when the republicans almost shut down the government over the debt ceiling obama was able to negotiate automatic cuts that were balanced. maybe it was a brilliant move: Here is a surefire way to cut $7.1 trillion from the deficit over the next decade. Do nothing. Thatâs right. If Congress simply fails to act between now and Jan. 1, 2013, the tax cuts passed under President George W. Bush expire, $1.2 trillion in additional budget cuts go through under the terms of last summerâs debt-ceiling deal, and a variety of other tax cuts also go away.â Those people lamenting the SuperCommittee failure are missing the bigger picture. The savings, as detailed here, are as follows: ⢠$3.3 trillion from letting temporary income and estate tax cuts enacted in 2001, 2003, 2009, and 2010 expire on scheduled at the end of 2012 (presuming Congress also lets relief from the Alternative Minimum Tax expire, as noted below); ⢠$0.8 trillion from allowing other temporary tax cuts (the âextendersâ that Congress has regularly extended on a âtemporaryâ basis) expire on scheduled; ⢠$0.3 trillion from letting cuts in Medicare physician reimbursements scheduled under current law (required under the Medicare Sustainable Growth Rate formula enacted in 1997, but which have been postponed since 2003) take effect; ⢠$0.7 trillion from letting the temporary increase in the exemption amount under the Alternative Minimum Tax expire, thereby returning the exemption to the level in effect in 2001; ⢠$1.2 trillion from letting the sequestration of spending required if the Joint Committee does not produce $1.2 trillion in deficit reduction take effect; and ⢠$0.9 trillion in lower interest payments on the debt as a result of the deficit reduction achieved from not extending these current policies. Total deficit reduction from utter Congressional failure? $7.1 trillion dollars over the next decade. http://www.ritholtz.com/blog/2011/11/is-it-really-the-debt/
If Obama wins the election, this is a real possibility. He has indicated he will not accept continuation of the Bush tax rates for >$250k earners. If the House stays republican, they are not likely to agree to keep the Bush rates for only <$250k. So everyone loses. Similarly, if Obama is reelected, I see no compelling reason for the republicans to do anything about the fiscal cliff, other than to bail out their buddies in the defense industry. Let it all go to pot and blame Obama. Same deal with the debt ceiling. Use it as leverage for tax cuts or do nothing and let Obama deal with it.
I don't see it as sinking the country. We're not going to write Obama a blank check for more reckless spending or paying off his supporters. If Obama wants to retain the middle class tax cuts, all he has to do is agree to preserve all the existing tax rates. He's the one who wants to alter the status quo, not republicans. The fact is, he can't force the House to do it his way, so his choice is do it their way or explain to the voters why they are getting a massive tax increase. My guess is he will choose the latter course because he doesn't care if he sinks the economy, and class warfare rhetoric is more important to him than doing the right thing.
do you mean the tax cuts for the rich that when passed by republicans and were supposed to end 2 years ago?
They were ALL supposed to end. Democrats agreed to extend them ALL. They also agreed to extend the AMT fix. Otherwise a lot of people would get socked by an unexpected alternative minimum tax bill, which can be substantial, not tha tObama cares. Reelect Obama and I see no way to avoid the fiscal cliff. Maybe it will be a good thing, as at least we'll begin to get the budget under control. Personally, I am not at all worried about the defense cuts. They waste that much per week probably. Do we really need more manned planes or more WW II type ships?