I agree 100% with Bruce. Obama doesn’t care about the fiscal cliff. He cares about increasing his power. He doesn’t care about fixing the long-term problems that confront this country. He cares about winning the House of Representatives in 2014. His political calculation is probably correct. The Republicans will get blamed if we go over the cliff because the non-thinking morons in this country actually believe taxing the top 2% more will solve our financial problems. Obama thinks he is the smartest guy in the room. He doesn’t see the possible unintended consequences of his little game. He actually thinks deficits of $1.4 trillion per year don’t matter. It’s almost as if this was meant to be. Fourth Turnings need a catalyst to start the regeneracy phase. The ultimate financial collapse triggered by this cliff dive and the full implementation of Obamacare in 2013 fit the description.
I’m all for it. Let’s go cliff diving bitchez!!!
Call the Bluff
Submitted by Bruce Krasting on 12/06/2012 08:29 -0500
I damn near fell of my chair (laughing) yesterday watching Timmy Geithner on CNBC. When asked if the President was willing to go over the fiscal cliff if the tax RATE on the top 2% were not increased, the Treasury Secretary snapped back, “Absolutely”.
Maria Bartiromo was also floored by this; she spent the next hour telling the world she thought Geithner’s position was clear evidence that the US would be going over the cliff. She had big shot Senator, Richard Shelby (R- Al) on air. She showed him the clip with Geithner making an ass of himself; the Senator looked like he had swallowed a wad of tobacco while he watched.
I was convinced that Geithner had made a blunder, a slip of the tongue that would later be clarified or retracted. Not the case. Last evening, Treasury put out a Blog about what a great job Tim did on TV (link). I took this as a confirmation that Geithner did not make a gaffe on air, his words were carefully chosen. When he said he was “Absolutely” certain that falling off the cliff was in our future if tax rates don’t go up, he meant exactly what he said.
Given that Geithner will be out of his job running Treasury soon, I’m sure that he went on TV with the blessings of Obama, and he had a scripted message from the President. There will be no negotiations on tax rates, the top rate is going to 40%, or we will be sailing off the cliff. What an idiotic bargaining position.
At this point, I don’t think there is any significant opposition to increasing tax revenue from America’s wealthiest folks; the question is how to achieve it. Raising marginal rates is one option; cutting deductions can accomplish exactly the same thing. Geithner and Obama will not consider adjusting deductions; the reasons are a mystery to me. It appears that the President wants to “punish” some folks rather than to find a compromise that achieves the desired results.
So I agree with Bartiromo, unless the President backs off, we are going cliff diving in 20 days.
I believe the President has started a war, No real bullets or sabers in this war, but there will be casualties none-the-less. The question is, “Who is going to get hurt?” The thinking by all of the pundits is that a fall of the cliff will fall squarely on the shoulders of Republicans. If they stand up to the Administration on tax rates, the Republicans will get slaughtered in the Congressional elections two years from now.
The facts force me to conclude that Obama is, in fact, using the cliff negotiations to bend Republicans over and force them into submission. The goal is to destroy the Republicans, and have the House, Senate and the White House all Democratically controlled in twenty-two months. Harry Reid would be in charge of the Senate, Nancy Pelosi would be running the House, and the President would have the last two years of his administration with the government controlled by “friendly” hands. A disaster in the making.
If tax rates go up on the wealthy, as the President has demanded, then it will generate approximately $68B per year. Every year, taxpayers take advantage of $1.1 Trillion of deductions. Minimizing/eliminating deductions could easily achieve the same revenue increases that Obama wants. Nor would not be difficult to target the limitations on deductions to those who are enjoying high incomes. What the President wants can be achieved without raising marginal tax rates. So what is the problem?
In my simple mind there is no reason not to consider attacking the problem by limiting deductions. Therefore, I conclude that politics is the problem. The President does not want to solve the cliff or the budget; he wants to punish Republicans.
