Top Senate Dems Urge Obama to Take Unilateral Action on Debt Ceiling

foxnews

Senate Majority Leader Harry Reid

WASHINGTON –  If President Obama were to break the impasse with Republicans over raising the debt limit by taking unilateral action, such a move would have the potential to set off a firestorm of controversy and spark a protracted legal battle.
Top Senate Democrats say, go for it.
The White House has dismissed talk that Obama would rely on unusual measures to raise the nation's debt limit without Congress' approval, but administration officials also have warned that the country could default on its debt and trigger a new economic crisis if lawmakers don't increase the limit on borrowing.
Senate Majority Leader Harry Reid, D-Nev., is among those urging Obama to consider options like invoking the 14th Amendment to the Constitution to find ways around the $16.4 trillion legal cap on government borrowing. The amendment states that the "validity of the public debt of the United States ... shall not be questioned," which some lawmakers believe permits a way out of the debt limit jam.
The government hit the debt limit last month and is juggling the books to buy additional time for Congress to act. But those moves only buy a few weeks of wiggle room, which requires Congress to act -- likely by mid- to late-February -- to avoid a market-quaking default on U.S. obligations.
The White House has said emphatically that it does not believe that the 14th Amendment permits Obama to ignore the debt cap on U.S. borrowing, though it considered the question during the 2011 debt crisis.
"There is no Plan B. There is no backup plan," White House spokesman Jay Carney said Wednesday. "There is no alternative to Congress raising the debt ceiling."
A letter to Obama on Friday from Reid and Sens. Dick Durbin, D-Ill., Chuck Schumer, D-N.Y., and Patty Murray, D-Wash., doesn't mention the 14th Amendment, but aides to the senators said that's what they have in mind in urging the president to consider unilateral action.
"We believe you must be willing to take any lawful steps to ensure that America does not break its promises and trigger a global economic crisis -- without congressional approval, if necessary," the letter said.
Battling House and Senate leaders have made virtually no progress on a strategy for legislation to lift the debt cap. House Speaker John Boehner, R-Ohio, insists that any debt increase be matched by equivalent spending cuts. Obama, buoyed by his re-election victory, says he won't negotiate as he did in 2011, when he traded a $2.1 trillion debt increase for tight spending limits on agency budgets and automatic, across-the-board spending cuts if a congressional "supercommittee" failed to reach a budget agreement.
"Senate Democrats cannot ignore their responsibilities for political convenience -- and the American people will not tolerate an increase in the debt limit without spending cuts and reforms," said Boehner spokesman Michael Steel.
The impasse has people on both sides scratching their heads over how it will be resolved. The anxiety is such that some on the left are urging Obama to mint a coin worth perhaps $1 trillion to be deposited at the Federal Reserve and drawn upon to meet government obligations.

Read more: http://www.foxnews.com/politics/2013/01/11/top-senate-dems-urge-obama-to-take-unilateral-action-on-debt-ceiling/#ixzz2HjZi3tYm

PAUL KRUGMAN: The Deficit Is Basically Solved [seriously...?]

are these guys playing around?

----------------------- 

Walter Hickey 

Many people think that fixing the deficit is a painful process that involves deep cuts to crucial programs. Some think the process is too hard, and it's not worth trying yet. 

That's not correct, according to a chart from from the Center on Budget and Policy Priorities' Richard Kogan showing just how far the United States has come in the past two years. 

We've talked before about how the painless and most effective solution to the deficit is additional growth in GDP.  As the recovery progresses and GDP rises, the government will get more revenue from increased productivity. We've also pointed out that — fundamentally — we don't have a spending problem.

CBPP

Paul Krugman made the point that the chart shows how far we've come on the deficit and how easy it will be to solve moving forward. 

Richard Kogan points out that the debt to GDP is very important indicator, and can't rise forever. "If it did," he says, "that would shrink the amount of national saving available for private investment, ultimately impairing productivity growth and, in turn, living standards."

In short, seeing what we're seeing is a good thing. 

The chart shows the stabilization of the debt to GDP ratio of the United States.

As late as 2011, the U.S. was bound for an unmitigated increase in debt to GDP ratio. Thanks to two bills, the deficit is close to coming under control:

• The Budget Control Act of 2011 (BCA), which came from the debt ceiling negotiations and mandates $1.2 trillion in cuts.
• The American Taxpayer Relief Act (ATRA), which was signed two weeks ago to avert the fiscal cliff and raised taxes on high earners. 

The red line on the bottom — which would stabilize the debt to GDP ratio — is what would come of an additional $1.4 trillion in government savings. Such savings could come in the form of either cuts or revenue raises, or a combination of both.

That's all it would take to permanently stabilize the debt to GDP ratio. Yes, the debt will continue to rise, but as long as it's rising at a slower, stable rate compared to GDP, the U.S. will be in an exceptional position moving forward. 

