Here’s a decent look at the competing advice President Obama may be getting as he approaches the fiscal policy issues. On the one side, Joe Biden:
“You guys have probably looked at the internals of the vote more than I have so far,” Biden said, according to a transcript provided by pool reporters. “But from what it appears is that, on the issue of the tax issue, there was a clear, a clear sort of mandate about people coming much closer to our view about how to deal with tax policy.” [...]
“I don’t want to speculate on that,” said Biden. “But we are prepared to work with Republican leadership to actually deal with the two overarching problems right now. One is the whole sequester piece, and the other is the tax piece. It’s possible you can bifurcate them. It’s possible, there’s all kinds of potential to be able to reach a rational, principled compromise. But it’s going to be an interesting — I think the most interesting caucus is going to be the Republican caucus.”
So Biden’s view is, let’s approach these things one at a time, and we won, so let’s raise tax rates on the top 2%. It’s worth noting that Goldman Sachs economic analyst Jan Hatzius now sees this happening.
Behind door number 2 you have Peter Orszag:
The White House, therefore, has three options. First, it could drive us temporarily over the fiscal cliff, let all the cuts expire, and aim for a deal in January with the clean slate that would occur once all the tax cuts are gone. This approach would create maximum anxiety and uncertainty, though. It’s not clear how quickly in January a deal could come together.
Second, rather than insist on raising marginal tax rates above $250,000 in income, the White House could suggest scaling back tax breaks for that cohort. House Republicans would be much more amenable to this type of approach. Still, it would be a major concession from a White House that is presumably feeling vindicated by the election [...]
Finally, the White House could push for a placeholder tax cut while negotiations are ongoing. The “tax reform refund” I proposed in a previous column should be easier for the Republicans to swallow than any tax-expiration scheme. This refund would amount to $1,600 a year for anyone who works or receives Social Security benefits, and it would remain in place until a deal could be reached or, failing that, until the economy recovered more.
The other requirement for any deal — entitlement change — is just as challenging. A team put together by the Center for American Progress, which included me, has proposed a variety of steps to continue slowing the growth of health-care costs, but almost all of these would be impossible to get through the House, with the possible exception of our proposal for medical-malpractice reform.
So the most promising approach may be to compromise on Social Security — even though it is not a significant driver of our long-term deficits.
So to Orszag, the only way to actually secure definitive higher revenue – let the Bush-era rates expire, and come back with a tax cut – is risky, and the White House should entertain keeping the rates steady, as House Republicans want. The “tax reform refund” is a confusing idea that relies on placeholders that are simply not necessary when the leverage of the expiring tax cuts is on the side of the White House. Finally, Orszag asserts that safety net cuts, specifically Social Security, are a “requirement.” He does this while saying that Social Security has nothing to do with the deficit!
When we start hearing this – and it’s going to come fast and furious now – consider that this has been thoroughly rejected this week by the American people. The Democracy Corps survey of voters shows that they favor growth over deficit reduction by 67 to 26 percent, and over 60 percent rule out cuts to Medicare and Social Security as part of any deficit reduction package. Almost every candidate personally endorsed by Erskine Bowles and Alan Simpson lost on Election Day. Bowles is in the Washington Post this morning demanding a deficit deal, based on his facility with elites, not any kind of groundswell of support. The “Fix the Debt” campaign has $35 million and not much else in the way of credibility. The public doesn’t want this. Elites want to force it upon them.
There’s a Third Way on the deficit, not exemplified by Biden or Orszag. It’s nothing that Third Way would actually endorse. That would be fixing the economy instead of fixing the debt, and it starts with a massive rebuilding program on the Atlantic Coast to protect it from the new reality of 100-year storms every year or two.
So far, that third way has been shut out of the thinking in the White House.
(Steve Bell, senior director of the Economic Policy Project at the Bipartisan Policy Center) said one option the Obama administration is considering is pushing anew for a “balanced” plan to cut as much as $100 billion in spending as a deficit-reduction down payment while letting the George W. Bush-era tax cuts expire for top earners [...]
To help bring Republicans to the table, Obama also may propose “minor changes” to entitlement programs, such as a temporary change in the formula used to calculate annual benefit adjustments, Bell said.
It’s always hard to know where internal discussions at the White House end and advocates for a grand bargain like Steve Bell begin, but it’s safe to say that most of Washington shares this discredited view about the deficit. Only the public does not.