Two states, California and New York make up 20+% of GDP. These states have a big say in the makeup of the House, they have the biggest electoral votes. They have been solid supporters of Obama with both money and votes. And now Obama is going to piss on them.
Income taxes in lovely California are now at an economy numbing 13%; NY is slightly behind the idiocy in California at 9%. If Obama gets his way, the combined tax bite on income will be 52.5% in Cali and 49.5% in NY. Add to this mess the 3% surcharge for Obamacare, and the 8% sales tax in these two states. Welcome to Sweden.
The chips on the Obama plan fall heavily on NY and Cali. Another big state, Texas, will reap the benefits, as it has no income taxes. Texas is as “Red” as a state can get, so when Obama is saying he is supporting his base, he’s just lying.
I think the Republicans should call the President’s bluff. Lets take a walk over the cliff; see what happens when we get to the other side. It can’t be much worse than 50%+ tax rates in the most productive states in the Union. Will Republicans get hammered in the bi-elections as a result? Maybe. But one thing is sure, if the President gets his way on tax rates today, and we also have the Republicans lose the House in two years, it sets up the possibility for a return to a more conservative frame of mind for the country when the next Presidential election comes around. If Obama gets his way, the economy will pay the price. In the process, any legacy that Obama might have had will have been converted into something like Herbert Hoover’s. So who is bluffing whom?
card802 says:
Republicans will cave in, screw that, republicans want higher taxes too, they will just call it something different than democrats.
Dems will win the house in the mid terms, Obama gets his super majority back, high ranking republicans like Boner still remain in power as part of ” washington compromise.” We’ll still go over this cliff, it just may be later, let the cliff get bigger first.
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6th December 2012 at 11:12 am
wip says:
Ohhhhhhh Who lives in a McMansion next to the feed? Landlord Duck pants! All Liberal, progressive and Pius is he Landlord Duck pants! If paying more taxes is something you wish Then tax everyone else you son of a bitch Landlord Duck pants Landlord Duck pants Land LOOOORD Duck PANTS!
Hot debate. What do you think?
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6th December 2012 at 11:16 am
Mark says:
The Republicans will get blamed if we go over the cliff because the non-thinking morons in this country actually believe taxing the top 2% more will solve our financial problems
Naah. Years ago I said at a pinic in Westport Ct that about 40% of the population wants a reset. People looked at me and thought I was crazy. I guess people who fancy themselves as doing ok never considered what is hidden in the heart of others.
It’s all about bringing everything down and starting over again.
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6th December 2012 at 11:26 am
DaveL says:
I have been in conversation with progressives who believes that if we just raise the marginal rates on those making more that $250K this will solve our deficit problem. These fuckwads don’t understand that the ANNUAL deficit is $1.2 trillion dollars, but Obama’s “this rate increase on the top 2% will generate $800 billion dollars” is over TEN YEARS.
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6th December 2012 at 11:38 am
AWD says:
It’s going down. All that will matter is how the MSM spins the blame, so, of course, the republicans will get the blame. He who owns the media owns the country. If you see it on T.V. it’s gotta be correct, right?
Obama will get his tax hikes and wealth redistribution one way or another. If not now, then in Jan. or Feb. The republicans are screwed, as is everyone who still has a job and pays taxes. Obamacare taxes will be more destructive than a 100 fiscal cliffs.
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6th December 2012 at 11:42 am
Eddie says:
Raising marginal rates puts a higher burden on the upper middle class and protects the capital gains rate so that the “half-percent” is still largely unaffected.
Looks like the typical ” compromise” to me. Talk about taxing the rich but really screw the folks just below them. The one’s who actually work and are producing something.
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6th December 2012 at 11:45 am
AWD says:
Let the redistribution and the borrowing of trillions more dollars begin! Spending $1 trillion on welfare a year isn’t nearly enough. Raise the debt limit, increase SNAP and EBT, turn 8000 square foot mansions into section 8 housing, distribute obamacars, free gas. Do it now!
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6th December 2012 at 11:45 am
AWD says:
Tax the rick!
