Too Much Wishful Thinking on Middle-Class Tax Rates

From Greg Mankiw, at the New York Times, "Wishful Thinking and Middle-Class Taxes":

IN the continuing fiscal negotiations between President Obama and House Republicans, both sides have, from the very beginning, agreed on one point: Taxes on the middle class must not rise. But maybe it’s time to reconsider this premise. An unwavering commitment to keep middle-class taxes low could be one reason the political process has become so deeply dysfunctional.

Let’s start with the problem: the budget deficit. Under current policy, the federal government is spending vastly more than it is collecting in tax revenue. And that will be true for the next several decades, thanks largely to the growth in entitlement spending that will occur automatically as the population ages and health care costs increase. As a result, the ratio of government debt to the nation’s gross domestic product is projected to rise, substantially and without an end in sight.

That can happen for a while, or even a long while, but not forever. At some point, investors at home and abroad will start questioning our ability to service our debts without creating steep inflation. It’s hard to say precisely when this shift in investor sentiment will occur, and even whether it will strike in this president’s term or the next, but when it does, it won’t be pretty. The United States will find itself at the brink of an unprecedented financial crisis.

Republicans and Democrats agree on the nature of the problem, but they embrace very different solutions. My fear is that both sides are engaged in an excess of wishful thinking, with a dash of mendacity.

If Republicans had their way, they would focus the entire solution on the spending side. They say that reform of the entitlement programs can reduce their cost. The so-called premium-support plan for Medicare, from Paul D. Ryan, the 2012 Republican vice-presidential candidate, would let older Americans use their health care dollars to buy insurance from competing private plans. (Interestingly, it’s similar to the system envisioned for the nonelderly by President Obama’s Affordable Care Act.) The hope is that competition and choice would keep health care costs down without sacrificing quality.

The premium-support model may well be better than the current Medicare system, but its supporters oversell what it would be likely to accomplish. The primary driver of increasing health care costs over time is new technology, which extends and improves the quality of life, but often at high cost. Unless the pace or nature of medical innovation changes, this trend is likely to continue, regardless of structural reforms we enact for Medicare.

Democrats, meanwhile, want to preserve the social safety net pretty much as is. They balk at any attempt to reduce this spending, including even modest changes like altering the price index used to calculate Social Security benefits. They focus their attention on raising taxes on the most financially successful Americans, contending that the rich are not paying their “fair share.”

Fairness, like beauty, is in the eye of the beholder. Unfortunately, people’s judgment is often based on anecdotes that distort rather than illuminate. The story of the undertaxed Warren Buffett and his overtaxed secretary looms larger in the public’s mind than it should.

Here are some facts, so you can judge for yourself....

Even if President Obama wins all the tax increases on the rich that he is asking for, the long-term fiscal picture will still look grim. Perhaps we can stabilize the situation for a few years just by taxing the rich, but as greater numbers of baby boomers retire and start collecting Social Security and Medicare, more will need to be done.

Continue reading (via Memeorandum).

RELATED: I'm for shrinking government, so this is the bottom line for me, at The Lonely Conservative, "People Should Pay For the Government They Voted For." Raise taxes. Go over the cliff.  I guarantee you that Obama won't get off cost-free. The real cost of the election will start biting people in the ass.

Senate Leaders to Work on Agreement

At LAT, "Obama 'modestly optimistic' that 'fiscal cliff' can be avoided":

WASHINGTON – President Obama said he was “modestly optimistic” that Senate leaders could reach an agreement to avoid the so-called fiscal cliff, but he said that if the effort fails, he’ll demand a vote on his basic proposal to protect middle-class taxpayers from seeing their taxes rise.

Speaking to reporters in the White House on Friday evening, a stern Obama tried to ramp up the pressure on lawmakers as they cobble together a deal before a potentially growth-crippling combination of tax increases and spending cuts take effect in the new year.

“The hour for immediate action is here. It is now,” Obama said.

Obama spoke shortly after meeting with top congressional leaders at the White House, during which Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) agreed try to come up with a proposal before the Dec. 31 deadline.

The president called the meeting “good and constructive” and suggested there was still time to reach a compromise. But if lawmakers failed to find common ground, Obama said, he has asked Reid to bring up a vote on a scaled-back version of his original proposal.

“If members of House or the Senate want to vote no, they can,” Obama said. “But we should let everybody vote. That’s the way this is supposed to work.”