Krugman and Kogan's points are the same: The U.S. has come a very, very long way recently. In the past two years, the federal government has successfully cut the deficit, and is all things considered very close to stabilizing the debt. 

Here's the full CBPP article.

Read more: http://www.businessinsider.com/krugman-the-chart-that-proves-the-debt-problem-is-mostly-solved-2013-1#ixzz2HgWj8p8i

Jon Stewart On 'Mint The Coin'

The idea of minting a trillion-dollar platinum coin to work around the debt ceiling has gained some credible support in what has been just more than a week since its renewed take-off.

Rep. Jerry Nadler supports the idea. Nobel Prize-winning economist Paul Krugman wrote his first print column today advocating the possibility if Republican members of Congress vote against raising the debt ceiling. Even the White House didn't flatly rule it out.

But don't count Daily Show host Jon Stewart among its supporters. He jabbed at the idea in a segment in his show on Thursday, comparing it to newly nominated Treasury Secretary Jack Lew's signature.

"I'm not an economist," Stewart said. "But if we're going to just make [stuff] up, I say go big or go home. How about a $20 trillion coin?" Or, he suggested, maybe a $1 "quillion" coin.

"We don’t need some trillion-dollar coin gimmick," Stewart said. "We need a way to get the world to take the U.S. dollar seriously again."

Then he presented Lew's signature. At least he thought the trillion-dollar coin wasn't as ridiculous as that.

"Hey, Lew, here’s a tip: stop signing all your checks on the tea cup ride at Disney World," Stewart said.

Here's the full clip, courtesy of Comedy Central:http://watch.thecomedynetwork.ca/the-daily-show-with-jon-stewart/full-episodes/the-daily-show-with-jon-stewart---january-10-2013/#clip841462

Read more: http://www.businessinsider.com/jon-stewart-trillion-dollar-platinum-coin-mint-jack-lew-signature-2013-1#ixzz2HgVEPNjy

Funny Money: Pundits float $1 trillion coin as answer to debt-ceiling standoff

Foxnews Is a trillion-dollar coin the solution to the next fight over the debt ceiling? 

Imagine sitting around the kitchen table, trying to figure out how you're going to pay off that next-generation HDTV you just bought.
Then someone has an idea. Brush off one of the old checker pieces in the attic, assign it a value of, say, $2,000 -- and use that newly minted "coin" to pay the credit card.
Such an absurd idea is, pun intended, gaining currency as a technically legal way for Washington to avert a looming fight over the debt ceiling. A Democratic congressman, a Nobel-winning economist and several prominent writers are now floating the idea that the Treasury Department should use obscure powers to mint a $1 trillion coin if Congress does not permit an increase in the debt ceiling.
That coin, then, could be used to pay America's debts.
Rep. Jerrold Nadler, D-N.Y., told Capital New York that the "out of the ordinary" idea could actually work.
"I'm being absolutely serious," he said. "It sounds silly, but it's absolutely legal."
Folks like Nadler point to a tiny section in the U.S. code that allows the Treasury secretary to "mint and issue platinum bullion coins and proof platinum coins" of a size and denomination of "the secretary's discretion." This is mainly for commemorative coins, but the idea that the provision could be exploited as an ace-up-the-sleeve for the administration was first explored during the 2011 debt ceiling fight. Now, it's back.
The trillion-dollar coin idea has attracted more than 4,500 signatures on a White House petition, and, crossing social media's first threshold of acceptance, has earned its own #mintthecoin hashtag on Twitter.
The likelihood of this happening is about as likely as the checkers scenario. But the argument in its favor is that minting a trillion-dollar coin is a commensurately ridiculous response to Congress refusing to pay debts it has already accumulated.
"While this may seem like an unnecessarily extreme measure," the White House petition reads, "it is no more absurd than playing political football with the U.S. -- and global -- economy at stake."
Economist Paul Krugman called it a "gimmick," but wrote that "since the debt ceiling itself is crazy ... there's a pretty good case for using whatever gimmicks come to hand."
Aside from the obvious questions this campaign raises -- whose face would adorn such a high-value coin, and what happens if it's lost in the laundry -- are some more troublesome questions, like what a freewheeling Treasury secretary minting coins of any denomination would do to the markets and inflation.
Bloomberg's Josh Barro tries to dispatch with these concerns by arguing that President Obama could avert the inflation fear by pledging to buy back the new currency as soon as the Treasury Department can borrow again. And then, Barro offers, Obama could revoke the platinum coin authority in exchange for abolishing the debt ceiling.
Joe Weisenthal of Business Insider also claims the coin wouldn't cause "massive inflation" anyway, "because we wouldn't have a gigantic injection of new money" -- just money Congress has already allocated.
But other analysts warn the idea of skirting the debt ceiling by producing astronomically valuable coins is a recipe for market chaos.
"It's just a disguised new form of debt," former Congressional Budget Office director Douglas Holtz-Eakin told FoxNews.com. "This would say (to the markets) they cannot manage their finances as a nation, they're down to gimmicky coins."
He added: "It would have all the implications of near-default."
A column in Britain's The Guardian also panned the idea as one that doesn't work "even as satire," arguing that it could indeed "create a nonsensical level of inflation."
The administration may not dignify the trillion-dollar coin idea with a response. The related petition is still about 20,000 signatures short of the number necessary to elicit a response from the White House.
Still, another debt ceiling fight is looming. The country technically bumped up against the borrowing cap on Dec. 31, but Treasury Secretary Tim Geithner took emergency measures to stave off a crisis. Lawmakers have a matter of weeks to determine what, if any, spending cuts will be mandated in order to win approval from Congress for another debt-ceiling hike.

