Obama’s Latest Fiscal Slope Offer: I’m Missing the Part Where Republicans Give Up Something

By: Tuesday December 18, 2012 6:00 am

The headlines here is that the Obama Administration narrowed the demand they maintained for four years, for tax rates to increase above $250,000, and they would agree to a benefit cut for Social Security and $400 billion in unspecified Medicare cuts, and in exchange they would mostly extend current law on a few fronts (but not all) and get an unspecified amount, no more than $50 billion, in infrastructure spending.

Boehner’s Counter-Offer: Based on Impromptu Bowles Super Committee Testimony

By: Tuesday December 4, 2012 6:20 am

In trying to make a quick understanding of the Boehner counter-offer on the fiscal slope yesterday, I knew that his reference to the “Bowles plan” was not a reference to Bowles-Simpson but rather something Bowles wrote or said in November 2011. It turns out that it came from testimony before the failed Super Committee, where [...]

White House Makes Aggressive Opening Bid in Fiscal Slope Negotiations

By: Thursday November 29, 2012 3:54 pm

In the context of doing a deficit reduction deal at all, this is an extremely strong bid that Tim Geithner delivered to John Boehner today. Now we know why Boehner whined and cried all afternoon. Let’s walk through it. House Republicans said on Thursday that Treasury Secretary Timothy F. Geithner presented the House speaker, John [...]

White House Report on Threats to Consumer Spending from Middle Class Tax Hikes Leaves Out Payroll Tax Cut

By: Monday November 26, 2012 7:45 am

The White House is getting more vocal on pressuring Republicans to extend tax cuts on the first $250,000 of income. They supplement this today with a new report from the NEC and the CEA, showing the impact of tax rises on the middle class on consumer spending, which comprises about 70% of the economy. It [...]

Sandy-Induced Unemployment Spike Shows Need to Focus on Jobs, Not Austerity

By: Thursday November 15, 2012 7:02 am

First-time jobless claims spiked to 439,000 after nearly a year under 400,000. The reason for this sudden weakness in the US economy? Suprestorm Sandy. This sharp increase is due to Hurricane Sandy as claims increased significantly in the impacted areas. Note the spike in 2005 related to hurricane Katrina – we are seeing a similar [...]

CBO Joins CRS in Finding Almost No Economic Impact From Letting High-End Bush-Era Tax Rates Expire

By: Thursday November 8, 2012 2:20 pm

You may remember that, last week, Republicans forced the Congressional Research Service (basically Congress’ think tank) to take down a study that analyzed 65 years of individual tax rates and found no correlation between lower taxes on the rich and economic growth. This just did not compute with the GOP, so they had to suppress [...]

White House Denies Report of Making Work Pay Tax Cut Proposal

By: Monday October 29, 2012 7:00 am

As is typical for Washington trial balloons, the White House is denying a report that they would push for a tax cut similar to Making Work Pay to replace the payroll tax cut and continue the stimulative wage subsidy effect amid an economy that’s still growing too slowly. Allowing the payroll tax cut to expire, [...]

White House Returns to Making Work Pay as Potential Stimulative Tax Measure

By: Friday October 26, 2012 6:11 pm

The White House, per Zachary Goldfarb at the Washington Post, is considering returning to the working family tax cut used in 2009-2010 as part of the Recovery Act, to replace the payroll tax cut, which expires at the end of the year. The refundable tax credit would not deal with the Social Security trust fund [...]

Democrats Begin Talking About Extending Payroll Tax Cut

By: Monday October 22, 2012 8:30 am

After giving up the payroll tax cut for dead, a few Democrats have tentatively returned to reanimate the policy, arguing that the economy could benefit from another year of fiscal accommodation. But the approach is so hedged and conflicted, that I don’t see it as a game changer. But Democrats on Capitol Hill are showing [...]

Another Study Shows Payroll Tax Cut Expiration Damaging to the Economy

By: Friday October 19, 2012 10:00 am

I don’t know that we needed another analysis of the effect of the expiration of the payroll tax cut, but JPMorgan Chase provided that yesterday. They estimate a cut to GDP of 0.6% next year from canceling the payroll tax cut, which will suck $125 billion out of the economy. As mentioned above, we no [...]

Larry Summers Wants to Extend Fiscal Stimulus

By: Friday October 12, 2012 9:15 am

It’s come to this in America: the most prominent champion of extending stimulus, including the payroll tax cut, is Larry Summers. And he also obliterated the argument for the confidence fairy succinctly. The current debate over the fiscal cliff suggests that legislators are hoping to replace the year-end contraction with a deficit-reduction package that would [...]

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