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"It's Just a Matter of Math."
 

Edmundo Braverman's picture
ST
(Human, 14,409
 
Points)
 on 12/5/12 at 7:30am

The fiscal cliff is dominating the news and the markets at the moment, and it's anyone's guess whether DC will have a solution in place by the end of the year (I'm not particularly optimistic). Bloomberg sat down with the President yesterday to discuss the issue, and I have to say he sounded pretty reasonable. When pressed on the cuts vs. increased taxes issue he responded, "It's not me. It's just a matter of math." TheKing and I are going to be doing a week's worth of posts on the fiscal cliff starting next Monday, but this interview is as good a way to kick off Fiscal Cliff Week as any. I'm no fan of Obama, but I defy you to make the case that this doesn't make sense.

Tags:

Comments

Nefarious-'s picture

Juliana Goldman is terrible.

CF
(Neanderthal, 2,216
 
Points)
 on 12/5/12 at 8:29am

Juliana Goldman is terrible.

You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

West Coast rainmaker's picture

I actually think Boehner's

ER
(Neanderthal, 2,092
 
Points)
 on 12/5/12 at 8:31am

I actually think Boehner's proposal is reasonable. Obama's insistence on rate hikes for the top few % is purely political - the extra revenue is immaterial. He is also talking about the reducing the deficit, not the debt (even as a % of GDP).

In a perfect world, we would get a drastic simplification of the tax code. For instance, eliminating the mortgage interest deduction. But this isn't likely, now or ever.

Fundamentally, we need to restructure entitlements. Social Security/Medicare/Medicaid will be the items that kill us, not tax revenue. If you believe in Hauser's law, our tax revenue will trend towards 19% to 20% of GDP. Tax revenue is down because the economy is lagging and unemployment is high, not because we are taxing millionaires at 35% vs 39%.

adapt or die's picture

How about DeMint... Coming in

(King Kong, 1,233
 
Points)
 on 12/5/12 at 8:53am

How about DeMint... Coming in HOT

crackjack's picture

Edmundo Braverman: I'm no fan

O
(Baboon, 165
 
Points)
 on 12/5/12 at 9:12am
Edmundo Braverman:

I'm no fan of Obama, but I defy you to make the case that this doesn't make sense.

Challenge accepted.

First off, the baseline:
Expiration of the Bush (and Obama) Tax Cuts: Net revenue gain of ~$300 billion a year.
Expiration of the Payroll Tax Cut: Net Revenue Gain of ~$125 billion a year.
Sequestration: ~$120 billion in spending cuts.
Net Deficit Reduction (2013): ~$550 billion

Obama's Proposal (aka Christmas Wish List):
Expiration of the Tax Cuts for the top 2%: Net revenue gain of ~$80 billion a year.
Additional Limits on High-income Earner Deductions: Net revenue gain of ~$80 billion a year.
Extension of the Bush (and Obama) Tax Cuts for everyone else: Net revenue loss of ~$220 billion a year.
Extension of the Payroll Tax Cut: Net Revenue Loss of ~$125 billion a year.
Removal of Sequestration: $0 in spending cuts.
Additional Stimulus Spending: ~$50 billion a year.
Unlimited power to raise the debt ceiling: Priceless
Total Deficit Reduction (vs. baseline) (2013): -$235 billion (yup, an increase)

There's absolutely zero items in Obama's deficit "reduction" plan that really does much to reduce to deficit (except for this tax increases on the rich). There's two things he's pretty much avoided with this whole argument, which is 1) serious deficit reduction hits poorer and middle class taxpayers hard, and 2) little to no mention of serious entitlement reform. He can harp all he wants about the rich not paying their "fair share" (whatever that is), but the fact of the matter the poor and middle class aren't either. The effective tax rate of someone making $40,000 in 1999 had an effective federal income tax rate of 8.6%. In 2012 is was 4.2%. For someone making $100,000 a year, it was 14.5% in 1999 and 8.9% in 2012. If he (or anyone in Congress) was serious about the long term fiscal health of the country, they would either 1) let the Bush Tax Cuts expire for everyone, and bite the tax bullet now, 2) Do tax reform that raises substantially more revenue from the poor and middle class but simplifies the code, or 3) institute a NST/VAT. Without this piece, all that will happen is 10 years down the road the poor and middle class are going to take it in the butt as far as taxes, and they won't have a choice in the matter (aka a Greece scenario).

Then their's the entitlements. Medicare is suppose to go belly up in 2024, Social Security insolvent in 2037, and the president has proposed what? Nothing as far as I've read. Some vague promises about "increasing efficiencies" or some nonsense. By 2020 the entire tax revenue will equal the spending for SS/Medicare and the interest on our debt. All of our "discretionary" spending will be financed on borrowed money (most of it is now anyway). Again, either they're going to have to gut (or "reform") these programs so that they are more cost effective, or substantially raise taxes.