Lots more at Memeorandum.

Fiscal Cliff Talks Down to the Wire

At the clip, Charles Krauthammer praises Obama for his "ruthless" partisanship.

And at the Wall Street Journal, "Both Sides to Meet at White House; Any Deal Likely to Be Limited":

Congress and the White House took small steps toward breaking the budget impasse Thursday, but Democrats and Republicans grew increasingly fearful they won't be able to avert the tax increases and spending cuts known as the fiscal cliff, a prospect that is unnerving consumers and investors.

President Barack Obama invited congressional leaders to the White House on Friday afternoon for a last-ditch effort to broker a deal, as the Senate returned to Washington on Thursday. House GOP leaders said in a Thursday conference call with Republicans, who are growing nervous about their party being blamed for the deadlock, that the House will reconvene Sunday evening.

It is still possible the two sides can reach a deal, especially with the leaders meeting Friday. Any resolution would be a scaled-back version of the package Mr. Obama and congressional leaders had anticipated passing after the November election. The White House is pressing for the Senate to extend current tax rates for income up to $250,000, extend unemployment benefits, keep the alternative minimum tax from hitting millions of additional taxpayers and delay spending cuts set to take effect in January.

The 11th-hour strategy carries enormous risk because it leaves no margin for error in Congress's balky legislative machinery. Senate Majority Leader Harry Reid (D., Nev.) said the prospects for passage of a bill before the last day of the year are fading rapidly. "I have to be very honest," he said. "I don't know time-wise how it can happen now."

Anxiety about Washington's ability to resolve its budget battles is roiling the economy. Conference Board figures showed that consumer confidence fell in December to its lowest level since August, driven by a pessimistic outlook for economic activity next year.

Stocks have swung on the latest news from Washington. The Dow Jones Industrial Average fell sharply on Mr. Reid's pessimistic comments before recouping most of a 151-point drop on news the House would reconvene this weekend.

At best, leaders are looking at a narrow bill that could be passed at the last minute. At the meeting Friday, Mr. Obama will outline the elements he thinks should be in a deal and could get majority support in both chambers of Congress, according to a person familiar with the matter. He won't put forward a specific bill or legislative language, the person added.

Continue reading.

And at Telegraph UK, "Barack Obama will meet congressional leaders today at the White House for last-minute talks on a "fiscal cliff" deal to avoid automatic tax increases and broad spending cuts that threaten the US economy's recovery."

PREVIOUSLY: "America's Crisis of Big Government Cronyism and Corruption."

A Weaker Tea Party?

Here's the headline from yesterday's New York Times front page: "Sidestepping Fiscal Showdown, Weaker Tea Party Narrows Focus."

The main thrust of the piece is to brush off the tea party as an irrelevant "fringe" movement following Obama's reelection and internal divisions among prominent organizations. There are indeed problems, but by no means is the tea party finished as a movement. The congressional elections saw some significant tea party victories and the tea partiers will no doubt have a strong voice in 2013, as their bread-and-butter issues of limited government and fiscal restraint prove more relevant than ever.

Note too that the tea party isn't so much a protest movement any more as it is a political tendency seeking to place activists into positions of power at all levels of government. I love the protests, but that energy has been increasingly channeled into electoral activities and organization. Leslie Eastman comments on that, at Legal Insurrection, "Tea Party tidal surge, not tsunami." And a local example is conservative activist Mike Munzing, who I first met at tea party rallies in 2009. He was elected to the Aliso Viejo City Council in November. A number of other local tea partiers either ran or were elected to the Orange County GOP Central Committee in recent years. Basically, the movement helped generate a mass of activists moving into formal political organizations.

Having said all that, the latest high profile conflicts at FreedomWorks are like catnip to the liberty-haters on the left. The Other McCain has the story with lots of links, "The Bloody Mess at FreedomWorks."

Either way, it's best not fall for the Democrat Media Complex's operation demoralize narrative. Taking back the country will require lots more activists to redouble their efforts at all the forms of grassroots participation. There's going to be ups and downs. Ignore these stupid memes about a "weaker tea party."