Read more: http://www.foxnews.com/politics/2013/01/07/funny-money-pundits-float-1-trillion-coin-as-answer-to-debt-ceiling-standoff/#ixzz2HJakqat4

The Trillion Dollar Platinum Coin

Financial cliff deal and Common sense

Here is a good way to look at this:

bbc.co.uk

US budget debts/ceilings Succinctly explained..
This puts things into a much better perspective. J
Lesson # 1:
* U.S. Tax revenue: $2,170,000,000,000
* Fed budget: $3,820,000,000,000
* New debt: $ 1,650,000,000,000
* National debt: $14,271,000,000,000
* Recent budget cuts: $ 38,500,000,000
Let's now remove 8 zeros and pretend it's a household budget:
* Annual family income: $21,700
* Money the family spent: $38,200
* New debt on the credit card: $16,500
* Outstanding balance on the credit card: $142,710
* Total budget cuts so far: $38.50
Got It ?
OK now......
Lesson # 2:
Here's another way to look at the Debt Ceiling:
Let's say, You come home from work and find
there has been a sewer backup in your
neighborhood....
and your home has sewage all the way up to
your ceilings.
What do you think you should do ......
Raise the ceilings, or remove the sh!t?

Fiscal Cliff Showdown Postponed to March

Frontpagemag

Matthew Vadum

With a cocky President Obama no doubt grinning from ear-to-ear, federal lawmakers yesterday gave their blessing to legislation that boosts income tax rates and government spending while kicking many of the “fiscal cliff” issues down the road for several weeks.

The $1.2 trillion in scheduled spending cuts –falling largely on the Pentagon– have now been officially postponed for two months. The next manufactured crisis comes March 1, the day the cuts will take effect unless Congress intervenes again to stop them.

Putting off dire problems for another day is now becoming routine in Washington, D.C., commentator Jim Antle opined on Twitter. “We have reached the point where temporarily averting self-inflicted disasters at the last second is a political success.”

The Obama-approved fiscal-disaster procrastination bill received final congressional approval in the House last night with relatively little Republican support after a prolonged fight during a long lame duck session of the outgoing Congress. Obama and Democrats got almost everything they wanted, as many Republicans dropped their long-standing opposition to income tax rate increases. Now Obama comes across to many low-information voters as a kind of champion of the middle class, and Republicans, whom the media would have painted as villains no matter what the fiscal cliff outcome, look like stubborn obstructionists who had to be forced to do the supposedly right thing.

By insisting on tax hikes only for the wealthy, President Obama skillfully played Republicans off against each other, launching what some are now calling a civil war within the Grand Old Party. Republicans were afraid of being blamed by the public for allowing taxes to rise if Bush-era tax rates, which expired Dec. 31, were not extended, so they held their noses and gave Obama largely what he wanted.

Charles Krauthammer called the measure a “complete rout for Democrats.” Many House conservatives “hate the bill for good reason … This is a complete surrender on everything.”

Bill Kristol called the bill a mess that was “ridiculous in too many ways to count” but urged House Republicans to vote for it anyway to get the issue behind them. “The two month delay of the sequester [i.e. spending cuts] will make actual governance even more difficult (how is the Pentagon supposed to plan for the rest of the year?) … And we will face another cliff when we hit the debt ceiling and the sequester again in two months.”

The stage is now set for the approaching battle over out-of-control federal spending. The bill passed Congress hours after the U.S. government bumped up against the limit on federal borrowing. In theory the government could default on its debts two months from now if the debt ceiling is not raised further.

The national debt is now about $16.4 trillion, up from $10.6 trillion on Inauguration Day 2009. But that $16.4 trillion figure is misleading. Government accounting tricks keep another $86.8 trillion in unfunded liabilities related to Medicare, Social Security, and federal employees’ future retirement benefits off the books and out of the public eye. The two figures added together produce the unimaginably large sum of $103 trillion. The U.S. government’s bond rating has been downgraded already and many more downgrades are on the horizon.

It is worth noting that the bill passed last night only because House Democrats supported it.