After 4 year of Obamanomics, the rich have gotten richer, and the middle class and poor have gotten poorer, very much poorer. Now, how to make the rich people into poor people, so everyone equally poor, but still equal. This is Obama’s mandate for his second term.
We all know, even a 100% tax on every penny the 1% make would only yield $800 billion. Taking away every single penny of the rich in taxes would still leave us with a $600 billion deficit every year. Socialism, making everyone equal (poor).
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6th December 2012 at 11:51 am
Ron says:
The Bill Clinton tax rates dont bother me.So far the only thing ive seen bad is the medicare cuts to doctors.
Its all stupid anyhow.Expecting good results when we spend more than we take in.
I still think the last part of the 2016 movie was right about Obama.
The idea all along is to run the country into the ground,then rebuild in some weird communist utopia(well in Obamas mind anyhow) every time the man talks about being “fair” I feel sick.
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6th December 2012 at 11:53 am
sensetti says:
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6th December 2012 at 12:01 pm
Pirate Jo says:
But … but …
Who’s going to feed my kids?
Who’s going to pay my rent?
Who’s going to fund my retirement?
Who’s going to fix me when I get sick?
I have a RIGHT to all those things! This is America!
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6th December 2012 at 12:10 pm
youcanthavemyglock says:
I hope Obama fucks up as much as possible, it will only accelerate the 4th Turning. They will win 2014 House and by 2016 the FSA will be even bigger and stronger, Latino and black populations will increase substantially while white will decline, 2016 presidential election will be another breeze for the Democrats with big shitstorm hitting between 2016-2020.
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6th December 2012 at 12:12 pm
Colma Rising says:
I’m about as worried about the fiscal cliff as I am worried about a fart in the wind.
The Uglicans and Hoopticrats can kiss my ass, the media can pucker up for a taint drop.
Cry me a fucking river everyone…. cry me a fucking river.
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6th December 2012 at 12:17 pm
Administrator says:
Commentary on The Capital Markets Posted 2012-12-06 10:33
by Karl Denninger
Oh Oh… (DeMint)
If you wanted a bell to ring at the “be prepared” point, it just did.
South Carolina U.S. Senator Jim DeMint will replace Ed Feulner as president of the Heritage Foundation. Mr. DeMint will leave his post as South Carolina’s junior senator in early January to take control of the Washington think tank, which has an annual budget of about $80 million.
Sen. DeMint’s departure means that South Carolina Governor Nikki Haley, a Republican, will name a successor, who will have to run in a special election in 2014. In that year, both Mr. DeMint’s replacement and Sen. Lindsey Graham will be running for reelection in South Carolina.
Do not underestimate the meaning of this or its timing.
I know people will, and will try to look at this as simply a “move that will popularize conservative values.” You’re wrong folks.
If you’ve followed Mr. DeMint over the years you know that he “gets it”, and that when not on the floor he is rather blunt with his constituents and anyone else who cares to pay attention.
Sometimes a bell does ring at important inflection points.
This is, in my opinion, one of those times.
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6th December 2012 at 12:38 pm
Administrator says:
Geithner Says Obama Willing To Go Over Fiscal Cliff: Game Theory Bluff Or Reality?
If republicans will not go along with tax hikes on the wealthy, then Geithner Willing To Go Over Fiscal Cliff.
Treasury Secretary Timothy Geithner said Wednesday that the Obama administration was willing to allow the economy to go over the fiscal cliff if Republicans did not agree to raise tax rates on the wealthy. In an interview with CNBC, Geithner drew a harder line in the sand than the White House previously has articulated. “There is no prospect of an agreement that doesn’t involve those rates going up on the top 2%,” he said. The Treasury Secretary repeated President Barack Obama’s tough line that he would not negotiate with Republicans if they held the economy “hostage” to threats that the debt ceiling would not be lifted. At the same time, Geithner tried to sound optimistic that the two sides would reach a deficit-reduction framework. “I think you see the broad outlines of a framework now look more inevitable,” he added. Reports to the contrary were “orchestrated drama.”
