Looks like the D.C. fiscal cliff players didn’t watch any football yesterday. There’s a new counter-offer today on President Obama’s desk from House Republican leaders, who claim their plan would achieve a net savings of $2.2 trillion over ten years. And Alice Rivlin and Pete Domenici have updated their 2011 “Grand Bargain” as a last ditch effort to get the talks moving again.
No surprise that the GOP’s plan doesn’t include a whiff of higher tax rates on the wealthy, as the president has been pushing for, or any mention of the debt limit.
The plan, based on the proposal of Erskine Bowles, co-chairman of the Simpson-Bowles commission, assumes $800 billion in fresh governmental revenue through tax reform, including closing special loopholes and deductions while lowering rates, $600 billion in health savings, $200 billion from changes to the Consumer Price Index (CPI), $300 billion in discretionary spending cuts, and another $300 billion in savings in mandatory spending. - Read more at The Fiscal Times
ANOTHER OPTION? THE GOP ‘DOOMSDAY’ PLAN But if today’s newly presented plan doesn’t satisfy the White House, House Republicans have another idea up their sleeves. They’ve been seriously considering a “doomsday” scenario in which they’d surrender to extending the Bush tax cuts on 98 percent of Americans, then refuse to compromise on anything else – no extension of the debt ceiling, nothing on unemployment, nothing on closing loopholes. Congress would recess for the holidays and the Republicans would return to Washington ready for battle over the debt ceiling early next year.
The plan would allow the GOP to avoid taking blame for tax hikes on the middle class, while continuing to play hardball with President Obama on everything else. “You don’t take a hostage you aren’t willing to shoot,” a senior Republican congressman told ABC’s Jon Karl.
The plan, confirmed by a GOP House leadership aide, makes no mention of what Congress would do about the automatic sequester cuts slated to take effect at the beginning of next year without any deficit deal. - Read more at ABC
LET’S NOT PANIC Relax, investors. Hedge fund managers say the widespread worry over the fiscal cliff is exaggerated and the coming changes to the tax code will cause “a lot less of a hit than most people are making it out to be.” According to the Investment Company Institute, only 14.7 percent of American households have mutual funds in taxable accounts, down from as high as 23.9 percent in 2001. .
Sam Stovall, chief investment strategist at S&P Capital IQ, said that among individual investors who do pay the taxes, many have incomes under $250,000 and would not be subject to the increased rates on investment income proposed by the White House. - Read more at The New York Times
JUST SAY ‘NO’ TO TAXES There’s no paucity of pundits offering up fiscal cliff solutions, but now Joseph Curl, a columnist for The Washington Times, shares a new, simple, yet illegal, solution for American families worried about shoveling out money on a bigger tax bill next year: “Just don’t pay it.”
“What if that father and mother raising two children, sitting around the kitchen table, scratching out a budget, deciding whether they can afford braces for Timmy or ballet lessons for Tammy, said: Enough! … The federal government ought to run like we run our family budget, and until they comprehend that, no money for you. Like the Soup Nazi said to Elaine Benes in ‘Seinfeld’: “No soup for you! Come back, one year! Next!”
Curl did not say whether he plans to subscribe to his own advice, but IRS will be watching to find out. - Read more at The Washington Times
