I read that Senator Mitch McConnell burst into laughter upon hearing Treasury Secretary Tim Geithner lay out President Obama's "Fiscal Cliff" plan. Here's the rub:
> $1.6 trillion in revenue
> $50.0 billion stimulus
> $400.0 billion in Medicare cuts
Unlike Susan Rice, who was sent in to fall on the administration's sword during the Benghazi cover up, Geithner isn't looking for his next government job. It makes him the perfect foil. He can actually go in with a straight face with a proposal so absurd that an old reserved guy like McConnell doubles over in hysterical disbelief. Some say this is how you begin negotiations, and they would be right if this were November 2011. The fiscal cliff countdown clock is a couple ticks from midnight.
We might all love a farce when viewed from afar, but a tempest in a teapot is dangerous when we all live in that teapot. So, when the administration keeps talking as if they think the GOP really wants what they want, then we should all feel sorry for ourselves.
As much as they routinely win the public relations war, their effort on this has been far from compromise and far from reality. The democrats keep tearing, but at least republicans have finally begun to move. For the general public, it's all the same - send in the clowns.
Yes, this is rich, because it's all going to make the nation poorer. Nonetheless, this is the path we are on. So, there will be some form of pain; some form of anti-free market pain that hurts the poorest Americans by limiting their future. This is the path chosen by a slight majority of people that never crunched the numbers, and more than finding or creating their own opportunities, agreed taking money from moderately successful citizens and small businesses is the path to glory. It will never be bliss, and no, I don't agree.
Still, there are lines that must be drawn. The opening salvo from Geithner would be laughable if not so goofy and ill-timed. Let's stop messing around. Here's what the White House will get:
* Extension of (ultra) long term unemployment benefits
* Extension of payroll tax holidays
* Taxes on carried interest
Here's what the White House will not get:
* $50.0 billion stimulus
* Higher taxes on small businesses
* Permanent end to debt ceilingFramed!
The murkier part is where tax increases will begin. I think higher taxes are a giant mistake, and those that pay are already doling out more than their fair share. But, going down this road, I hope the line moves to $1.0 million. I also think mortgage interest deductions will be altered or tossed out along with charitable deductions but only with real reform to entitlements.
Real entitlement reform has to go into effect at the same time as tax hikes and defense spending cuts.
I must say, yesterday when I heard John Boenher mention "framework" for a plan to deal with a solution later, the hair on the back of my neck stood on end. That is a euphemism for kicking the can down the road. Obviously, that's a giant mistake. Problems don't stop mounting. Debt doesn't stop mounting. The real cliff that comes with us eventually forking over $1,000,000,000,000 a year in interest gets closer.
Gutless politicians on both sides have brought us to this point. Politicians are asking Americans to buy "framework," not knowing if eventually it will house a Caravaggio or velvet painting of card-playing dogs. But where are the clowns - there ought to be clowns
Maybe next year
Impact of Buffett Tax
A new report says the fair share tax revenue supported by Warren Buffett would pull in only $8.0 billion a year. The chart is from JP Morgan says it all.
Gross Domestic Product
Officially, third quarter economic growth was revised higher to 2.7% from 2.0%.
I have to say, the headline number really masked an economy that is crawling along barely keeping its head above water. While it speaks to the resolve of the economy and underscores it's built to last already, beneath the surface the numbers were disturbing.
Inventories were much higher, revised from initial reading of $34.1 billion to $61.3 billion - good, but not likely to recur. In the mean time, real consumption was lowered to 1.4 from the original read of 2.0 and business investment in things like equipment and software is down substantially to -2.7% from unchanged. This was the lowest read on business investment since second quarter 2011 and down sequentially.
Inventory builds speak mostly to the auto market and made the difference in the overall revision. Economic trends that speak to the future were a major disappointment.