The measure was approved in a House vote of 257 to 167 after GOP leaders decided not to insist on government spending cuts. Speaker John Boehner (R-Ohio) and Budget Committee chairman Paul Ryan (R-Wisc.) voted for the package, breaking with House Majority Leader Eric Cantor (R-Va.) and Majority Whip Kevin McCarthy (R-Calif.) who voted against it.

In total 85 Republicans voted for the bill and 151 voted no. On the Democratic side there were 172 votes in favor and 16 against.

After going against most of the House Republican conference on such a critical matter, Boehner’s speakership may be in jeopardy. Some conservatives are pressing GOP lawmakers not to reelect Boehner as Speaker when the new 113th Congress convenes on January 3.

American Majority Action spokesman Ron Meyer told Breitbart News late yesterday that enough House Republicans have come together together in an effort to take Boehner’s gavel away. To be considered elected, a candidate for Speaker must receive a majority of the votes.

“At least 20 House Republican members have gotten together, discussed this and want to unseat Speaker Boehner–and are willing to do what it takes to do it,” Meyer said. “That’s more than enough to get the job done, but the one problem these guys face is they need a leader to coalesce behind.” Early discussion on a possible Boehner challenger has centered on House Majority Leader Cantor.

Before the House took action late yesterday, at 1:39 a.m. the Senate approved the bill by a vote of 89 to 8. The only Republicans to vote against the measure were Charles Grassley (Iowa), Mike Lee (Utah), Rand Paul (Kentucky), Marco Rubio (Florida), and Richard Shelby (Alabama). (Jim DeMint of South Carolina and Mark Kirk of Illinois didn’t vote.)

Rubio said he couldn’t vote for the bill because he “wanted to be part of solving the long-term problems this country faces. Time and again, we’re given choices here that don’t involve that.”

“The real fiscal cliff is still there,” he said. “We’ll be back here again. In March, we’ll have a showdown like this all over again.”

Many Tea Party-backed Republicans opposed the legislation because it raises taxes without reducing government spending. According to an analysis by Joseph Henchman of the Tax Foundation, the bill raises taxes by $620 billion tax increase while cutting expenditures by a paltry $15 billion. That’s a ratio of $41 in tax increases for every $1 in savings.

While the legislation preserves the lower-income tax brackets from the Bush era permanently, it raises tax rates for joint filers earning $450,000 or more, phases out exemptions for high earners and limits the personal exemptions and itemized deductions they can claim. It also raises payroll taxes for all and discourages investment by raising the capital gains tax and dividends tax for high earners.

On the positive side, the legislation approved by Congress repeals the CLASS Act, a huge unfunded mandate promoted by the late Sen. Ted Kennedy (D-Mass.) that was part of Obamacare. The Community Living Assistance Services and Supports Act would have created a new national long-term care insurance system.

Quite apart from the fiscal cliff, yesterday Americans were hit with $1 trillion in new taxes to be fully phased in through 2022 to support the president’s unpopular health care reforms.

Among the new job-killing Obamacare-related levies effective January 1 were: an excise tax on gross sales by medical device makers; a  surtax on investment income for households earning at least $250,000; and an increase in the Medicare payroll tax for married couples earning more than $250,000.

Many more tax increases are likely headed our way in President Obama’s second term in office.

Fiscal cliff deal: House OKs proposal despite GOP objections

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House reviews Senate fiscal cliff compromise; timing on vote unclear

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White House, Senate leaders reach deal on taxes, delaying 'sequester' cuts

President Obama and Senate Republicans reached a sweeping deal late Monday that would let income taxes rise significantly for the first time in more than 20 years, fulfilling Obama’s promise to raise taxes on the rich and averting the worst effects of the “fiscal cliff.”
According to Democratic aides, Vice President Biden is on his way to the Capitol to explain the details of the pact he negotiated with Minority Leader Mitch McConnell, and a Senate vote on the package could be held by 10:30 p.m. ET, beating a midnight deadline. White House officials gave in on the last issue, how to handle estate taxes, yielding to GOP wishes, aides said.
The House will begin considering the bill tomorrow, with a vote on final passage in the next day or two. 

Keep reading >>

Obama: Fiscal cliff deal 'within sight'

(CNN) -- An agreement to avert the "fiscal cliff" of automatic tax increases and spending cuts appears to be "within sight," President Barack Obama said Monday.

"There are still issued left to resolve, but we are hopeful Congress can get it done," Obama said.

The deal that was taking shape included an agreement to raise the income tax rate on top earners to what it was during President Bill Clinton's last term in office, according to sources close to the process.

A GOP source told CNN negotiators are "very close" to a deal. The sticking point is $24 billion in spending cuts being sought by Republicans, according to the source.

"It's like looking under the cushions at this point," the source said. "If we can't find that at this point, we should pack this place up."