Fiscal Cliff Dive Would Impose Steadily Increasing Pain and Hardship

At the New York Times, "Fiscal Cutoff Gradually Morphs Into Horizon":

Negotiations are set to resume in the coming days, following a break for Christmas, although hopes for a so-called grand bargain have faded. Instead, President Obama is pushing for a scaled-back plan that would extend the Bush-era tax cuts on incomes below $250,000, while suspending the automatic spending cuts and extending unemployment benefits.

Michelle Meyer, senior United States economist at Bank of America Merrill Lynch, said there is a 40 percent chance of what she calls a “bungee-jump over the fiscal cliff,” with Congress failing to act until after Jan. 1 but eventually averting the full package of tax increases and spending cuts by mid-January. If that were to happen, she predicts a steep sell-off on Wall Street, which would quickly force political leaders to compromise.

Over all, Ms. Meyer estimates that the economy will grow by just 1 percent in the first quarter of 2013, well below the 3.1 percent pace recorded in the third quarter of 2012.

What’s worrisome, she added, is that consumer anxiety about the fiscal impasse has begun to mount, catching up with business leaders who have been warning of economic danger since summer. “What’s been missing in this recovery has been confidence,” she said. “We’d see a healthy recovery if it weren’t for this uncertainty and the potential shock from Washington.”

Indeed, the economy has been showing signs of life recently. Unemployment in November sank to 7.7 percent, a four-year low. Consumer spending has been picking up, and the housing market has continued to recover in many parts of the country. Overseas worries like slowing growth in China and recession in Europe have also faded.

Those trends have encouraged some observers, like Steve Blitz, chief economist at ITG Investment Research. He estimates that the economy will grow by nearly 2.5 percent in the first quarter if Washington comes up with even a modest compromise. In the absence of a deal, the pace of growth would be more like 1 percent, he said.

“I don’t think that not having a deal going into the new year is all that critical,” Mr. Blitz said. “It doesn’t mean you will immediately go into a recession.”

RTWT at the link.

And that's Maria Bartiromo at the clip, mercilessly hammering the befuddled Democrat Senator Ben Cardin, via Eliana Johnson at National Review, "Maria Bartiromo Lays the Smackdown on Ben Cardin, Trading Floor Erupts in Cheers."

And see Jonathan Tobin, at Commentary, "Democrats Can’t Avoid Fiscal Cliff Blame."

Countdown to the Fiscal Cliff

I had John Hawkins' excellent post at the sidebar blog item finder, but I keep thinking about his comments as the fiscal cliff debate continues. This should be up on the front page: "5 Ways The GOP’s Poor Political Decision Making Helped Create This Fiscal Cliff Mess + Why I Would Have Voted For Boehner’s Plan B."

Bottom line for me: the GOP's all messed up and it's going to take some structural reforms at the organizational level to start turning things around. John's right: the Democrats won the public relations battle on higher taxes for the wealthy. Obama sees raising taxes as his mandate. And he correctly perceives the weakness of the Republican position and the obvious fractures within the GOP conference on the Hill.

More from Karen Tumulty, at the Washington Post, "Tax fight sends GOP into chaos."

And at the New York Times, "News Analysis: Still Bitter About Election, Republican Opposition Unwilling to Compromise with President" (via Memeorandum).

Boehner's Budget 'Plan B' Collapses

Here's the key bit from the Wall Street Journal's editorial, "Teetering on the Cliff":

The Speaker's miscalculation was that, just as in 2011, he thought he could get into a room with the President and negotiate a grand bargain. His intentions were good but he misjudged the all-or-nothing ideological nature of this Presidency. After the debacle of 2011, Mr. Obama could have treated the negotiations as the art of the bipartisan deal that could set the stage for immigration reform and other second-term achievements. Flush with victory, he could have at least made a gesture on entitlements.

Instead, he has treated the talks as an extension of the election campaign, traveling around the country at rally-style events at which he berates Republicans for not accepting his terms of surrender. Grant gave Lee more at Appomattox.

Plan B was Mr. Boehner's attempt to salvage some political dignity and a policy victory or two in return for conceding on tax rates. The bill wasn't even technically a vote to raise taxes because the rates are set to rise automatically on January 1 if Congress does nothing. The bill also kept the estate tax at 35%, rather than going up to 55% as now scheduled, and it made the tax cuts on lower incomes permanent.

With a narrow deal on taxes, Mr. Boehner figured he could live to fight another day on spending

More at that top link. And a CBS News report, "House votes on Boehner's 'Plan B'."

