual budget planning, and that includes determining head count. If they believe the rollbacks and tax increases will take place, layoffs are inevitable at the start of their fiscal years, many of which begin Jan. 1.
More from The Fiscal Times:
VIDEO ON MSN MONEY
The systems we allow to shape our lives are camouflaged as serving us when in fact, we the people are the servants. It seems even the institutions and activist groups with altruistic beginnings are infiltrated by instruments of chaos or control.
I hear only silence while executive orders, signed in seclusion, override our constitution. Our lawmakers provide more restrictions than FREEDOM, with little thought to our pursuit of happiness .
Social engineering creates dependence and constrictions rather than independence and individual growth. I see the misuse of our military, in my name, to destroy thousands of innocent lives in sovereign countries that have done us no harm. We are ruled by BUREAUCRATS and threatened by AGENCIES.
It has to stop..
The gamblers say there`s a 75% chance Obama wins.It will get solved,but nobody
will really be happy.
The Social Democrats don;t seem to get it. If you are loosing money...STOP SPENDING.
Stop creating more government, stop making government responsible for the auto industry, mortgages, and the other " buy outs".....In a democrcacy-republic, using FREE Enterprise, you take the risk of failure.. When Teddy Roosevelt had BIG BUSINESS busted in the early 1900s because they were monopolies, they had to sell off their satellite businesses. The country did not tank, like it is now.
Europe is a mess because they tried Socialism. IF you have any business associates over there or relatives,,...ask them..... How good is their FREE medicine?...Not too good as it takes an income tax of 50% and VAT taxes to sustain it and other Socialistic programs.
The Obama administration has robbed our treasury to enrich them selves. Read " Throw Them All Out" an investigative book that describes the $20 million Nancy Pelosi made from her Visa stock while pushing thru bills that favored Visa, and Harry Reid who made a fortune in RE while pushing RE laws. The topper is the $14 billion that Dept of Energy Obama Appointees gave out to Obama campaign contributors. Many of them have declared bankruptcy after having received loans and grants that do not have to be repaid.
I must fault the Republicans, too... We had 12 years of Bush presidents. If there were not in the oil business, they might have worked harder to get us off of foreign oil and more into renewable s. It can be done. Read " Energy Victory" a plan to get us off of foreign oil.
Finally companies are stepping up to the plate and launching commercial space ventures that will actually MAKE money and not be boondoggles like the " retired" Space Shuttle and the now over budget and under achieving International Space Station......
Read "The Case for Mars"....a cost effective, intelligent way to get off this planet and to the only planet in the solar system that can save us when cataclysms come to earth...End of world is not the only reasons to go to space...we can make Billions mining the asteroids and in space tourism...see Spacex and Virgin Galactic.....don't; depend on gov't depend on FREE ENTERPRISE..
You can define a man by his character Obama & Biden have none. – here is the proof.
Ohio is a key battleground state and all of the candidates have campaigned here during the past months.
Biden had a rally in Copley in August, Obama had a rally in Fairlawn in Sept, and Romney had a rally in Cuyahoga Falls just last week... these three communities are all within a five mile radius of Akron.
The cost of the Biden rally was $10,549 and Copley sent a bill to the "Obama for America" campaign but never received a penny.
The cost of the Obama visit was $34,166 and Fairlawn sent a bill to the Obama campaign but has never been paid either... this cost excludes a $21,304 additional cost for the Akron convention center which the Democratic Mayor of Akron donated for the "privilege of hosting a sitting president."
Romney's campaign visit? They contacted Cuyahoga Falls in advance, organized the plan, and promised to pay any extra expenses the city would incur. The city sent them a bill for $7,050 and the Romney campaign promptly paid it in full.
Quoting the Mayor of Cuyahoga Falls, "I think it's self-evident who is accountable for their deeds and who isn't, who's accountable for their actions and who keeps blaming everyone else."
Indeed, there's a stark contrast between these candidates.
Koo you are a fool, and don't know that it takes as much energy to be as you call it a right wing
Christian fanatic as it dose to be a left wing liberal socialist. The deference is the Christian fanatic
whats you to live your life in a country that is in the guide lines of are forefathers. A country that
is free a country that has true liberty a country that gives you the right to say as you think and
gives me the right to disagree. A country that will not allow the bill of rights to be taken from us.
