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Sen. Graham: Obama's Cliff Meeting 'Political Theater'

Friday, 28 Dec 2012 12:44 PM

 

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President Barack Obama and congressional leaders were to meet on Friday for the first time since November with no sign of progress in resolving their differences over the federal budget and low expectations for a fiscal cliff deal before Jan. 1. Instead, members of Congress are increasingly looking at the period immediately after the Dec. 31 deadline to come up with a retroactive fix to avoid the steep tax hikes and sharp spending cuts that economists have said could plunge the country into another recession.

"It's feeling very much to me like an optical meeting than a substantive meeting," said Republican Senator Bob Corker of Tennessee, noting that it was not a sign of urgency to set a meeting for mid-afternoon with a deadline just days away.
"Any time you announce a meeting publicly in Washington, it's usually for political theater purposes," Senator Lindsey Graham, a South Carolina Republican, said on Thursday on Fox News.
"When the president calls congressional leaders to the White House, it's all political theater or they've got a deal. My bet is all political theater," said Graham, adding that he did not believe an agreement could be reached before the deadline. With taxes on all Americans set to rise when rates established under former President George W. Bush expire on Dec. 31, lawmakers would be able to come back in January and take a more politically palatable vote to cut some of the tax rates.
U.S. stocks fell on Friday, with the Dow Jones industrial average dropping 0.48 percent as investors fretted about the lack of certainty.
But some in the market were resigned to Washington going beyond the New Year's Day deadline, as long as a serious agreement on deficit reduction comes out of the talks in early January.
"Regardless of whether the government resolves the issues now, any deal can easily be retroactive. We're not as concerned with Jan. 1 as the market seems to be," said Richard Weiss, a Mountain View, California-based senior money manager at American Century Investments.
The new factor in the mix was involvement by Republican Senate Minority Leader Mitch McConnell of Kentucky, who held conversations with Obama this week and said he expected a new proposal from the president that he would consider.
Urgent: Will Raising Taxes Help or Hurt America? The White House spent much of Thursday stifling expectations for any new offer from Obama, beyond the limited fallback plan he outlined in vague terms on Dec. 21, which would protect what he described as "middle class Americans" from the tax hikes, extend unemployment insurance and lay the "groundwork for further work" on deficit reduction and tax reform.
The major sticking point on taxes is Republican opposition to hikes on anyone, particularly in the absence of heavy cuts in spending for so-called entitlement programs such as Medicare and Medicaid, the government-run health programs for senior citizens and the poor.
Democrats in Congress want to keep lower tax rates for most Americans but raise them on those earning above $250,000 a year.
"The wealthy have got to kick in," Senator Debbie Stabenow, a Michigan Democrat, said Friday on CNN. "The tough part is in the House, where they have taken this very extreme position" of "protecting the wealthy at all costs," she said.

© 2012 Thomson/Reuters. All rights reserved.

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The Cliff and the 16.4 trillion dollar debt limit

The Cliff and the 16.4 trillion dollar debt limit:

PUSA obama gives the best example of 'unmitigated gall' I have witnessed in my eighty years on earth.  Reportedly, he wants to go over the cliff so that he can blame the Republicans.  Who raised our debt more than all former presidents combined during the last four years? Wasn't it this narcissistic pusa?

And aren't the media heads talking about the demise of the 2010 Tea Party a little prematurely?  I will remain a Tea Party Republican for the rest of my days because the Demoncrats have nothing close to Tea Party ethics. 

Term limits for all elected 'representatives', a simplified tax plan, and effective ways of prosecuting American traitors and terrorists from anywhere are highly desirable for this struggling nation.

obama will be happy when the simplified tax form says:  1.) How much did you make? _________
2.) Send it in!  The government might give you back thirty cents on the dollar and will proceed to spend your money in a completely irresponsible manner.  Don't worry.  Be happy!

SamKat

Fiscal Cliff Discussion- Newsmax

Monday, 26 Nov 2012 04:21 PM

By Stephen Feller
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A growing number of Democrats say they are willing to let the country
go off the fiscal cliff if a deal cannot be reached by Jan. 1 that
raises taxes on the top two percent of earners while protecting costly
entitlement programs.