But one leading Senate Democrat warned the deal could run into trouble -- not only from House Republicans who have long opposed any tax increase, but also from liberals in the Senate who oppose allowing more high-income households to escape a tax increase.

"No deal is better than a bad deal, and this looks like a very bad deal the way this is shaping up," Sen. Tom Harkin, D-Iowa, said.

President Barack Obama was expected to discuss the issue in public remarks at the White House.

Keep reading on CNN >>

No fiscal deal Sunday; Senate to return New Year's Eve

By Michael O'Brien, NBC News

After a day of talks that were expected to yield some sort of compromise on the so-called fiscal cliff, Senate leaders called off any further votes until Monday morning, just hours before the deadline that will trigger across-the-board tax increases and dramatic cuts in military and domestic spending. 

The Senate will meet again on New Year's Eve, the last full day before the "cliff" takes effect on Jan. 1. Negotiations were expected to continue in the meanwhile.

A day of wrangling in the Senate came and went without an accord to avoid the fiscal cliff, leaving lawmakers just a matter of hours to sort through thorny issues of taxes and spending that have beguiled Congress for the better part of the past two years. 

Significant distance remains between the two sides and negotiations continue, although the clock continues to tick. Even a simple deal appears far from certain.

 

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Obama's agenda on fiscal cliff, second term

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Senators work behind scenes Saturday on fiscal deal, votes would come Sunday

Senate Minority Leader Mitch McConnell and House Speaker John Boehner outside the White House in Washington. (AP)

Senate leaders are working off-stage Saturday to reach a final-hours deal to avert a fiscal crisis, with no official proposals or votes expected until Sunday.

Senate Majority Leader Harry Reid, D-Nevada, has adjourned the chamber until Sunday so Democratic and Republican leaders can negotiate on a deal to present to the House.

House members will officially return to Capitol Hill on Sunday in expectation that the Senate will present them with a plan to stop tax increases that are scheduled to kick in next week.

Senate leaders from both sides of the aisle vowed late Friday to scramble over the weekend to produce a new bill, on the heels of a high-stakes White House meeting with President Obama that is seen as the last chance to come together before the tax-hike deadline.

Minority Leader Mitch McConnell said he hopes senators can come forward with a recommendation as early as Sunday. 

Several senior administration officials told Fox News late Friday night that McConnell, R-Ky., is showing strong signs that he will help seal a deal.

However, they acknowledges he will have a difficult time getting a deal passed in the Republican-controlled House, which  has so far rejected any plan that includes allowing tax rates to increase for higher-earning Americans.

Reid called the White House meeting Friday "very constructive." 

"We need to have everybody step back a bit," he said.

The pledge to work on a new bill is by no means a solution to the sweeping set of tax hikes set to hit Jan. 1, followed by steep spending cuts. Lawmakers still have to write the bill, and produce something that can pass both chambers. 

Obama, speaking from the White House briefing room late Friday, voiced a dose of doubt about the Senate leaders' final push for a deal. 

He said he's "modestly optimistic" but that if Reid and McConnell fail, the Senate should allow an up-or-down vote on a scaled-back proposal the president is pushing. 

"The hour for immediate action is here, it is now," Obama said. "We're now at the last minute, and the American people are not going to have any patience for a politically self-inflicted wound to our economy. ... We've got to get this done." 

Considering how late this effort is getting underway, lawmakers easily run the risk of missing the deadline and causing at least some uncertainty with Americans' tax bills starting next week. 

The developments late Friday, though, at least showed Reid and McConnell were beginning to work together. And it marked a decision by lawmakers that the Senate should make the first move -- for days, House Speaker John Boehner has insisted that the Senate act, but Reid has resisted and put the onus on the House. 

It's unclear what the new bill would entail. It appears the Senate wants to tweak the Obama plan, which would include an extension of current tax rates for most Americans -- but potentially adjust it so fewer earners see a tax hike, and add a provision dealing with a looming expansion of the estate tax. 

The debt ceiling, which Obama wants increased, would not be part of this bill. And a senior White House official admitted it is unclear how a looming set of spending cuts would be addressed. 

Read more: http://www.foxnews.com/politics/2012/12/29/senators-work-behind-scenes-saturday-on-fiscal-deal-votes-would-come-sunday/#ixzz2GT2vFe9D

What leaders said after financial cliff meeting

politicalticker

Washington (CNN) - Congressional leaders spoke Friday after meeting about the fiscal cliff with President Barack Obama at the White House.

Congressional leaders attending the meeting was Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, House Speaker John Boehner, and House Minority Leader Nancy Pelosi. Vice President Joe Biden was to be in attendance, the White House said, and an administration official said Treasury Secretary Timothy Geithner would attend as well.