Orchestrated Drama
I am amused at the idea Republicans will not cave in is “orchestrated drama”. There is nothing purposely “orchestrated” about the setup.
Republicans brought this mess upon themselves out of arrogance, but game theory now suggests they have little to lose by telling Obama where to go. Likewise, president Obama has little incentive to bargain either.
Ironically, the US could stand a great deal of fiscal austerity. However, the sad reality is neither party has the decency to stand up and say to US citizens what needs to be said: We cannot afford the promises we have made on entitlements, nor can we afford our lavish military budget, nor can we afford to be the world’s policeman with US troops in 140 countries.
So, instead of realistic compromises, we have to listen to demagogues in both political parties acting as if cuts in projected budget increases are the same as actual cuts in real spending.
The result is fiscal insanity and trillion dollar deficits for four consecutive years. Whether or not inability to face reality constitutes “drama” is clearly in the eyes of the beholder.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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6th December 2012 at 12:40 pm
Administrator says:
Are stock investors going insane?
Commentary: Investors not paying attention to the fiscal cliff
By Brett Arends
Have investors lost their moorings — or their minds?
As the economy hurtles towards the “fiscal cliff,” the stock market is going up, not down. Standard & Poor’s 500 is buoyant and is now within a few percentage points of a new, post-Lehman high. The Russell 2000 index of the smallest, riskiest stocks has risen 7% in just a few weeks.
Hello, McFly?! Is there anyone home?
I am going to say two things right now that absolutely nobody else anywhere in the media is likely to say. I could be disbarred for saying it, so don’t rat me out.
1.I have absolutely no idea whether we are going to go over the “fiscal cliff” of tax hikes and spending cuts at the end of this year.
2.Nor does anybody else.
I doubt even John Boehner and Nancy Pelosi know what’s going to happen. But what is as obvious as a kangaroo in a dinner jacket (to steal from the late, great Raymond Chandler) is that there is a significant risk of us going over.
And yet investors are acting like there’s no worry whatsoever.
Josh Strauss, money manager at the $1 billion investment firm Pekin Singer Strauss in Chicago, puts it well. If you look at the stock, bond and gold markets, he notes, they are telling you three completely different things about the economy ahead.
The booming stock market “is telling you that … the problems of the world are resolved, and we’re going to be just fine.” Meanwhile, the collapse in bond yields is signaling almost the complete opposite: That we are heading into “deflation and no growth” — and possibly a nasty recession. And gold, which despite a recent easing remains well ahead over the past six months, is signaling the risk of inflation, financial crisis or both down the road.
At the risk of stating the bleeding obvious, all three of them can’t be right.
Strauss notes that in the past, when these markets have disagreed, “it’s been the bond market that’s been right.” This is only half the story, though.
If U.S. stocks were cheap, there would be a case for buying them right now, fiscal cliff or not. Investors who focus on value, rather than predictions, almost always do better down the stretch.
But stocks aren’t cheap. The S&P 500 trades at about 21 times average earnings for the past 10 years, according to finance professor Robert Shiller at Yale. The median since 1900: About 15 times. The current dividend yield on the market is just 2.4%. Since 1900, the median is about 4.1%.
And then there is the chart to the left, which shows the S&P 500 going back to 1950. Hardly anybody on Wall Street ever looks at long-term charts. (Their idea of “long-term” or “historical data” is 10 years.) I find it hard to look at this chart and be cheerful.
After adjusting for inflation, we’re still about a quarter below the madness of 2000 — surely the biggest bubble in Western history — but it still looks to me like we’re in Bubbleland and due for a nasty return to reality. The first two bubbles ended in disaster. Third time’s a charm? Really?
There are a lot of risks out there. And with stocks at today’s elevated prices, investors really aren’t being paid very much to take them.