Their theory in this game of chicken with Republicans is that it will
be easier in January to lower taxes for 98 percent of the country
while finding the best possible parts of the federal budget to cut —
in line with long-held goals of the nation's liberal party. They also
think they'll be in a better position to save most, if not all, of
massive entitlements like Medicare as well as pet projects.

The fiscal cliff, originally created to force a
legislatively-appointed supercommittee to make significant cuts to the
federal budget, is roughly $500 billion mix of budget cuts and tax
increases.

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It includes the expiration of the Bush-era tax cuts and Obama-era
payroll tax cut, massive cuts to the military and jobless benefits,
and a decrease in Medicare reimbursement rates.

This will send tax on bond interest to 44.6 percent from 35 percent;
on capital gains to 25 percent from 15 percent and on dividends to
44.6 percent from 15 percent, Forbes magazine pointed out Monday.

The average family will pay an extra $2,000 to $3,000 in income taxes
if Congress fails to reach an agreement before the Bush tax cuts
expire on Jan. 1, according to the Congressional Budget Office.

The economy would shrink by 0.5 percent, the CBO has found.

Experts have consistently predicted that the overall economy would
take a massive hit if the country goes over the cliff, likely sending
it into recession. Still, since July, Democrats increasingly have made
the case that it wouldn't be so bad.

Led by Sen. Patty Murray, D-Wash., Democrats have pushed the idea that
the cliff is not as bad as the hype, with it being more of a “slope”
than a “cliff.”

Pentagon cuts, they say, would be phased in, and the tax hikes,
including the payroll hike, could also be slowed. If this happens,
according to The Center on Budget and Policy Priorities, there would
be a few weeks at the beginning of 2013 for a deal to quickly be
reached.

Sen. Charles Schumer backs Murray, also saying that Democrats can’t
cave in. He and other Democrats believe that Obama won a mandate for
increased taxes with the presidential election.

“[President Obama] campaigned on it clearly,” the veteran New York
Democrat said on “Meet the Press.” “He didn’t back off it.”

Also weighing in on Monday in a New York Times Op-Ed was billionaire
investor Warren Buffett, who has said he think the country will be
just fine going over the fiscal cliff.

While it's not ideal, the founder of Berkshire Hathaway thinks that
Obama must be willing to keep pushing for higher taxes on the wealthy,
even if it triggers the automatic onset of tax increases and spending
cuts on Jan.1.

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The U.S. economy, he said, can weather it for a month or two. "We're
not going to permanently cripple ourselves," Buffett told CNN last
week.

Buffett shrugged off the Congressional Budget Office's warnings that
failure to address the fiscal cliff by Dec. 31 could lead to a
recession.

"We have a very resilient economy," said Buffett, a long-time Democrat
and staunch Obama supporter. "The fact that [lawmakers] can't get
along for the month of January is not going to torpedo the economy."

But even as some Republicans waver on taxes, others have renewed the
call for no tax hikes.

“A tax increase never created a new job in this country,” Rep. Tom
Price, R-Ga., said on “Fox News Sunday.” “It doesn’t make any sense to
us to raise taxes on job creators in this time of economic challenge.”

And House Speaker John Boehner, R-Ohio, has said raising tax rates
will stymie job creation. But he also said he is willing to raise
revenue through tax reform and by eliminating “loopholes” in the tax
code.

House Majority Leader Eric Cantor, R-Va., has not said whether he
would vote for tax increases.

“A lot has been said about this pledge,” Cantor said on MSNBC Monday
morning, referring to the popular no-tax pledge pushed by anti-tax
activist Grover Norquist.

“I will tell you when I go to the constituents that re-elected me, it
is not about that pledge, it really is about trying to solve
problems," Cantor said. "And as we know, this election we just went
through is very much about, number one, what are we going to do to
reclaim a momentum in this economy? How do we get us back to that?
And, two, how do you solve a problem?”

Senator Jeff Sessions of Alabama, the senior Republican on the Senate
Budget Committee, echoed Cantor, saying in an interview that reforming
the outdated tax code could stir up new revenues without raising tax
rates.

"We need to create growth, which creates jobs, not damaging growth by
huge tax increases," Sessions told Fox News.

A CNN/ORC International poll released Monday shows a solid majority of
respondents -- two-thirds -- supports the Democratic stance that any
agreement should include a mix of spending cuts and tax increases. Of
that total, Republicans favor such an approach by 52 to 44 percent.