Obama was set to make a statement at 5:45 p.m. ET.
McConnell and Reid spoke on the Senate floor.
Reid said, “we had a constructive meeting. We certainly hope that something positive will come from that. The republican leader and I and our staffs are working and we’ll see what we can come up with. We shouldn’t take a long time to do that. …
“If we come up with something, it’s not that easy. We’re dealing with big numbers and some of the stuff that we do is somewhat complicated. But I think it was a very positive meeting,” he said. “There was not a lot of hilarity in the meeting, everyone knows how important it is. It was a very serious meeting and it took an extended period of time as you all know waiting for us.”
McConnell spoke immediately after Reid, saying, “I share the view of the majority leader. We had a good meeting down at the White House.
“We are engaged in discussions, the majority leader and myself and the White House, in the hopes that we can come forward as early as Sunday and have a recommendation that I can make to my conference and the majority leader [Reid] can make to his conference and so we’ll be working hard to try and see if we can get there in the next 24 hours,” he said. “And so I’m hopeful and optimistic.”
Boehner’s office issued a statement which said he “reminded the group that the House has already acted to avert the entire fiscal cliff and is awaiting Senate action.”
“The leaders spent the majority of the meeting discussing potential options and components for a plan that could pass both chambers of Congress,” the statement read. “The Speaker told the President that if the Senate amends the House-passed legislation and sends back a plan, the House will consider it – either by accepting or amending. The group agreed that the next step should be the Senate taking bipartisan action.”
In a paper statement, McConnell’s office also pointed to legislation which had passed the House.
“While the House already passed legislation in August to prevent tax hikes (a proposal Sen. McConnell supports), the President and Congressional leaders today agreed that the Senate must now act,” the statement read. “This will require a bipartisan approach. Members of the Senate will continue to work toward producing a bipartisan package in a timely manner to protect American taxpayers and jobs from a massive tax hike in January.”
Pelosi said the meeting was "constructive" and "candid."

White House Meeting Ends With No Sign of Breakthrough

foxnews

If Americans were looking to Washington on Friday to unveil a bold new solution for averting the fiscal crisis, they didn't get it.
President Obama, at a last-ditch meeting with congressional leaders just days before sweeping tax hikes take effect, presented a recycled version of the scaled-back proposal he pitched last week.
There was little sign of a breakthrough, as lawmakers left shortly after 4 p.m. Stocks on Wall Street dove at the close of the day, amid fears that the tax increases along with steep spending cuts will hit Jan. 1.
According to one source familiar with the White House meeting, Obama pushed lawmakers to either bring his proposal for a scaled-down bill to a vote or put forward a counterproposal of their own.
As she returned to Capitol Hill, House Democratic Leader Nancy Pelosi suggested Obama is trying to get the Senate to act first. "I think it moved us forward," she said of the meeting, without offering specifics about what was discussed.
Senate Majority Leader Harry Reid called it "very constructive."
"We hope it will bear fruit," the Democratic leader said, though he cautioned there was "no concrete proposal."
The president's plan is a far cry from the kind of "grand bargain" lawmakers were shooting for just a few weeks ago -- something that would narrow the deficit, overhaul the tax code and set the country on a course to curb its entitlement spending, all while averting massive tax hikes and spending cuts.
Instead, Obama wants a bill that primarily nixes the tax hikes for families making under $250,000. He has pushed that particular provision for months, though Republicans have adamantly opposed raising taxes on those making above $250,000. Obama's proposal would also extend unemployment benefits for roughly 2 million people expected to lose them next year, and deal with "other outstanding issues."
Obama referred to those other issues last week when he called for laying "the groundwork for future growth and deficit reduction," which presumably would be a commitment to return next year and draft broader tax and entitlement reform.
The latter idea, though, would stir deep skepticism in Congress -- the last big budget deal in the summer of 2011 ended precisely with such a commitment, which in turn ended in failure and the fiscal crisis facing the country today.
The immediate challenge for negotiators, though, will be to craft a plan that does enough to spare most Americans a big hike without doing so much as to complicate the bill's passage. There are a host of expiring provisions next year -- from Medicare rates to doctors to payroll tax cuts -- that some lawmakers hoped to address before the end of the month. The more items added to the bill, the trickier it gets to pass it.
Lawmakers have been hesitant to predict whether Congress will be able to arrive at any solution.
Earlier Friday, Senate Finance Committee Chairman Max Baucus, D-Mont., said: "I think it all comes down" to the White House meeting.
Senate Budget Committee Chairman Kent Conrad, D-N.D., continued to push for a "grand bargain," though that does not appear to be what Obama is pushing in the near-term.
Senate Republican Leader Mitch McConnell, ahead of the meeting, called on leaders to "get serious."
"We are obviously running out of time here," he said.
Lawmakers effectively have fewer than two working days to pass legislation. While the Senate is in session, the House does not return until Sunday afternoon.
Between now and Jan. 1, Congress has just a handful of options for sparing taxpayers. Aside from the scaled-back "Plan C" being offered by Obama, lawmakers could simply pass a short-term extension of current rates -- buying more time to work out an agreement. Lawmakers might have to do this even if they reach an agreement by the weekend -- because of the sheer time it would take to write that bill and bring it to the floor.
Or Congress could let the tax hikes happen, only to retroactively deal with them next year. The Boston Globe reported Friday that the IRS may delay the impact of tax hikes by holding off on telling employers to change how much they withhold from workers.
House Republican leaders, though, still want the Senate to pass their bill that extends current rates for everyone. And Senate Democratic leaders still want the House to pass their bill letting taxes rise on households making more than $250,000.
The latter, though, would probably only pass in the House with a bloc of mostly Democrats. According to Politico, Boehner told his rank-and-file Thursday that he's "not interested" in passing a bill that way.
Fox News' Ed Henry and Chad Pergram and Fox Business Network's Rich Edson contributed to this report.