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6th December 2012 at 12:47 pm
Administrator says:
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair…”
Charles Dickens
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6th December 2012 at 12:53 pm
Colma Rising says:
Administrator: Those last three quote/posts say it all….. especially Shedlock’s.
Anybody else into Nash Equilibrium/ Game Theory? Shedlock just broke it down and chances are he’s right.
Unless it’s another Kabuki Theater and there isn’t really any game going on, just a bunch of boooshit.
That’s the real question: Do you think this is a real political showdown? Do you think that these folks will embrace a somewhat reality-based budget and the kick in the nuts it would entail?
Or do you think this is a handful of sand in your eyes while something else slides under the radar…. that short-attention span radar of ‘merican television watchers?
Either way, if you aren’t ready for anything by now you’re simply Deluded. <with a capital "D"
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6th December 2012 at 1:10 pm
John A says:
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6th December 2012 at 2:01 pm
Stucky says:
Fiscall Cliff? I don’t give a shit, a rat’s ass, or a fuck. Just jump and get it over with.
.
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6th December 2012 at 2:01 pm
ragman says:
As if it wasn’t bad enough: there is serious talk of repealing the 22nd which would allow our African dictator unlimited terms. We are truly fucked.
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6th December 2012 at 2:27 pm
Bob says:
Glock, you may be right about the timing, though I believe the major troubles will start right about now. That would be consistent with the idea that the fiscal cliff issues are really significant.
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6th December 2012 at 2:27 pm
PlatoPlubius says:
And then you have this….Can’t Obama do whatever he wants anyways using his Executive Power? Why does the Senate need to vote anyways? BTW I wonder if DeMint resigning had anything to do with it? Or maybe DeMint knew that the Shit is going to be hitting the fan soon and didn’t want his head on a pike.
Senate to vote on giving Obama debt limit power
WASHINGTON (Reuters) – The Senate is expected to vote on Thursday on legislation that would give President Barack Obama power to raise the Treasury Department’s borrowing authority without congressional approval, Senate Majority Leader Harry Reid, a Democrat, said.
Democrats who control the Senate say they think they have the 51 votes needed to pass the measure but are unsure if Senate Republicans will erect procedural roadblocks requiring 60 votes to clear. Democrats hold the chamber 53-47.
(Reporting by Thomas Ferraro; Editing by Vicki Allen)
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6th December 2012 at 2:29 pm
youcanthavemyglock says:
PlatoPlubius, they blocked it…..thank god! Mitch McConnell, a silent, minority Senate leader demanded 60 votes for it to pass. Best news I read all day.
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6th December 2012 at 3:30 pm
Steve Hogan says:
I can only think of two possible reasons for the sentiment that soaking the rich is a good idea:
1. That Americans are clueless about addition and subtraction. The math just doesn’t add up. Increasing marginal tax rates on the wealthy is like farting in a hurricane.
2. Americans are just envious and want to take down those that have more than they do. I wonder if these geniuses think they’ll be unaffected in the long run. Eventually, you run out of other people’s money and there’s no one left to bilk. What then?
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6th December 2012 at 3:30 pm
ASIG says:
I wrote this in the other Fiscal Cliff post and it fits here also.
Political theater that’s all it is. There are no real solutions being considered. Obama has only one goal in all of this. He needs a new scapegoat. He’s worn out the “It’s bush’s fault” and needs someone to blame as things get progressively worse and the republican congress is the new scapegoat. And this will work since the liberal MSM will support that image of Obama doing everything possible to improve the economy and the evil republican congress is hell bent to destroy the economy just to benefit the rich.
At some point it will be presented as a logical solution that congress needs to be eliminated. We need to give Obama complete control so that he can fix all problems without congress standing in the way.
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6th December 2012 at 4:14 pm
John A says:
PlatoPlubius:
DeMint is resigning to take over leadership of the Heritage Foundation.
http://www.huffingtonpost.com/2012/12/06/jim-demint-resignation_n_2251524.html?utm_hp_ref=politics
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6th December 2012 at 4:27 pm
Kill Bill says:
The fiscal cliff is infinitely high
Holding hands we leapt off years ago
Black hole mass now fashions its grip
The event horizon approaches ever quicker
Will the camel pass thru the needles eye?