Even if effects of the cliff felt by Americans could be held off
temporarily, the markets may not fare so well.

“Markets are going to go into an absolute tailspin, and I don’t think
we want to risk that, especially with leadership right now trying to
find a deal,” said Gabriel Horwitz, director of the economic program
for Third Way, a centrist think tank. “I think the market reaction is
going to happen immediately.”

“Rather than stop the country from going over the fiscal cliff and
preventing the expiration of the 2001 and 2003 tax relief, they are
prepared to Thelma-and-Louise the American economy right over the
cliff,” said Sen. Orrin Hatch, R-Utah, the top Republican on the
Finance Committee. “That is an astonishing admission.”

William Galston, a senior fellow in governance studies at the
Brookings Institution, told CNN that Murray's form of brinksmanshipis
best avoided.

"To be sure, no one believes that non-agreement by December 31 would
be the end of the story. After a period of finger-pointing,
discussions would resume," Galston wrote last week in a New Republic
opinion piece. "But equally, no one knows how the failure to reach
agreement before the end of 2012 would affect the dynamics of the
negotiations."

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In addition, "we can be reasonably sure ... that national and global
markets would react adversely and that businesses, which are already
retreating from planned investments in new plant and equipment, would
become even more uncertain and risk-averse."

Murray said in July, and again after the election in November, that
without increasing taxes for some Americans, Democrats would balk at
any deal Republicans propose.

By waiting until January to cut taxes for the bottom 98 percent,
rather than increasing taxes for the top two percent, it may be easier
for Republicans to support the concept - based on timing and
semantics, Murray and other Democrats seem to think.

“We can’t accept an unfair deal that piles all of this on the middle
class and tells them they have to support it,” Murray said on ABC in
November. “We have to make sure that the wealthiest of Americans pay
their fair share. If Republicans, many of whom were elected after
campaigning against tax hikes, won’t agree, Democrats shouldn’t
blink... We’ll start over next year and whatever we do will be a tax
cut for whatever package we put together. That may be the way to get
past this.”

While many Republicans are now saying that they’d be willing to
violate Norquist’s pledge under the right circumstances, removing the
spectre of actually voting to raise taxes would make it easier for
them, she surmises.

Sen. Lindsey Graham said on ABC this Sunday that the pledge was not
his major concern, as long as Democrats offer cuts to entitlements and
other drains on the budget alongside the tax hikes.

"I will violate the pledge, long story short, for the good of the
country, only if Democrats will do entitlement reform," Graham said.

House Minority Leader Nancy Pelosi, D-Calif., told ABC that it’s not
her “role to go to the table with a threat... I think it’s my role to
go to the table with some ideas, to be receptive to what we can come
to agreement on.”

However not all Democrats agree that the threat of going over the
cliff should not exist.

Sen. Jay Rockefeller, D-W.Va., and Sen. Tom Harkin, D-Iowa, have
circulated a letter demanding that Obama start negotiations at a
1-to-1 ratio of spending cuts to revenue increases, putting them in
line with many in the party who want to see a harder line taken by
Democrats.


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Cumberland Advisors Commentary- Fiscal Cliff

 

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Sent: 12/5/2012 11:47:56 A.M. Pacific Standard Time
Subj: Fw: FW: Cumberland Advisors Commentary - Personal view on Fiscal Cliff

 

My Personal View on the Fiscal CliffDecember 5, 2012

Numerous readers have emailed and asked me a personal question:  “What would YOU like to see happen with the fiscal cliff?”  We thank you for the question.

Please remember, this missive will not be about what is going to happen.  We do not know that outcome and neither does anyone else.  We hold an opinion that there is a deal coming.  We think it will be at the 11th hour or even early next year after we tumble over the January 1 cliff.  But that is just an informed guess.  President Obama didn’t add much clarity to that view in his Bloomberg interview today.  Readers may see it and hear it on Bloomberg.com.

Instead, today’s letter is about what we would like to see happen, and why. My view is simple: until we experience the cliff, we will not understand what it really means.  Hence, we will not act wisely if we do it prospectively.

We believe the markets and citizenry are too complacent about our government.  US investors are used to watching the Washington charade.  Voters, in nearly every congressional jurisdiction, are trapped by limited choices, which is why we re-elect most incumbents.  Our politics are the politics of default choices.