Read more: http://www.foxnews.com/politics/2012/12/28/obama-congressional-leaders-give-talks-to-avert-fiscal-crisis-one-last-try/#ixzz2GODQ2AXS

What happens to you if we go over the fiscal cliff

NBC News/ Allison Linn 

Some lawmakers are back in Washington hoping to hammer out a last-minute deal to avert the so-called fiscal cliff, but so far it seems that there’s more name-calling than deal-making going on.

If no deal is ever reached, it will be more than just a political headache. Americans also could feel considerable pocketbook pain as taxes rise, unemployment benefits are cut off and an array of smaller changes take effect.

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The cumulative effect on Americans’ wallets could be enough to dent significantly the already weak economy. Federal Reserve Chairman Ben Bernanke has said the combination of tax increases and spending cuts could be enough to send the nation back into recession.

That’s the worst-case scenario, and despite the considerable gridlock, most experts expect that Congress and the president will eventually come to some sort of deal. Experts also say that even if no deal is reached by Jan. 1, retroactive fixes and other dealmaking could prevent the most harmful effects from ever hitting most Americans.

Related: Consumers, businesses brace for fiscal cliff impact

Still, the Tax Policy Center, a nonpartisan think tank, says that nearly 90 percent of households would be affected if we go over the fiscal cliff completely and no deal is reached.

A stalemate would have very specific effects on certain groups of taxpayers, such as students, parents and married couples who have benefited over the past decade from certain tax law changes passed under the Bush and Obama administrations.

But the Tax Policy Center says that on average, taxes would go up for every income group, from the poorest taxpayers to the most wealthy:

• Americans in the lowest 20 percent of the income scale could pay an average of about $400 more in taxes.
• Middle-income households could pay about $2,000 more in taxes, on average.
• The top 20 percent of taxpayers could pay about $14,000 more a year in taxes, on average.
• The 1 percenters could pay an average of $120,000 more in taxes.

Here’s a look at some of the biggest issues likely to affect the largest groups of taxpayers if Congress cannot make a deal.

Tax rates will go up: If no deal is made, taxpayers can expect their tax rate to rise no matter what income group they fall in, said Roberton Williams, senior fellow with the Tax Policy Institute. That’s because previously passed rate cuts would expire.

“Everyone who has taxable income will see a tax increase because of the rates,” Williams said.

Payroll taxes: For the past two years, the employee’s share of taxes paid for Social Security has been set at 4.2 percent instead of the previous level of 6.2 percent. That temporary tax cut would expire without a new deal, meaning almost everyone’s taxes would rise by 2 percentage points.

Translation: Your paycheck would be a little bit smaller.

“That’s the thing that people will see first,” Williams said.

Alternative Minimum Tax:  The Alternative Minimum Tax  was originally designed so that wealthy taxpayers would be forced to pay a minimum level of taxes no matter what. But because it was not created to account for inflation, over the years it has threatened to affect an ever-bigger group of people.

Congress has previously passed temporary “patches” to keep lower-income households from having to pay more taxes. If no deal is reached this year, the latest patch would expire and the Internal Revenue Service says around 30 million additional taxpayers would become subject to the AMT.

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Of course, every taxpayer’s individual circumstances are different. To see how your family’s tax rates could be affected, you can check out the Tax Policy Center’s individualized tax calculator.

Taxes aren’t the only pocketbook problem Americans could face if a deal isn’t reached, because so much government spending is tied up in reaching a deal. But the most widespread effect would probably be on people who have been unemployed for a long time.

Unemployment benefits: About 2.1 million unemployed Americans are scheduled to lose federally funded unemployment compensation if Congress can’t reach a deal to extend the benefits plan by the end of the year. President Obama has said he’d like to see those benefits extended as part of a fiscal cliff deal.

The federally funded unemployment benefit extensions were introduced in 2008 while the country was in the depths of the recession. The extended benefits kick in after an unemployed person has exhausted his or her 26 weeks of state benefits. The exact amount of additional compensation depends on the unemployment rate in the person’s home state.