From what I've seen neither side is willing to do what is really needed to deal with the deficit. Republicans are not willing to raise revenues enough, and Democrats only want it from the rich. Democrats don't want to cut spending, and Republicans are too vague on their proposals that they get used as fodder for the Democrats. Maybe I'm just super pessimistic, but really this country is going to have many crappy years (and it's probably going to have to get alot worse) before the people up on the hill start taking the steps they need to fix this mess.

mikesswimn's picture

Are you out of your mind?

O
 
Points)
 on 12/5/12 at 9:17am

Are you out of your mind? I'm barely into the interview and the case he's making is utter nonsense. Somehow, two completely insolvent programs, social security and medicare, need to be "strengthened without hurting seniors or beneficiaries", that they've "already cut $1 trillion" and that magically, that "rates on the top 2% are going to go up" (roughly $42 billion a year) in order to make revenues sufficient.

I think I can safely stop at 3:30 and say the president's case makes no sense whatsoever. Please somebody let me know if the latter 82% of the interview contains any semblance of sanity.

Note: I suspect that the speaker's plan is equally ridiculous.

"My caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested."

rogersterling59's picture

adapt or die: How about

AM
 
Points)
 on 12/5/12 at 9:22am
adapt or die:

How about DeMint... Coming in HOT

The fact that so many uber-conservatives are pushing back on Boehner's plan shows you just how fair it is. The fact theat the left base is so united behind Obama's plan is because it is a laundry list of DNC talking points. I applaud Boehner for putting together a plan that actually does what a bipartisan plan should do: raise revenues AND cut spending.

I would agree with you, but then we'd both be wrong.

mikesswimn's picture

crackjack: Then their's the

O
 
Points)
 on 12/5/12 at 9:34am
crackjack:

Then their's the entitlements. Medicare is suppose to go belly up in 2024, Social Security insolvent in 2037.

Just a quick point of note (sorry for being nitpicky) but both are already insolvent. In order for the programs to be considered "solvent" requires (in the basic sense) that the present value of future taxes and currently held assets be at least equal to the present value of future benefits. So, by virtue that you can point to two specific dates where the programs will stop working means that they're effectively insolvent at this very moment.

"My caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested."

andres17's picture

rogersterling59: adapt or

 
Points)
 on 12/5/12 at 9:42am
rogersterling59:
adapt or die:

How about DeMint... Coming in HOT

The fact that so many uber-conservatives are pushing back on Boehner's plan shows you just how fair it is. The fact theat the left base is so united behind Obama's plan is because it is a laundry list of DNC talking points. I applaud Boehner for putting together a plan that actually does what a bipartisan plan should do: raise revenues AND cut spending.

Boehner's plan is not cutting spending in the "defense" budget. Only on "entitlements". How can you call his plan bipartisan? Obama will send it back. No deal.

Finametrics's picture

crackjack: Challenge

(Monkey, 35
 
Points)
 on 12/5/12 at 9:51am
crackjack:

Challenge accepted.

First off, the baseline:
Expiration of the Bush (and Obama) Tax Cuts: Net revenue gain of ~$300 billion a year.
Expiration of the Payroll Tax Cut: Net Revenue Gain of ~$125 billion a year.
Sequestration: ~$120 billion in spending cuts.
Net Deficit Reduction (2013): ~$550 billion

Obama's Proposal (aka Christmas Wish List):
Expiration of the Tax Cuts for the top 2%: Net revenue gain of ~$80 billion a year.
Additional Limits on High-income Earner Deductions: Net revenue gain of ~$80 billion a year.
Extension of the Bush (and Obama) Tax Cuts for everyone else: Net revenue loss of ~$220 billion a year.
Extension of the Payroll Tax Cut: Net Revenue Loss of ~$125 billion a year.
Removal of Sequestration: $0 in spending cuts.
Additional Stimulus Spending: ~$50 billion a year.
Unlimited power to raise the debt ceiling: Priceless
Total Deficit Reduction (vs. baseline) (2013): -$235 billion (yup, an increase)

Just out of curiosity, where are you getting those numbers from?

rogersterling59's picture

andres17: rogersterling59:

AM
 
Points)
 on 12/5/12 at 9:55am
andres17:
rogersterling59:
adapt or die:

How about DeMint... Coming in HOT

The fact that so many uber-conservatives are pushing back on Boehner's plan shows you just how fair it is. The fact theat the left base is so united behind Obama's plan is because it is a laundry list of DNC talking points. I applaud Boehner for putting together a plan that actually does what a bipartisan plan should do: raise revenues AND cut spending.

Boehner's plan is not cutting spending in the "defense" budget. Only on "entitlements". How can you call his plan bipartisan? Obama will send it back. No deal.

Of course Obama will send it back, but Boehner's plan is a much better plan to start the debate with than Obama's plan, which is at best laughable.

I would agree with you, but then we'd both be wrong.

neilol's picture

Nefarious-: Juliana Goldman

IB
(Orangutan, 251
 
Points)
 on 12/5/12 at 10:01am
Nefarious-:

Juliana Goldman is terrible.

