Sunday, November 18, 2012

Sunday Question for Liberals

Okay, same question: what would you consider a good solution to the issues involved in the fiscal cliff?
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Posted by Jonathan Bernstein at 2:58 PM
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22 comments:

  1. ChrisNovember 18, 2012 at 3:10 PM

    Does one need to be realistic? I think it's fairly clear what the liberal "solution" is: expire the Bush tax cuts on high earners only, extend the payroll tax holiday, and concentrate any cuts on defense in preference to safety net programs. Maybe the best case scenario is the Republicans go over the fiscal cliff into the Norquistian crevasse, refuse to pass the middle-class tax cuts Obama says he wants, and we end up with significantly higher revenues by default.

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  2. Yaramah ZNovember 18, 2012 at 3:42 PM

    From a liberal perspective, I think one should go over the "cliff" and then Obama can introduce a tax package he's happy with (re-introduce the cuts for those under 250k and close some loopholes etc). Absolutely no deal with cuts to social security or medicare. In fact, I'm kind of hoping there will be no deal pre Dec 31.

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  3. Greg DworkinNovember 18, 2012 at 3:43 PM

    Acknowledge that medicare costs are about aging boomers, and recognize that the best way to bring down medicare costs is to bring down medical costs. Put single payer back on the table, with an explanation why (best way to tackle costs, look at it as Medicare for all). Add back in end of life discussion. Treat SS separately as it is not the same issue. Be flexible on the tax issue (accept limits on deductions, don't give in on privatizing).

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  4. ChazNovember 18, 2012 at 3:48 PM

    Increase spending and cut taxes. Reducing the budget deficit is a stupid idea that would make the economy worse.

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  5. Ron E.November 18, 2012 at 3:49 PM

    Cancel the sequester entirely. Extend the payroll tax cut, unemployment benefits, and the tax cuts on income under $250,000 until unemployment drops below 6% for 2 consecutive quarters at which time Congress and the President can reconsider them. Let Mitt Romney, pro athletes, movie stars, and Paris Hilton pay higher income taxes. Worry about the deficit and the debt a few years from now when we aren't trying to dig our way out from under a financial crisis and interest rates aren't at record lows. Repeal the debt limit. If Congress appropriates more $ than there is revenue, the authority to issue debt to cover the difference should be implied -- no more hostage crises. All of that would be a good solution. Obviously we aren't going to get anywhere close to that.

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  6. Matt JarvisNovember 18, 2012 at 3:52 PM

    Let all Bush cuts expire. INCREASE payroll deduction for 2 years, but with steps down every 6 months. Cut defense.

    This is, of course, unrealistic. GOP opposes all 3 vehemently (#2 just because it doesn't favor wealthy) . However, that should be fairly progressive. If they can somehow work in a 100K deduction cap, that'd be great. (Someone more knowledgable than I might be able to address whether this would push some of these "small businesses" like Bechtel into the corporate tax system, as would be my hope)

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  7. JazzbumpaNovember 18, 2012 at 3:55 PM

    I won't be limited by realism. The best way to get out of a debt/GDP crisis is to grow GDP. It's what we did after WW II. Piddling around with a 3% tax hike is not something that will make a profound difference. We need a top marginal tax rate north of 60%, robust regulations, most particularly on the finance sector, a break up of too big to fail banks, and lots of government spending.

    The last time we were in this situation we built the interstate highway system and the space program. The fiscal cliff is a total red herring.

    JzB

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    Replies
    1. AnonymousNovember 18, 2012 at 5:15 PM

      Also, a sustainably growing economy can't have debilitating inequality. There's been way too much focus on marginal incentives tax rates. Inequality only started skyrocketing after the late 1980s when the GOP's big wins on taxes came with regard to capital gains rates, not tax brackets.

      Delete
    2. JazzbumpaNovember 19, 2012 at 9:28 AM

      Yep -

      It all fits together.

      JzB

      Delete
  8. AnonymousNovember 18, 2012 at 4:14 PM

    Extend Bush tax rates for everyone under $250K. Remove preferential tax treatment for dividend and capital gains (tax at marginal rate). Remove top end of payroll tax for SS and Medicare (or at least extend it higher and step it down). Plan for honest reduction in expenditures dependent on a set of criteria including GDP growth rate and umemployment.

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  9. zicNovember 18, 2012 at 4:19 PM

    There is no sane solution; I expect every choice we could potentially make will have insane consequences.

    That said, I'd seriously cut military/defense spending, and move toward a defense that's not aimed at being the world's top cop. I do not want to be exceptional at the art of war.

    Ramp up evidence-based treatment.

    Offer, through the exchanges, something that equals a medicare buy-in for individuals; the folk who never get the benefit of group rates the way the market is currently structured.

    Let the taxes cuts expire. All of them. Then we can negotiate new cuts for the lower and middle classes, and work at eliminating loopholes in a tax reform bill.