And at the Los Angeles Times, "Boehner cancels House vote as 'Plan B' falls short of GOP support."

Power Grab!

O'Reilly's talking points memo:

Lots more at Memeorandum.

Obama Invokes Newtown Massacre to Attack GOP on Fiscal Cliff Negotiations

From Bryan Preston, at PJ Media, "Disgraceful: Obama Invokes Newtown Massacre to Pressure Republicans to Go Along with His Tax Hikes":

This has to be one of the lowest moments of a very low presidency. Why should the Newtown killings bring any sort of “perspective” to a spending crisis that Barack Obama has created?

More at that top link, and watch Krauthammer rip into the disgusting one, at the Right Scoop, "Krauthammer: Obama invoking the massacre of children to say GOP needs to accept his terms is a SACRILEGE!"

A Nation of Takers Hurtles Toward the Fiscal Abyss

From Bruce Thornton, at FrontPage Magazine:

The on-going negotiations over avoiding the tax hikes and spending cuts we call the “fiscal cliff” are the simply the latest act in a farce of self-serving political denial. For decades now both parties have overseen and nurtured the expansion of the entitlement state all the while ignoring the slow-motion economic implosion whose predictable end can be seen today in a bankrupt Greece currently surviving on EU handouts. But American voters and politicians are so marinated in expectations of endless federal and state largess that modest reductions in spending, such as those proposed earlier this year by Congressman Paul Ryan, are attacked as draconian “cuts” that will “shred” the safety net and throw millions into Dickensian penury.

And make no mistake. The “cliff” might not be reached in January, even without a deal. But it’s still waiting down the road. Baby Boomers, 75 million strong, are retiring at a rate of 200,000 a month, and they can expect to live on average until 84 if they make it to the retirement age of 65. The two big drivers of entitlement spending, Social Security and Medicare, weren’t designed to transfer money to retirees for so long, or pay for artificial knees and hips for Boomers who want to be active in their 70s and 80s. If left unreformed, spending just on Social Security and Medicare will eat up 14% of GDP in 40 years, necessitating even more federal borrowing than the 40 cents currently borrowed for every dollar the feds spend. That’s not a cliff, that’s an economic abyss.

Reining in entitlement spending, then, is the major problem that everybody needs to focus on. And a good place to start is Nicholas Eberstadt’s A Nation of Takers. Eberstadt’s grim documentation of the reckless expansion of what he calls the “vast and colossal empire of entitlement payments that it [the state] protects, manages, and finances,” and his analysis of the ill effects such transfers have had on the American character should be read by everyone serious about the fiscal threats to our way of life.

Redistributing wealth through programs like income maintenance, Medicaid, Medicare, Social Security, and unemployment insurance has become the federal government’s most important function. This development would have astonished the Founders, who codified national security and defense as the national government’s primary role. And this momentous shift has led to an accelerating number of Americans on some sort of dole. In the early 1980s, 30% of Americans received at least one government benefit. By 2011 just over 49% were. The costs of this increase have accelerated as well. In 1960, entitlement spending by government at all levels was $24 billion in today’s dollars. In 2011, the cost was almost $2.2 trillion. As Eberstadt glumly prophesizes, we are heading for “the day in which entitlement spending comes to exceed all other activities of all levels and branches of the U.S. government.”

The costs of such profligacy, however, are more than economic. These wealth transfers have had deleterious effects on traditional American character. Observers of the American character traditionally had remarked on what Eberstadt describes as a “fierce and principled independence” and “proud self-reliance.” This independence extended to financial self-reliance as well. Americans “viewed themselves as accountable for their own situation through their own achievements in an environment bursting with opportunity,” Eberstadt writes, and had “an affinity for personal enterprise and industry” and a “horror of dependency and contempt for anything that smacked of a mendicant mentality.” Accepting help or handouts was considered “an affront to their dignity and independence.” These are the strengths of character and virtue that have created the richest, freest, and most powerful nation in world history. But the federal government’s ever- increasing handouts––which these days are not considered signs of shame, but deserved legal and civil rights––are eroding these virtues.

Yeah, those virtues have been circling the drain for some time. And the Obama-Socialists have been all too happy to apply the plunger to accelerate the flushing action.

IMAGE CREDIT: The People's Cube, "In Progressive America Virtue Has No Value."