Our markets are driven by forces such as low interest rates and global demand and geopolitical risk.  We go on about our daily business in spite of our broken government.  We engage in a collective trillion economic decisions each and every day, without government help.  Leave us alone and we can pretty much figure out what to do.

We have a broken political system, in which our leaders are about as popular as the proverbial used-car salesperson (according to recent polls).  Most of us feel that way about them but cannot do anything about it, so we go on with our lives and let the self-serving “leaders” in Washington decide our fate.

 

One defining characteristic of Americans is to rally in time of crisis.  We do that in wartime.  We do that with natural disasters like Katrina and Sandy.  We do that with regard to health matters.  We are generous with our charity.  Mainstream Americans are mostly good folks.  But we are reactive, not proactive.

So, let’s see if we can rally to deal with this government crisis.  But we won’t do it unless and until we know we have a real crisis on our hands.  So, let’s have at it.  To get there, we need to go over the cliff and stay there long enough to actually begin to experience what it feels like, and what it means, to be off the precipice.

 

Let’s see what happens when all the income tax credits expire on lower incomes and when 140 million Americans get hit with an average $1000 a year in a payroll tax hike.  Let’s see what the experience is when sequestration kicks in hard.  Let’s watch the layoffs of defense contractors who have to downsize since they won’t be paid by the federal government.  Let’s tax capital and dividends and income at high rates and let our citizens begin to feel the impact in their pocketbooks.  Let’s tax estates at confiscatory rates.  Let’s allow tax-free bonds to be penalized when our schools and sewer systems need financing.  Let’s subject 24 million folks to the alternative minimum tax.  And on, and on, and on.

The political morons generalize in their pronouncements because they fear giving us real details.  Our president repeatedly attacks the rich with class-warfare rhetoric.  He says upper 2% of income but he doesn’t say that many are independent businesses.  Does he ever mention an S-Corp small business that is trying to accumulate capital to grow a business and hire folks?  Many small businesses finds themselves burdened with a marginal effective tax rate above 50% under the present tax system – before we even go over the cliff?  That is where a small business can find itself when all taxes imposed are combined. 

 

Obama avoided this detail today.  He cited CEOs of big companies.  He ignored the half of the country that is small and independent firms even while claiming that 97% of them will benefit. 

 

Obama uses the new-age definition of millionaire: a couple filing a joint income tax return with a $250,000 annual income.  He never mentioned that his failure to compromise means the lower-income tax groups will incur a very high tax hike once we’re off the cliff.  He never admits that some of the lower middle-class tax rates he claims are obtained are in place by using the deception of credits.

 

The Republicans are not any better.  Republicans never say, “We defend the 15% carried interest provision.”  They never explain the details by which many wealthy Americans benefit from provisions in the tax code that are engineered to benefit the few at the expense of the many.  They just say no changes in tax rates.  And now they are clamoring for “revenue,” which means changing the tax code, not the rates. 

 

Readers, please note, it is the effective tax rate that really counts.  Let me repeat and add clarity.  It is ONLY the effective tax rate that counts.

Both Republicans and Democrats are disingenuous.  That is a nice term for lying to us and deceiving us and using fuzzy language to mask the truth. 

 

So, my personal proposal is to have a major fight and a resulting stalemate that persists until there is real pain in the land.  I would like to see my fellow citizens get really angry with Washington and set aside their partisan differences and then throw out some of the bums of both parties.

 

I would like to see us get mad enough and scared enough and clear enough about what’s really happening to us, that we realize we have to pull together to claw our way back from the cliff and get this country on stable ground.

Let me invoke a scene from a movie that will date me.  What I want you to do is throw open the window, stick out your head, and yell “I’m mad as hell and I’m not going to take this anymore.”  If you are too young to remember the movie, Google the phrase and watch the scene (YouTube will take you there).

That is what I would like to see happen, dear readers.  We need to open our windows and yell.  Get 314 million of us angry enough at our government, and we will stop this nonsense.  Unless we get that angry, this broken-down system of ours is going to go clickety-clack right off the cliff. 

 

Happy holidays to all cliff dwellers (us).  Get angry.  Tell your congress people that you’re angry.  Whether you’re Democrat or Republican, be angry, be clear-headed, and demand the truth. It’s our country!

 

Thank you for asking.

 David R. Kotok, Chairman and Chief Investment Officer