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Absolutely unscrupulous greed. That’s what it is. All pretense has been dropped. CNBC’s top tea-bagger dipshit Santelli said openly this morning that investors are dumping stocks to exploit the current minimal 15% tax rate on capital gains and to avoid the horror of a possible 25% or 40% tax rate starting next year.
One of the CNBC money honeys was on MSNBC within five minutes of Santelli’s greedfest repeating like a robot “we are heading over the fiscal cliff and we have the status quo” in Washington. Every cable channel spent hours this morning working themselves into hysterics over the fiscal cliff.
We need a stronger term. They aren’t just “scolds.” They are much worse. They are criminals. I think their corporate employers are greedy Whiney Ass Tiny Babies and these mouthpieces for the plutocrat mob will say anything on camera that their corporate patrons order them to say, and they will say it in unison, and they will say it everywhere, non-stop, until the inauguration and beyond.
What word do we apply to that kind of behavior? I think they are thieving sociopaths.
If the millionaire and billionaire deficit scolds really thought the deficit was such a hair-on-fire, house-is-burning emergency, why don’t they advocate putting corporate tax rates back to 1950 levels and giving the IRS the tools to enforce those rates? Why instead do they advocate putting the 99% of us who aren’t millionaires (much less billionaires) out on ice floes when we get old or sick?
They’re Ayn Rand readers. They see themselves as the Elect, and we 99%ers as the Preterite, the useless eaters, the moochers, the untermenschen.
It was Bob Pisani, not Rick Santelli. I don’t want to give CNBC any web traffic, so I am not giving a link. I apologize to Santelli.
We need to find a way to shut them up. That’s what I want to do. Make them just STFU.
Naked incitement against the public interest must be made no longer permissible under a license issued by the public to broadcast on the public airwaves. We should campaign to yank their licenses.
CNBC and their ilk are inciting direct corporate criminality, including evasion of taxes lawfully due under existing law, and thievery of our social trust funds. We need to just force them off the air.
Just a reminder from the Center on Budget & Policy Priorities six weeks ago that, as Dday has so carefully illustrated for so many months, it’s not a “cliff,” at the most it’s a “slope”.
Also, raising top rates on the rich won’t hurt “small businesses”.
Money-making for Wall Street as dialogue between financiers and politicians conducted in full reflexive view of a largely mute public.
Peter Orszag, living off the Federal teat at Citibank.
~
Orzag believes that rich people don’t need Social Security, so the government shouldn’t spend money on it, and any money that has been contributed should go to lowering taxes for the rich.
Jack Benny’s “Rochester” would understand. The master speaks and let’s hope my “feet don’t fail me now.”
By the way, Orzag went to the same elite prep school as Judd Gregg and Kent Conrad, two other rich dicks that want our earned benefits slashed. All that bunking with future CEOs can make you hate the “little people.”
Some of them, most of them, are too financially and economically illiterate to know any better. They’re just repeating what the bought and paid for hacks say.
I read Uncle Tom’s Cabin and the ice floe bit brings up a funny picture.
CBS News poll: 13% in favor of letting all the tax cuts expire, and 47% want to raise the top tax bracket only. That’s 60%. Ordinarily I would say the Obama administration can’t ignore that big a majority, but they have done it before.
Why would we want to invest massively in East Coast infrastructure? All it would do is save lives, homes and cities, create thousands upon thousands of good-paying jobs, prepare for the changing climate, and be extremely popular politically to boot.
But that only helps 99% of us. It doesn’t do much for Wall Street (except, you know, the actual street itself) so it’s a non-starter.
I continue to dispute Orszag’s plan to ‘save’ Social Security. Today he writes,
His premise of increased life expectancy has been contradicted by a recent study. His use of changes in life expectancy to additionally change the benefit structure of Social Security for future recipients is a ‘radical’ and destabilizing change to the structure of Social Security as a social insurance system. His plan is the only one I am aware of which reduces benefits based upon expectations of increased life expectancy. Other plans just raise the retirement age, reducing benefits paid out by 7% per year, for every year the retirement age is raised. His plan reduces benefits for current 25 y.o.s by about 10%.
Making benefits more ‘progressive’ means changing the benefit formula to reduce benefits to middle and upper income earners, disconnecting benefits from earnings, and flattening benefits for the great number of beneficiaries whose benefits are already modest. This is a cut in the guise of making stuff ‘progressive’.