Ezra Klein: Yesterday's Revenue Can't Support Tomorrow's America

This is a fascinating piece, from the progressive wonder boy, at the Washington Post.

Klein's statistics all seem fine and dandy. He just comes to the wrong conclusion: that taxes must expand rather than spending contract. It's always that way with lefties. The final solution is to engorge government to such levels that all private activity is snuffed out.

While Klein focuses on the degree of taxation as a percentage of GDP, he doesn't consider that the average tax incidence of the individual is already nearing unsustainable levels. We're nearly taxing individuals in blue states at the level of the most generous Scandinavian welfare states. See: "Top Marginal Tax Rate Will Exceed 50% in California, New York, and Hawaii in 2013." California, following the November election, will boast the nation's highest marginal tax rate of 51.9 percent. It's no surprise that California's been bludgeoned by a massive exodus of businesses from the once-Golden State.

In any case, the Ezra Kleins of the world will never learn, for their ideology is one of no restraints, only the never-reached goal of human equality and the perfect resolution of mankind's material needs (in "tomorrow's America"). It is, in another word, Utopianism.

See Victor Davis Hanson for the reality check, at IBD, "Spending, Not Lack of Revenue, Is Real Problem."

America Will Find Out How a Termed Out Socialist Will Govern

Cartoon via the Looking Spoon.

And Daniel Henninger suggest we won't be waiting long, "Obama's Ruinous Course":

A wise judge once wrote in dissent that the Constitution is not a suicide pact. Let us now extend that wisdom to presidential elections.

Barack Obama says his election victory is a mandate to pursue the policy course he's insisting on in negotiations with Republicans on the fiscal cliff. He wants a tax increase of $1.6 trillion, $50 billion of new and immediate stimulus spending and the end of congressional approval to raise the ceiling on U.S. debt—the debt that a ratings agency downgraded in 2011.

The campaign stump speech in which Mr. Obama demanded that Congress cede him control over the debt ceiling slips my mind. But we all recall his repeated cries for increasing taxes on "the wealthiest" ($200,000 individual/$250,000 joint), so arguably he has a claim to that. Consequences do come with the democratic habit of holding elections.

But if that is true, then Republicans are justified in citing the consequences of the message of the midterm election held a mere two years ago. In 2010, the Republicans regained control of the House of Representatives. Less noted but as important in measuring the nation's desires, that election gave the GOP control of the largest number of state legislatures it had held since 1928. A similar surge occurred for Republican governors.

Last time I looked, the progressive movement still hadn't turned Washington, D.C., into the only political jurisdiction of consequence in the United States. The message of the 2010 election, for Republicans anyway, was unambiguous: Slow down the runaway public-spending train, the spending train that caused the nation's voters to torch and punish Republicans in the 2006 midterms.

On the available evidence, a Republican who forgets those recent elections is headed for retirement. So naturally Barack Obama wants John Boehner and the Republicans in control of the House to forget those elections.

Bear in mind as we spend the holidays on this precipice, that the "fiscal cliff" wasn't born yesterday. It crawled out of its crypt in late 2011, after the Republican leadership and Mr. Obama—the deficit-reduction "super committee"—failed to negotiate essentially the same deal they are failing to get done now.

The inability of this Congress and this president to compromise on anything, now or at any time in the past four years, is itself a problem worthy of some thought.

Here's one thought: The main reason there isn't, and may never be, a solution on the fiscal cliff is that Barack Obama doesn't know how to do a political compromise. Where in his career did Barack Obama ever learn the art of the political deal? Nowhere.

Well, there you go. It's going to a long quadrennial.

More at that top link.

Progressives suck, especially our Dear Progressive Leader Barack Hussein. All hail!

'Count Bubba' Provides High-Powered Intellectual Riposte at the Comments

I have no idea who this "Count Bubba" is, but it sure looks like the blogging around here has hit a nerve:

"Progressives suck"

Awwww... waah, waah, waah, waah, waah, waah, waah, waah, waah, waah, waaaaahhh!

Grow up you fucking loser. Or better yet... post some pictures of tanks and explosions to go along with your "AMERICAN POWERRRRRR 5000!!!1!" 14-year-old mentaility. Something to go along with all the girlie pics. Girls that would never get with a loser man-child like you.

Dork. Go stuff yourself in a closet.

Gotta love it. A "loser-man child."