A country that whats a leader to lead in honesty and truth and not over burden the people with
to much goverment, taxs and laws interfering with thier ability to become proud that they have
a job or a business that they can be proud to be able to enter into the American dream. I have
been disable for 13 years, But my wife has been blessed and has had good employment for 33
years. I was a 4th generation Industrial steel painter in 1999 July 2nd I fell 42 feet while painting
a bridge. I have never collected unemployment, diabality but I did collect workmans compinsation
for 2 years. I said this to you because I only want what is mine I am 60 years old and when I can I will collect my social security. I was blessed to have good children that helps when we need it to
provide my medication. What we need is a President that will do the right thing and not be a
lyer & a coward that won't take care of muslims that murdered our Heros who was there to help
and bring good to Libia. He won't do it he him self is a black muslim. Rather you what to believe it
or not I live in Chicago Land and we know the truth about obama and his wife. They have declared
war on us and anyone else that isn't muslim. And obama is a black muslim so he's not going to do
nothing. He is going to try his best get away with do nothing until after the election but every action
has a reaction and he will get his upcomins.
FOR THE LOVE OF GROVER, DUMPING ON THE POOR
WE WILL NOT BE COMPROMISED, DON'T BORE US WITH FACTS
WE WILL NOT BE SATISFIED, 'TIL WE PAY NO TAX (NO TAX RAH!!!!)
ONWARD DEADBEAT SOLDIERS, LISTEN TO US WHINE
YELLING OUT OUR MOTTO, "SCREW YOU , I GOT MINE".
I am sure that Obama's executive order granting work visa's to 23 million illegal immigrants during a time of super high unemployment demonstrates his fiscal thinking.
This guy has ZERO interest in moving America forward. He will follow his social agenda at any cost.
Wake up America, look at his actions and his mentors. Ignore the media spin and look to Obama's actions.
We simply cannot afford another 4 years of Obama paying back the sins of our forefathers.
People, Wake up! We, along with most of the rest of the world, operate under a debt monetary system. Under this system, no money is allowed to be created, unless we borrow it from private commercial banks. Government borrows from the fed or other countries by selling treasury bills, notes or bonds. We do not have enough money to pay that debt, so we just pay the interest on it.
When corporate America borrows, we the public pay those loans, plus interest, in the higher cost of living, when businesses raise the price of their products or services.
Think about it! Money has to have an origin. You didn't always have money, and neither did your boss. It had to begin somewhere. Where do you have to go to get any sizeable amount of money? The bank! All money in circulation, had to be borrowed and then spent into circulation. When you get your paycheck, you are being paid from the principal of someone's loan that the company you work for has captured through commerce. If you have money in an IRA, 401K, bonds, stock, a pension plan, checking account, savings or just in your wallet, you could not possibly have that money unless someone else either individually or collectively has an equal amount of indebtedness.
Ther is a difference between wealth and money. You cannot spend wealth until you convert it into money. That can only be done in one of two ways. You must either sell some of your wealth to someone for some debt dollars, or you would have to borrow against your wealth. Either way, the bankers some how are involoved.
When you go to a bank for a loan, you must sign a loan agreement, mortgaging a portion of your future productivity! The bank then credits your checking account with the principal amount of the loan. The banker is creating that money out of thin air, with the touch of a computer key. Under fractional banking, bankers can create a multiple of what they have in reserves. Usually about 9 times. But who is really creating the money? Isn't the banker actually creating the money to loan to you, on your promise to pay it back? So maybe it is the borrower who is actually creating the money and the banker is only the middle man, who sits back and collects the interest that no money was ever created to pay!!!
When no monay is created to pay the interest on any loan, we are always creating a debt greater than the debt principal of every loan. Blame the federal reserve and this ponzi system for our evergrowing indebtedness.
Congress gave the federal reserve and it's bankers the power to create money to loan to us, so why can't congress give the power to create money to the treasury, to pay for all of our infrastructure needs, without borrowing. This would solve our unemployment problems, take people off welfare, reduce the need for fuel and road use taxes, just to name a couple benefits.
People, keep in mind that when we have to borrow in order to have a medium of exchange, that money has to be paid back and erased off the books, (or it is uncreated). When money is earned first, then spent into circulation, it doesn't have to be paid back to anyone, and lives on indefinitely.
Some people claim that creating money this way would create inflation. I highly doubt that, since no money would enter circulation until it was matched with productivity. Our current monetary system was broken before it even started. We need change
A source in the Deutsche Bank claims that in 2008 our financial and monetary system completely collapsed and since that time the banking cartels have been "propping up the system" to make it appear as if everything was fine. In reality our stock market and monetary systems are fake; meaning that there is nothing holding them in place except the illusion that they have stabilized since the Stock Market Crash nearly 5 years ago.
The Deutsche Bank informant says that the cause for the bailout of the banks was a large sum of cash needed quickly to repay China who had purchased large quantities of mortgage-backed securities that went belly-up when the global scam was realized. When China realized that they had been duped into buying worthless securitized loans which would never be repaid, they demanded the actual property instead. The Chinese were prepared to send their "people" to American shores to seize property as allocated to them through the securitized loan contracts.
To stave this off, the American taxpayers were coerced by former US Treasury Secretary Paulson. During that incident, the US Senate was told emphatically that they had to approve a or else martial law would be implemented immediately. That money was funneled through the Federal Reserve Bank and wired to China, as well as other countries that were demanding repayment for the fraudulent securitizations.