The unemployment rate has fallen sharply in recent months, but long-term unemployment remains a major problem. About 4.8 million people, or 40 percent of the total number of people who were unemployed in November, had been jobless for 27 weeks or more.

Boehner calls House back to Washington on Sunday

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Obama’s Regulatory Cliff Draws Near

frontpagemag/ Arnold Ahlert

garyhasissues.com

Many Americans believe the biggest problem the nation currently faces is the so-called fiscal cliff. Unfortunately, the fiscal cliff is nothing compared to the avalanche of new regulations that will be coming in 2013. That Americans remain unaware of this ominous development is understandable. The most transparent administration in history ignored the provisions of the Regulatory Flexibility Act and a subsequent series of executive orders that require the semi-annual release of all regulations under development or review by some 60 departments, agencies, and commissions. Thus, the April 2012 and October 2012 deadlines came and went without compliance. Now that the election is over, Americans will discover just how all-encompassing Obama and his big-government zealots intend to be.

The scope is staggering. According to the Competitive Enterprise Institute, the overall regulatory burden has reached $1.8 trillion annually, and $215.4 billion in compliance costs have been added in 2012 alone. The OMB’s Office of Information and Regulatory Affairs website reveals that 4,100 new regulations are in the pipeline, with more than 400 aimed at small businesses, whose compliance costs will exceed those of their larger competitors by 36 percent.

Unsurprisingly, the Environmental Protection Agency (EPA) will be taking the lead role in flexing the administration’s regulatory muscles. Proposals to significantly expand the Clean Water Act will give the EPA power over virtually every body of water in the nation, including farm ponds, streams, and even storm water runoff, all of which could seriously impact family farmers and small businesses. More restrictive requirements for controlling ozone emissions could cost $90 billion annually and trigger the potential loss of millions of jobs. The designation of coal ash as a “hazardous substance” will substantially increase energy costs, adding another $79 billion to $110 billion to the regulatory tab, and eliminating thousands of jobs in Pennsylvania, West Virginia, Missouri, and Ohio. A new rule that tightens allowable levels of so-called fine particulate matter will be added to the mix as well, making it far harder for local governments to issue new manufacturing permits.

Keep reading on frontpagemag >>

FORGET THE DEFICIT: Here's The Real Reason Liberals Want To Hike Taxes On The Rich

businessinsider/Joe Weisenthal 

A common argument you hear from conservatives is that raising taxes on the rich is a joke of a deficit reduction proposal, because it hardly makes a dent in the deficit.

According to CNBC, reverting to Clinton-era levels would just get you about $40-$45 billion in the first year.

GOP Congressman Tom Price has gotten a lot of attention for saying it would only fund government for 8 days... so what's the point?

So what is the point?

Well, it's not really about deficit reduction at all.

Zachary Goldfarb at The Washington Post has a great piece on how Democrats once vehemently opposed the Bush tax cuts, but are now trying to permanently preserve all of them for the vast majority of taxpayers. One big reason is that the economy has changed, and there's a recognition among virtually everyone that the economy is too weak to let taxes rise above the board.

But as for raising taxes on the rich...

What’s more, income inequality has been growing. Sparing the middle class higher taxes while requiring the wealthy to pay more would tip the scales slightly in the other direction.

“The reason there’s been this movement toward broad consensus on renewing the tax cut for working- and middle-class families is that will give us a sharper progressivity in the tax system that is very much desired by Democrats and progressives who’ve seen an income distribution more and more distorted toward the wealthy,” said Betsey Stevenson, former chief economist in Obama’s Labor Department and a professor at the University of Michigan, who added that taxes may have to rise even more than currently contemplated to meet the country’s needs.

The point about making the tax code more progressive doesn't get talked about enough, but when discussing changing marginal tax rates, this should be the main issue.

The truth of the matter is that it's not going to be that easy closing the deficit using the tax code, or even via lower spending. Deficits are closed via more growth, and that's about it.

As this chart shows, a great predictor of deficits, going back decades, is the unemployment rate. The tax code has much less to do with it than people think.

But the tax code can help create more progressive outcomes, and at a time when inequality continues to rise, addressing that inequality is a major liberal goal. Actually it's not just a liberal thing. Most people in most societies feel that extreme inequality is problematic.

For those unfamiliar with it, here's a look at the Gini Coefficient (which measures societal income inequality; higher = more unequal) for the U.S.

So yes, tax hikes on those making $250K or more won't dent the deficit much.

But that's at a minimum a secondary issue in the tax discussion. It's all about trying to do something about inequality. Debt and deficits so thoroughly dominate politics, however, that politicians usually frame it through that.

Read more: http://www.businessinsider.com/fiscal-cliff-obama-heres-the-real-reason-liberals-want-to-raise-taxes-on-the-rich-2012-12#ixzz2GGpLcJiM