I guess it's grown up to be all about $1.6 trillion in tax increases, but Big Bubba's not too keen on actually addressing the key issues at the post. So yeah, progressives suck, and how.

And Bubba, it takes a real loser like yourself to know one. I'd be more more than pleased to stuff you in a closet, so step up your game, bro. Make it personal, up close and personal, you butt-licking coward. You're real tough hanging out behind a computer screen, like a stupid unkempt troll. Fuck you, asshole.

Obama's Fiscal Cliff: It's Nothing But a Power Play

From Charles Krauthammer, at the Washington Post":

Let’s understand President Obama’s strategy in the “fiscal cliff” negotiations. It has nothing to do with economics or real fiscal reform. This is entirely about politics. It’s Phase 2 of the 2012 campaign. The election returned him to office. The fiscal cliff negotiations are designed to break the Republican opposition and grant him political supremacy, something he thinks he earned with his landslide 2.8-point victory margin on Election Day.

This is why he sent Treasury Secretary Tim Geithner to the Republicans to convey not a negotiating offer but a demand for unconditional surrender. House Speaker John Boehner had made a peace offering of $800 billion in new revenue. Geithner pocketed Boehner’s $800 billion, doubled it to $1.6 trillion, offered risible cuts that in 2013 would actually be exceeded by new stimulus spending and then demanded that Congress turn over to the president all power over the debt ceiling.

Boehner was stunned. Mitch McConnell laughed out loud. In nobler days, they’d have offered Geithner a pistol and an early-morning appointment at Weehawken. Alas, Boehner gave again, coming back a week later with spending-cut suggestions — as demanded by Geithner — only to have them dismissed with a wave of the hand.

What’s going on here? Having taken Boehner’s sword, and then his shirt, Obama sent Geithner to demand Boehner’s trousers. Perhaps this is what Obama means by a balanced approach.

More at that top link.

Social Security Will Boost Debt by 18 Percent of GDP in Just Twenty Years

At IBD, "Social Security to Up Debt By 18% of GDP In 20 Years":

Since 2007, Social Security has gone from running an $81 billion annual cash surplus to an estimated $58 billion deficit.

Yet despite that $139 billion swing toward red ink, Democrats insist that Social Security hasn't added a penny to the deficit and, therefore, should be off the table in fiscal cliff negotiations.

In reality, Social Security's deteriorating finances explain 15% of the $900 billion-plus increase in the overall budget deficit over the past five years.

Even more striking, Social Security's cash deficit will balloon to $155 billion by 2022, the Congressional Budget Office projects. That rise amounts to more than one-third of the overall deficit increase over the coming decade if current tax and spending policies stay in place.

IOU Accounting

So how can liberals argue that Social Security doesn't cause deficits? The $2.7 trillion Social Security trust fund doesn't hold any resources to help the government afford benefits. Instead, it represents a Treasury promise to cover any cash shortfall until the trust fund's special bonds, really government IOUs, are all spent.

That makes the retirement program's cash shortfall a problem for Treasury, but not Social Security itself, liberals can argue.

Yet either way, the impact on the government's bottom line is the same.

On its current path, Social Security's cash shortfall would raise public debt by 18% of GDP through 2032 — just before the trust fund is exhausted — an IBD analysis based on the 2012 Social Security Trustees report finds.

In 20 years, if Social Security is left unreformed, its cash deficit will hit 1.4% of GDP. On top of that, the extra interest due on the debt incurred by redeeming all of Social Security's trust fund bonds would amount to another 1% of GDP.

Bottom line: Social Security alone would increase the deficit by 2.4% of GDP, making it too big to ignore.

Because health care is by far the biggest driver of long-term budget deficits, there's no reason to think that the non-Social Security part of the budget will have money to spare to cover such a big Social Security deficit.

There also are important reasons to reform Social Security beyond fiscal prudence. When President Clinton put Social Security at the top of his agenda in 1998, he told Congress that reform wasn't just about saving money but also providing more support to lift low lifetime earners and elderly widows out of poverty. Such efforts have been stymied by political stalemate.

How about adults at the halfway point of their careers who face the prospect of retiring after the Social Security trust fund is depleted?

An IBD analysis finds that an average earner (about $43,000 a year) with 20 years left until retirement would have to set aside more than 5% of wages each year to make up for a nearly 25% automatic benefit cut under current law. That assumes Treasury returns and a lifetime annuity.