All the money that those banks claimed they needed to avert collapse was also sent to the Chinese to add to the trillions of dollars lost during the burst of the housing bubble on the global market.
The only saving grace has been the US dollar being the global reserve currency. However, now this prop is showing signs of wear as foreign nations like China, Russia, India and Iran are dealing in gold as currency and purchasing gold on the market at an exponential rate. Their use of gold as currency which has threatened the direct value of the US dollar as the global reserve currency.
The war with Iran has to do with gold, its use as currency and its exposure of the central banking cartel’s lack of gold which defines a fiat currency’s worth. And right now, the US dollar is absolutely worthless.
Since this time, the Department of Homeland Security (DHS) in conjunction with FEMA and other federal agencies have been quickly working to set in place their directives of control under a silent martial law.
Ryan, you're an indolent freak that knows nothing about budgets, but presents an imaginary front of wisdom to all the citizens and the fools in the House of Representative that you lead so well, you are the head guru of the worthless Tea Party. You are pushing our country closer and closer to the greatest deepest Cliff.You only know distorted political policies very well for the benefit of the rich, you burst your lungs with the lies you produced in the House of Representative giving these speeches about how to annihilating the old, and later will hurt the younger people by taking their Medicare away in the notorious Vouchers replacements trick. Also trying to change the present Social Security to “Privatization”, transferring those billions of dollars presently in “Secure Government Funds” to Large Banks, Money Lending Institutions, and “Private Investor Groups”, if the Stock Market were to crash any time in the future! The money will just disappeared in the pockets of all last mentioned institutions. You, like Mr. Romney, thinks that the 47% of our best citizens are worthless. These 47%, they are the ones you both want to take everything away from them, while they are trying hard to recover from the Bush destructive years in power. If you both by a misfortune and stupidity of the American people get both of in the White House, you both will destroy America as we know it! Keep thinking no one, but the rich deserves all the millions of dollars, all the food, all the houses, all the comforts of living, home car elevators, all the health insurance, all that obtained from the sweats of the middle class presently working for you now!! Ryan, you keep attending Congress, while you also running for VP, and sleep there all day, besides voting against every Bill to abuse the American citizens that you both call the 47%, and the rest of the 53% you are screwing-up also! Mr. Ryan, people/women are criticizing you because enjoying showing your muscles, and taking athletic poses during you lousy speeches. To many of us, you eyes face looks like the night owl my grandfather kept, the poor bird flew away into the unknown, never to return! You should do the same! You have the Hercules verbal, and mental complex, the gift and ability to lie to anyone that wants to listen to all the junk that comes out of your mouth, needing daily wash with cleaning fluids to sterilize your mouth from perpetually telling, and propagating political policies full of lies to the decent American people all around you!
AS A US TAXPAYER HAVE DONE NOTHING TO BE RESPONSIBLE FOR THE SO CALLED WASHINGTON DC MANUFACTURED FISCAL CLIFF!
I AM NOT RESPONSIBLE TO ASSUME ANY PART OF THE FEDERAL DEBT NOR WILL I PAY FOR ANY OF IT!
I WILL NOT BE SUBJECT TO CONFISCATORY TAXATION BY A BONA FIDE GANGSTER GOVERNMENT!
I WILL FLAT OUT REFUSE TO PAY ANY FUTURE TAXES TO SUCH GANGSTERS!
THE IRS CAN GO TO HELL!
OBAMA CAN GO TO HELL!
HARRY REID AND THE US SENATE CAN GO TO HELL!
THE SUPRME COURT OF THE US CAN GO TO HELL AS WELL!
THE UN CAN GO TO HELL!
Two more years of unhonorable political theatrics ahead in my humble prediction. Republicans need to get a clue. Now, instead of 2 years from now. Won't happen tho. The unhonorable polarization of republicans is too strong at this point.
Counting Bush's 8 years of dysfunction, the last 4 wasted by republicans, 2 more to clean congress, THATS 14 "f"ing years republicans have screwed this country! 14!
Ohio Democrats and Independents for Romney/Ryan !! The entire East Coast is without gasoline, electricity, water, food , heat and essentials while YOUR President is nice and cozy in VEGAS today !!??
When is Obama going to make his Vegas-type visits to his States 51 thru 57 ?? They are waiting patiently !! IMPEACH OBAMA AND FIRE BIDEN !! Go Romney/Ryan !! OHIO.............
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Asian markets ended the quiet session on a mixed note. The overnight news flow was light, but the chief of Japan's pension fund GPIF said the fund is adjusting its portfolio towards greater exposure to equities.
Economic data was limited. Japan's Household Confidence slipped to 37.5 from 38.3 (previous 40.2), while the weekly ... More
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