Rising retirement age, implement since 1983 (from 65 to 67), may have actually over-compensated for the revenues demanded of the generations who are now retiring.
Orszag’s motivation for pursuing his own plan to diminish and reduce Social Security benefits appears to be about pursuing the plan he and Diamond wrote together, rather than serving the needs of current and future Social Security participants.
The other opaque part of the Orszag plan are the increases in revenue which exceed those hikes needed to close the actuarial gap at 75 years out. The Orszag plan raises 128% needed in revenues and cuts.
Perhaps in some long ago, faraway time, some small percentage of Wall Streeters would have recognized that building infrastructure and creating good-paying jobs with the resulting increased demand for goods, benefits everyone, including themselves, giving rise to greater investment to meet that demand.
But Wall Street no longer invests in much except financial instruments, which has little relationship to the real economy except in the predatory, vampirish sense.
While I disagree with his solution, I was under the impression that his premise that there is a life expectancy gap between the affluent educated and the non-affluent was true.
China would be tickled pink.
That’s how I read it.
okay so if you are correct that they don’t know any better, I can’t call them criminals because they are parroting their plutocrat bosses without intending to harm the public interest and without intending to steal our social trust funds.
OTOH, in criminal prosecutions, ordinarily the judges like to remind the jury that ignorance of the law is no defense. But you are saying they are ignorant of economics & finance.
It’s the part about their “just repeating stuff” that bugs the shit out of me. They are inflicting material harm to the public interest. We need to stop them, whatever their excuses are.
Meanwhile, it’s not just hacks at CNBC. The very reliable reporters at Bloomberg are now revealing that some of the Big Four accounting firms are pumping up the greed stampede. Although they throw a bone to the appearance of propriety:
But then other plutocrat wealth management experts can’t help themselves:
Dean Baker of CEPR and Rosnick have a study which affirms your premise that lower and upper income groups have different life expectancies. They looked at different birth cohorts and income levels.
The Diamond-Orszag plan also appears to be a cultural ‘artifact’, a creation imbued with ideological values, and economic expectations reflective of the bubble economy of the turn of the century.
Why I almost expected them to consider our children at their future retirement in 2050ish as the ever-expanding, radioactive, sixty foot women and men./s
Considering we’re currently $16T in debt, where would we get the funds to
massively in East Coast infrastructure?
I suppose we could peek in the $2.4T Social Security Trust Fund.
No need to apologize to him, seriously.
If only the US had the capacity to print its own money. If only “the deficit doesn’t matter”, particularly in a depression when there’s a national/global emergency.
Remember when one sells a stock someone else buys it.
yeah, I did need to apologize because it was just a wrong call by me on who said what. It’s simple, and it’s easy, to apologize immediately for minor screwups. Santelli is still a greedy dipshit, and I’m sure he will say something equally criminal and disgusting soon, which I will comment on ASAP. But he wasn’t the one who revealed the greed stampede this morning, so I corrected my error.
The propaganda machine includes all MSM and the Government so all you will hear is “DIRE” for the next few months.
Yup. The plutocrats are breeding their own younger generation of vampires, who held their own Predators’ Ball on election night.
Did you see Fargo? Remember the scene where William Macy’s car salesman is playing the couple who don’t want the car? The sly looks. That’s how I picture the wealth advisers. What a job title, brilliant.
Here is the recent study showing that the expected increases in life expectancy have been rather grim instead:
Link IS HERE.
We can debate life expectancies with Orszag from here to eternity. But really, why? Social Security contributes nothing to the Federal debt or deficit. Actuarial gaps in the far off future can be met by raising the FICA cap. Everyone agrees on the fairness of doing that. My own opinion is that even capital gains income should be captured by any FICA cap, but others on Wall Street who would pay for that, consider that option, too extreme./hahaha.
But it’s like apologizing because you said it was Geithner but you meant Summers.
Well, yes, to sell anything, you need a buyer, else there’s no sale. That’s why homes in some areas stay on the market for years.
everlasting classic
it’s hard work using numbers in context, but you should try it.
You referred to a figure of $16 Trillion. I presume you wanted to point at “public” debt. I have seen a slightly smaller figure, but not materially different. When we talk about the public debt, we should put the “public” debt in the context of the entire economy. The GDP is roughly $20 Trillion or $22 Trillion, IIRC.