The government should let these workers know if they need to do more saving before it's too late.

RTWT.

Fiscal Cliff Is No Accident — It's The Left's Agenda

From George Will, at IBD, "Fiscal Cliff is the Left's Policy Dream":

Even Jonathan Swift, who said promises and pie crusts are made to be broken, might have marveled at the limited shelf life of Barack Obama's promise of a "balanced" deficit-reduction plan — substantial spending cuts to accompany revenue increases.

Obama made short shrift of that promise when he demanded $1.6 trillion in immediate tax increases and mostly unspecified domestic cuts.

He also promised to cut $800 billion from 10 years of war spending that will end in two years, which is like "cutting" $800 billion by deciding not to build a ski resort on Mars.

Year after year, the Democratic-controlled Senate, ignoring the law, refuses to pass budgets.

Year after year, Washington makes big government cheap by charging Americans only $6 for every $10 of government services, borrowing the difference. And the biggest purchaser of U.S. government debt is not China but ... the U.S. government, largely through the Federal Reserve.

Yet what supposedly is horrifying is a sequester that would cut less than 3% of federal spending over the next decade? Or horrible Grover Norquist.

Although a surfeit of numbers are being bandied, a pertinent one is missing — the number of legislators who have pledged to Norquist not to raise taxes. The number is: Zero.

All pledges have been to voters. Progressives lament the public's distrust of the political class, while urging many members of it to treat their promises as pie crusts.

Given progressives' "principled" refusal to countenance entitlement reforms, the principal drivers of the fiscal imbalance will not be untouched even by raising, from 65, the age of Medicare eligibility.

RTWT.

Progressives suck.

Dems Ready to Push Americans Over Fiscal Cliff

At Business Week, "Geithner Says No Fiscal Deal Without Higher Tax Rates."

U.S. Treasury Secretary Timothy F. Geithner said the Obama administration “absolutely” is willing to go over the fiscal cliff if Republicans don’t agree to raise tax rates on the highest-income earners.

“There’s no prospect to an agreement that doesn’t involve those rates going up on the top 2 percent of the wealthiest,” Geithner said in an interview on CNBC today.

Dick.

RELATED: At Hot Air, "Tapper to Carney: Back to “hostage” again, eh, champ?", and at Twitchy, "New tone: DCCC launches site branding GOP ‘hostage takers’."

Democrat dicks.

The Blue-State Suicide Pact

From Joel Kotkin, at New Geography:

With their enthusiastic backing of President Obama and the Democratic Party on Election Day, the bluest parts of America may have embraced a program utterly at odds with their economic self-interest. The almost uniform support of blue states’ congressional representatives for the administration’s campaign for tax “fairness” represents a kind of  bizarre economic suicide pact.

Any move to raise taxes on the rich — defined as households making over $250,000 annually — strikes directly at the economies of these states, which depend heavily on the earnings of high-income professionals, entrepreneurs and technical workers. In fact, when you examine which states, and metropolitan areas, have the highest concentrations of such people, it turns out they are overwhelmingly located in the bluest states and regions.

Ironically the new taxes will have relatively little effect on the detested Romney uber-class, who derive most of their income from capital gains,   taxed at a much lower rate. They also have access to all manner of offshore dodges. Nor will it have much impact on Silicon Valley millionaires and billionaires, or the Hollywood moguls and urban land speculators who constitute the Democratic Party’s “good rich,” and enjoy many of the same privileges as their wealthy conservative counterparts.

The people whose wallets will be drained in the new war on “the rich” are high-earning, but hardly plutocratic professionals like engineers, doctors, lawyers, small business owners and the like. Once seen as the bastion of the middle class, and exemplars of upward mobility, these people are emerging as the modern day “kulaks,” the affluent peasants ruthlessly targeted by Stalin in the early 1930s.

William Jacobson's getting a kick out of the kulak analogy: "Go kulak — more of nothing is nothing." (And be sure to follow the links there.)

But back to Kotkin's piece:

What would a big tax increase on the “rich” mean to the poor and working classes in these areas [big metro areas that supported Obama]? To be sure, they may gain via taxpayer-funded transfer payments, but it’s doubtful that higher taxes will make their prospects for escaping poverty much brighter. For the most part, the economies of the key blue regions are very dependent on the earnings of the mass affluent class, and their spending is critical to overall growth. Singling out the affluent may also reduce the discretionary spending that drives employment in the personal services sector, retail and in such key fields as construction.