    But the real fiscal cliff isn't from taxes or spending, it's from a lack of corporate investment and hiring, which stems from a lack of demand, which is down because corporations aren't hiring. The private sector -- corporations -- have the cash. And that's where the problem will be solved. They're not going to get a Republican solution, so maybe they'll finally be ready to act for their own self interest.

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  10. NickTNovember 18, 2012 at 5:25 PM

    End the Bush tax cuts, all of them. They haven't worked and we can use the revenue. Create a big infrastructure program to fix our battered highways, bridges and sewers - and generate plenty of new jobs and pay packets circulating in the local economy. No cuts to Social Security or Medicare. It's monstrous for us to try and cheat those who have worked hard all their lives. Means test benefits so that the rich don't get free money that they don't need. Cut defense spending. The procurement system is hopelessly corrupt and we should invest resources in the wider economy, not propping up boondoggle factories.

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  11. AnonymousNovember 18, 2012 at 6:55 PM

    I think now isn't a good time to be focusing on the deficit, and instead we should still be focusing on improving the economy. So I'd prefer another stimulus even though that's not going to happen.

    But since "the fiscal cliff" is the big issue right now...

    imo let *all* of the Bush tax cuts expire, and then raise taxes a little more on the wealthy. We're a low tax, medium service country and we need to become a medium tax medium service country.

    Then significantly reduce the military spending. I think there's already some support out there among the public for it, and most people don't know how astronomical the military budget is.

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  12. Rain TrueaxNovember 18, 2012 at 6:57 PM

    Let the tax cuts expire if the Republicans won't get serious about tax cuts only on income under $250,000. For Obama to trust Republicans at this point is like Charlie Brown believing it when Lucy says this time she'll really really hold the football for him to kick. Now is a better time to face this and maybe the republicans will then get serious about a real plan. If not, this is better than extending those tax cuts at the cost of the poor suffering more cuts in food stamps and Medicaid. I think Dems are ready to see this get worse before it gets better IF it's going to get better by standing our ground. SS isn't a part of this as the only problem it currently has is getting the federal government to pay what it borrowed. I don't really favor means testing SS as it will then lead to higher administering costs.

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  13. AnonymousNovember 18, 2012 at 7:28 PM

    Dr. B,

    Barack Obama: Senator McConnell? You can have my answer now, if you like. My final offer is this: nothing.

    Really, the Republicans aren't needed but for votes for things they wouldn't *dare* vote against. So why capitulate at all. Come to the table, but make meeting Democrat proposals so difficult that nothing gets done til Jan 1. Then, re-pass Bush tax cuts for <= 250K, and a permanent Doc Fix and AMT fix, and a replacement for the payroll tax holiday tied to unemployment. Those are a non-negotiable package. Keep the sequestration in place, but that's there to bargain against, for a public option, or whatever liberal goodie strikes that side of the aisle this spring.

    The public would blame Republicans if all the Bush tax cuts expired, polls show. They aren't really giving up anything they had the power to not give up. And this is what happens when you play hardball and lose.

    That's my bargain.

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  14. AnonymousNovember 18, 2012 at 7:49 PM

    End all the Bush tax cuts. The closer to Simpson-Bowles, the better. Big defense cuts. Big Medicare cuts; it's way too generous.

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  15. Captain FutureNovember 19, 2012 at 3:30 AM

    What I'm most interested in seeing is whether Congress can actually agree to guarantee that middle class tax cuts will remain, in time to affect Christmas shopping.

    This would be very encouraging in two ways. It would help the economy. And it would signal a willingness to work on the problems one by one, as problems. All this "fiscal cliff" stuff is a meaningless generality--people don't even agree on what's involved. I'd be impressed with a step by step process, in a timely fashion.

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  16. JChuNovember 19, 2012 at 6:23 AM

    Off topic, but you made recommended on daily kos! http://www.dailykos.com/story/2012/11/18/1162960/-Bernstein-has-news-for-you-liberals

    Apparently you're a "villager" now.

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    Replies
    1. UserGoogolNovember 19, 2012 at 9:06 AM

      I really don't understand how people who are calling for political theater can all other people villagers. The idea that political theater drives politics is one of the most insidious memes of Beltway punditry.

      Delete
    2. Jonathan BernsteinNovember 19, 2012 at 9:08 AM

      Thanks -- I missed that one.

      Delete
    3. JChuNovember 19, 2012 at 11:41 AM

      No idea UG. I think it's mostly a way to rationalize disagreement on an issue that seems obvious to them. Delegitimize it by claiming it comes from an insider who is resistant to change.

      Delete
  17. TrayNovember 19, 2012 at 7:46 PM

    Taxes unfortunately are going to have to be raised for the top earners in order to reduce the deficit, along with a reduction in federal spending. The only problem is that the federal spending is in part aiding in keeping the unemployment number low and keeping the economy somewhat afloat. I propose that democrats increase taxes on income level from those that are making 250K to those that are at 300k/350k level to help those that file their business and personal taxes together.

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