So our debt-to-GDP ratio looks high, but it’s still only about 80%. It’s not currently over 100% and not likely to reach 100%, despite what some ignoramuses in the GOP claim.
Have you looked at how much of the “public debt” is owed to ourselves? The $16 Trillion includes one-two trillion in Treasury securities held by the Social Security Trust Fund(s). If you are proposing “borrowing” from Social Security, we already do that to the tune of trillions.
“Fixing the economy instead of the debt” is a powerful statement, and pretty much bumper sticker succinct. Hence, I would advocate repeating that meme – incessantly, relentlessly, and across all media outlets, no matter where they fall on the political spectrum. Even the teabaggers are going to get twitchy if you start screwing around with their Medicare and Social Security…assuming they understand that they are, in fact, being violated in such a manner.
Oh, and lose the bullshit “entitlements” terminolgy when we’re talking about what are, in fact, insurance policies that all working Americans have paid into.
No cuts to SS or Medicare. No exceptions.
Who is buying and who is selling. I know how Morgan Stanley works so I imagine a bunch of brokers churning the “muppets” to scare them into selling so the uber wealthy can increase their holdings.
Well, churning makes the fees that get you vice presidencies. I picture the money in a perpetual front load washer: round and round and round…… I’m guessing that what’s sold to client A is bought from client B, and vice versa. Round trip, fees all around, have another single malt, John.
What is this money printing that you speak of? /s
Don’t you realize we only print money to wage war on brown people and destroy things in general? Borrowing against our future to BUILD THINGS would be a novel concept.
David. One of the other Beltway values which the elites share is a royalist approach to decision making. All of the recommended committees from the think tanks are set up to let a small group of people implement cuts to the Federal Budget.
Orszag likes to compare this decision making stream lining to committees formed to decide which military bases to cut….as a means to side stepping from holding representatives accountable for painful decisions. Orszag would like such a committee to make changes to Social Security.
When Steve Bell recommends, does he do so as a representative of the BiPartisan Council? Or as an individual? Where’s the link? Is he tied to THIS.
Is Steve Bell recommending draconian cuts based upon decisions made by a few individuals with streamlined, legislative powers?????
Bingo. End of story.
Uh, from what I read (Krugman to Stoeller and more) this is gonna be done and over before year’s end, during Lame Duck.
Fast and furious, The Grand Bargain has been struck, it’s all over but the bleeding.
By. Year’s. End.
Krugman didn’t concede any such deal will be passed in the lame duck, let alone that any such deal should be passed, so what are you talking about with respect to Krugman?
This is the link to STEVE BELL.
How could you miss Bell saying that Obama will offer the chained CPI, a cut to current and future beneficiaries of Social Security??
This is either testing the waters through Bell, or announcing that as newly elected President, he is going to ignore the will of the people who just elected him.
Bell is quoted in that article:
To help bring Republicans to the table, Obama also may propose “minor changes” to entitlement programs, such as a temporary change in the formula used to calculate annual benefit adjustments, Bell said.
Whenever the “deal” is made public it is already “a done deal” so we are all correct in a way.
just trying to make sure I was up to date on Krugman
Yeah, he’s still on the side of truth as far as he can be. I am still optimistic is some ways that we won’t have to go into a real deep depression to depose this plutocracy of greed and corruption.
temporary???
This is the first time I have heard about a temporary change.
Has anyone else heard them try to sell this as a temporary change?
good to hear. Certainly seems to be true from his most recent columns, including this one on Sunday night, and this one last month on preznit’s economic plan, as well as his most recent blogpost.
But maybe we should mosey upstairs to Dday’s new link about fighting directly against a new “grand bargain.”
Apparently we had a temporary Democracy so now we know what the Change was referring to.
This is the first time I’ve heard about a “change in the formula”, temporary or not.
I don’t know how that would work.
good catch. I don’t know what that means. I interpreted (or misinterpreted) that to mean the chained CPI. But hey, there has been total secrecy on their part and total transparency on our part, as we do not see any need for any changes. It could be ‘temporary’ like the invasion of Vietnam./s
“The Democracy Corps survey of voters shows that they favor growth over deficit reduction by 67 to 26 percent”
Then they voted very foolishly Tuesday.