The most important development in the ongoing tax negotiations is Treasury Secretary Timothy Geithner’s recent acknowledgement that President Obama is willing to go over the so-called fiscal cliff. While it has been heavily hinted that the Obama administration would use this tactic, Geithner told CNBC that it is “absolutely” something Obama is prepared to do. What this means is Obama believes he has all the negotiation leverage when it comes to taxes and the GOP has none.
Obama has little to fear politically from going over the cliff, since polling has shown that most voters would blame Republicans if it happened. Even if there is some political backlash, Obama doesn’t have to face re-election while Congressional Republicans do.
Letting all the tax cuts expire also undermines the Republicans justification for opposing taxes on the wealthy. Once taxes have already gone up, the Republicans are no longer fighting a tax increase, instead they are stopping at taxcuts because it does cut taxes enough on the wealthy.
The Republicans only had leverage in this tax fight if Obama was afraid to go over the cliff, and he is not. If Obama thought doing so would significantly hurt the economy, he might have an incentive to give in to prevent economic damage; but it is now clear the administration sees the cliff as really more of a very modest slope. Going over it for a short period is something that the Obama team thinks they can manage rather easily.
The Obama administration is effectively saying they are willing to take that small hit as long as it means Republicans will be left twisting in the wind as they publicly hold everyone’s taxes hostage to protect millionaires.





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If only it was all about US. If it was then none of this BS would be necessary.
Remember it’s Obama in the equation. Given past performance vs hype, what he and his say and do are distinctly different.
I hope Obamam doesn’t overestimate, or underestimate the dastardly, despicable, black-hearted bastards(TM)that are today’s repubulilcan party. They don;t care about you and me. The are only beholden to themselves and their benefactors, the 1%. Would they cut off their nose to spite their face? You betcha, in a New Yok minute.
It’s certainly clear that the Rs didn’t learn anything from the beating they took in the election. They apparently would rather destroy the country and the middle class than give an inch to Obama.
I would be pleasantly surprised if Obama is really going to do some real negotiating finally. I will believe it when I see it. That is when it is the republicans who actually do not get everything they want.
Which is further evidence of my assertion that the real rich leaders of the PTB are mentally insane and get real pleasure from other peoples suffering. Paranoid narcissists or worse.
It’s perplexing. But more than that, it’s disturbing. How and why does one manifest such an attitude to one’s fellow countrymen? I’m serious. My little sister expressed to me when Obama was elected the first time that she hoped the entire country went into the toilet. Now, she’s certain 23 states will llikely secede from the union. She and I grew up in the same house with the same parents and the same water.
Must be a gene mutation.
See my #7. All kidding aside, that type of behavior is hard to explain. This not the republican party of Ike and Dirksen, Ford, Dole, Reagan and Kemp. They are, in fact, despicable and detestable human beings.
Lastly, does it bother anybody else that Timmy is negotiating for our side???
I ain’t worried about the Fiscal Curb, I’m worried about what Obama will give up in the debt ceiling fight coming up. Wanna bet he’ll give back in spades then whatever he wins now?
Not sure “our” side is even at the table and yeah he bothers me at all times.
He has to make sure the .1%ers come out ahead in the final analysis so that is a good prediction.
I have a sister like that only older than me and she is an Ayn Rand devotee. Logic is not part of their thought process so hard to discuss issues with them.
Howard Dean has come out in favor of going over the “cliff” and not looking back. In a recent TV interview, he said the country could make it through a short, mild recession and come out the better for it.
Anyway, how else can we get Washington politicians to cut Pentagon spending?
It also means that Obama has a plan, published before the election, that cuts the items of the discretionary budget by 8%, does not (by law) touch entitlements, and also does not touch either veterans benefits or military pay and benefits. Everything else across the board is cut by around 8%.
That is a cut that delivers the $1T in cuts that he committed to as a part of the debt ceiling debate in 2011. That happens automatically, and those programs cut all have their constituencies.
In addition, doing nothing automatically tosses the responsibility for the tax increases and budget cuts to the House committees that control the purse. That is a political benefit for the President. He is the one in the position to say No. The GOP in the House either have to increase taxes, increase spending, or both.
And the 2012 election delivered a noticeably different mandate than the 2010 election, as far as the Village narrative is concerned–although the DC concern troll are still with us.
I’m thinking Obama gives up the debt ceiling altogether and this time pushes the 14th Amemndment position that the US pays its bills. Congress creates the deficit; then contrary to its appropriations and tax legislation creates a debt ceiling. When those two conflict (a debt ceiling crisis) which takes precedent. Last time it was the debt ceiling, with some adjustments. This time, I think President Obama will say it is Congress’s instructions via appropriation bills.
That just goes to show who their real bosses are and to whom they owe their real allegiance. It’s sure as heck not us.
(Neither are the Dems on our side, either. The Dems just represent those of the rich 1 % who think that they still might need the rest of us at times, or see some danger to themselves from going into all-out extraction mode. It’s like Greg Palast said here a few weeks ago in a memorable analogy–US politics is like watching a old-time Godzilla movie; Godzilla embroiled in a to-the-death battle with another monster but don’t kid yourself that either one is fighting for you).
-stewartm
I think that’s a sensible position. But what if SCOTUS rules against him? (And, knowing how politicized the court is nowadays, that’s a distinct possibility).
-stewartm
MIne ate a a lot of fudgsicles whereas I was more of a popsicle fan. I’m not saying that necessarily conclusive, but it is evidenciary.
Frasnkly, I agree. The MIC owns half of congress and has nude photos of the other half. 12 aircrafts carriers=good. 15 aircrasft carriers = better.
Honestly, I’d like to see how the SCOTUS would come down on that. I hope he does it. I just bought Orville Reddenhacher stsock.
The fiscal cliff is a sham .rate hikes is is a sham that will quickly yield compensatory relief via reductions in corporate taxes and other areas of tax evasion welfare ,and deficits/debt will soar because elites don’t care .The debt was , is , and will continue to be the straw man that justifies austerity to manipulate the ignorant and stupid into a hysteria amidst which they beg for full-spectrum impoverishment .The debt is unpayable ,and a debt that can’t be paid won’t be paid .
Is there an accounting savant that wishes to challenge my contention that the debt cannot be vanquished within this economic paradigm and the latitude of its conventional tools?
I think you’re exactly right. There seems to be a school of thought that says if a deal is reached the economy will be just peachy. Bulls__t. We’re in for very slow growth regardless of any deal. And military spending isn’t even being discussed.
Talk is cheap. Obama is pretty well known for caving when push comes to shove. As I remember it, he has a habit of giving Republicans everything they want and a lot more.
ANd that chickenshit Geithner can’t ever be trusted to ever do what’s best for anyone except his bankster masters.
Kucinich invited Steve Keen to appear in front of Congress yesterday ,and he blew the austerity scam to hell when denouncing the fiscal cliff . His best quote :”People reflexively feel the need to say something must be done about the debt so they don’t appear to be stupid , while never realizing their comment for urgent debt reduction just confirmed they really are stupid “. Highly recommended for serious thinkers ,i.e. ,not Krugman fans .