Black Jack's picture

Nefarious-: Juliana Goldman

IB
(King Kong, 1,180
 
Points)
 on 12/5/12 at 10:30am
Nefarious-:

Juliana Goldman is terrible.

+1

RE Edmundo- the guy always sounds calm/reasonable- that is his thing.

Addinator's picture

The problem really is one of

ST
 
Points)
 on 12/5/12 at 10:33am

The problem really is one of how much government do we want going forward and are we all willing to pay for it. It's pretty simple really. If we all want healthcare coverage, social programs etc we WILL ALL have to pay for them. You can make the wealthy a pariah until the cows come home but the amount raising taxes on them will contribute is irrelevant to the overall picture of the problem. When I see these deficit deals of 1 or 2 trillion dollars I want to puke considering these are all over 10 years! Who gives a flying fuck about 2.2 trillion over 10 years when we are running a deficit of 1 trillion a year every single year. Anyone with half a brain knows that you simply cannot levy enough taxes to pay for how much we are spending. At this point, I would actually like for them to raise taxes enough to close the deficit. Hold spending equal and just raise them enough to pay for everything people want the goverment to spend on. Shit will get ugly really quickly and people will begin to see the issues really damn quickly.

Contact: [email protected]
See my other blog posts

Black Jack's picture

Addinator: The problem really

IB
(King Kong, 1,180
 
Points)
 on 12/5/12 at 10:36am
Addinator:

The problem really is one of how much government do we want going forward and are we all willing to pay for it. It's pretty simple really. If we all want healthcare coverage, social programs etc we WILL ALL have to pay for them. You can make the wealthy a pariah until the cows come home but the amount raising taxes on them will contribute is irrelevant to the overall picture of the problem. When I see these deficit deals of 1 or 2 trillion dollars I want to puke considering these are all over 10 years! Who gives a flying fuck about 2.2 trillion over 10 years when we are running a deficit of 1 trillion a year every single year. Anyone with half a brain knows that you simply cannot levy enough taxes to pay for how much we are spending. At this point, I would actually like for them to raise taxes enough to close the deficit. Hold spending equal and just raise them enough to pay for everything people want the goverment to spend on. Shit will get ugly really quickly and people will begin to see the issues really damn quickly.

The issue is that we all don't want national healthcare coverage, social programs, etc. and thus all do not want to pay for these sorts of things.

Nefarious-'s picture

Black

CF
(Neanderthal, 2,216
 
Points)
 on 12/5/12 at 10:37am
Black Jack:
Nefarious-:

Juliana Goldman is terrible.

+1

RE Edmundo- the guy always sounds calm/reasonable- that is his thing.

But you didn't give me a SB?

You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

Black Jack's picture

Nefarious-: Black

IB
(King Kong, 1,180
 
Points)
 on 12/5/12 at 10:42am
Addinator's picture

Black Jack: Addinator: The

ST
 
Points)
 on 12/5/12 at 10:45am

Contact: [email protected]
See my other blog posts

Grayson's picture

crackjack: First off, the

IA
(Monkey, 62
 
Points)
 on 12/5/12 at 11:01am

"He chose money over power, a mistake nearly everyone makes. Money is the Mcmansion in Sarasota that starts falling apart after 10 years. Power is the old stone building that stands for centuries. I cannot respect someone who doesn't see the difference."

BTbanker's picture

Let's see if Obama can do the

IB
 
Points)
 on 12/5/12 at 11:05am

"A man generally has two reasons for doing anything. One that sounds good, and the real one." - J.P. Morgan

crackjack's picture

mikesswimn: crackjack: Then

O
(Baboon, 165
 
Points)
 on 12/5/12 at 11:11am
crackjack's picture

Grayson: crackjack: First

O
(Baboon, 165
 
Points)
 on 12/5/12 at 11:15am
LBT's picture

crackjack: mikesswimn: cr

IB
 
Points)
 on 12/5/12 at 11:19am
Bankn's picture

Black Jack: The issue is that

(Orangutan, 286
 
Points)
 on 12/5/12 at 11:43am
jeremymarrus's picture

excuse my ignorance but what

 
Points)
 on 12/5/12 at 11:47am
ladubs111's picture

crackjack: Grayson: crack

IA
 
Points)
 on 12/5/12 at 12:08pm
Nefarious-'s picture

ladubs111: crackjack: Gra

CF
(Neanderthal, 2,216
 
Points)
 on 12/5/12 at 12:18pm

You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

mikesswimn's picture

Bankn: Black Jack: The

O
 
Points)
 on 12/5/12 at 1:26pm

"My caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested."

athcasi's picture

That's kind of fallacious

 
Points)
 on 12/5/12 at 3:27pm
Bankn's picture

mikesswimn: Bankn: Black

(Orangutan, 286
 
Points)
 on 12/5/12 at 3:51pm
West Coast rainmaker's picture

Bankn: mikesswimn: Bankn:

ER
(Neanderthal, 2,092
 
Points)
 on 12/5/12 at 4:49pm

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