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6th December 2012 at 5:11 pm
Kill Bill says:
IIRC, the GOP raised the debt ceiling 6-7 times under GWB.
In 2006 not one Democratic senator voted to raise the debt ceiling
Today the roles are reversed
So it goes…
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6th December 2012 at 5:23 pm
Stucky says:
On ZH they’re saying Obama wants the Fiscal Cliff. It results in a 4% drag on the economy. As bad as things are now, they get worse. The White House and their media puppets will orchestrate a successful blame-the-republicans story. Democrats get control of both houses in 2 years. Obama becomes defacto dictator with power for;
Elimination of the debt ceiling.
Additional stimulus and bailout programs.
Additional expansion of the social welfare fabric.
Substantially higher taxes on the “wealthy” to redistribute wealth.
Greater expansion of Government regulation and control.
Nancy Pelosi blows him on national televsion during the State of the Union speech
Full implementation of ObamaCare
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6th December 2012 at 5:47 pm
AWD says:
Obama may be a democrat, but he’s more of a socialist.
You might remember, the last president to BALANCE the budget was Bill Clinton. He actually provided us with a budget surplus.
You might not remember, the last president to enact any type of welfare reform was, you guessed it, BILL CLINTON. He stopped the growth of welfare for almost a whole year!
Obama, on the other hand, has increased the deficit more than any other president in the history of the country.
Obama has increased welfare spending more than any other president in our history; An almost 40% increase his first term, and at least a 30% increase coming his second term, for total yearly welfare spending of $1.14 trillion per year.
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6th December 2012 at 6:17 pm
AWD says:
Obama proposal released today has some interesting concepts:
Due to the current financial situation caused by the slowdown in the economy, President Obama has decided to implement a scheme to put workers of 50 years of age and above on early retirement, thus creating jobs and reducing unemployment. This scheme will be known as RAPE (Retire Aged People Early).
Persons selected to be RAPED can apply to President Obama to be considered for the SHAFT program (Special Help after Forced Termination).
Persons who have been RAPED and SHAFTED will be reviewed under the SCREW program (System Covering Retired-Early Workers).
A person may be RAPED once, SHAFTED twice and SCREWED as many times as President Obama deems appropriate.
Persons who have been RAPED could get AIDS (Additional Income for Dependents & Spouse) or HERPES (Half Earnings for Retired Personnel Early Severance).
Obviously persons who have AIDS or HERPES will not be SHAFTED or SCREWED any further by President Obama. Persons who are not RAPED and are staying on will receive as much ‘shiznit’ (Special High Intensity Training) as possible. President Obama has always prided himself on the amount of ‘shiznit’ he gives our citizens. Should you feel that you do not receive enough ‘shiznit’, please bring this to the attention of President Obama, who has been trained to give you all the ‘shiznit’ you can handle.
Sincerely,
the Committee for Economic Value of Individual Lives (EVIL)
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6th December 2012 at 6:30 pm
Appalachian Trail Deblazer says:
@ Amin:
Being a South Carolinian , I was really looking forward to Congressman T. Scott being a replacement for Senator Lindsey Graham, but the way the country going it won’t matter.
I have suffered from cognitive disonance and now realize I am in the Ann Barnhardt Camp.
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6th December 2012 at 7:19 pm
Novista says:
I don’t think this is kabuki, it’s more like bunraku.
Could a black swan be arriving soon?
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6th December 2012 at 8:35 pm
BUCKHED says:
AWD…Clinton had a surplus…when ?
I wish we’d get a replacement for DeMint who wouldn’t vote for things like the Patriot Act,2013 NDAA,Bailouts and anything else that takes away from our freedoms.
That person ISN’T Tim Scott .
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6th December 2012 at 8:41 pm