This prospect is troubling since many of these areas are already among the most unequal in America. In the expensive blue areas, the lower-income middle class population that would benefit from the Administration’s plan of keeping the Bush rates for them is proportionally smaller, although the numbers of the poor, who already pay little or nothing in income taxes, generally greater. Indeed, according to a recent Census analysis, the two places with the highest proportions of poor people are Washington, D.C., and California. By far the highest level of inequality among the country’s 25 most populous counties is in Manhattan.

Finally we have to consider the impact of the new tax rates on the fiscal health of these states. Four of the five states in the poorest shape fiscally, according to a recent survey by 24/7 Wall Street, all have congressional delegations dominated by Democrats — California, New Jersey, Rhode Island and Illinois (the one red state is Arizona). Slower economic growth brought about by higher taxes — compounded by high state taxes — is unlikely to make their situation any better.

So what can we expect to happen if the fiscal cliff appears, or if the President and his party get their taxes on the rich? One can expect a proportionally greater impact on citizens and the budgets of the already expensive, high-tax states, where the new kulak class is concentrated. It may also spark a greater migration of people and companies to less expensive, lower-tax areas...

Progressive economics is not smart.

Seriously. We're talking retardo-maximo territory here (shaking head in pitiful yet resigned astonishment).

Democrats Are Pathologically Unserious

Milton Wolf, at the Washington Times, "GOP should fear voters, not the ‘fiscal cliff’":

How many times does Lucy have to pull away the football before Charlie Brown finally wises up and quits playing her game?

Republicans don’t have to keep falling for the Democrats’ duplicity. The Democrats pretend the so-called “fiscal cliff” debate is about getting our financial house in order, so they propose a tax increase on people earning more than $200,000 a year (i.e., “millionaires and billionaires” in Democrat-speak), which will fund their leviathan government for all of — drumroll — four days.

These are pathologically unserious people. Their goal is not to solve the current fiscal crisis. Their goal is to use the crisis to grow government and further their statist agenda which, incidentally, created the crisis in the first place. Recall Democrat Rahm Emanuel’s unmasked moment of clarity: “You never want a serious crisis to go to waste.”

Now, in hopes of enacting their panacea of tax increases, Democrats offer spending cuts that everyone knows never will happen. What’s worse, the president calls for $255 billion in more spending. Only a Democrat would claim increased spending will reduce the deficit, and only a Republican would fall for it.

The Democrats’ lust for tax increases goes far beyond simple class warfare, as atrocious as that alone is. Democrats are fully aware that the rich already are paying more than their fair share. The wealthy (top 10 percent) may earn 50 percent of the income, but they pay 70 percent of the federal taxes. If that’s not fair, what is? Eighty percent? One hundred percent?

The Democrats’ long game is to push an ever-increasing tax burden onto fewer and fewer taxpayers. This grows a class of Americans who may or may not earn paychecks but certainly become beneficiaries of government largesse while remaining blissfully detached from its enormous cost. (What’s their fair share?) Economists would call this a recipe for disaster. Democrats would call it a voting base. Weak-kneed Republicans are poised to help them build it.

Continue reading.

How Washington Fools the Public About Spending 'Cuts'

At the Wall Street Journal, "The Budget Baseline Con":

If the fiscal cliff talks make Lindsay Lohan look like a productive member of society, perhaps it's because President Obama and John Boehner are playing by the dysfunctional Beltway rules. The rules work if you like bigger government, but Republicans need a new strategy, which starts by exposing the rigged game of "baseline budgeting."

Both the White House and House Republicans are pretending that their goal is "reducing the deficit," which they suggest means making real spending choices. They are talking about a "$4 trillion plan," or something, regardless of how that number is reached.

Here's the reality: Those numbers have no real meaning because they are conjured in the wilderness of mirrors that is the federal budget process. Since 1974, Capitol Hill's "baseline" has automatically increased spending every year according to Congressional Budget Office projections, which means before anyone has submitted a budget or cast a single vote. Tax and spending changes are then measured off that inflated baseline, not in absolute terms...

Continue reading.

And at Gateway Pundit, "Boehner Purges Committees of Conservatives Voting on Principles."