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.

Thanks Democrats: Sluggish Economic Growth Locked-In for 2013

At IBD, "Economy 2013: Mediocre Growth Will Be the New Good":

Next year may be when Americans stop waiting for faster economic growth to make everything better again and finally learn to accept the current modest pace as good enough now and good enough later.

Even if lawmakers reach a deal to avoid the fiscal cliff's full impact, tax rates will still go up for many Americans, and government spending will go down.

Incomes, which have seen little growth during the recovery, are unlikely to start shooting higher. Aging consumers haven't regained their lost net worth and aren't ready to load up on new debt.

"It's a very different economy than what we've seen in the last 20 to 30 years," said Steve Blitz, chief economist at ITG Investment Research.

Gross domestic product has expanded at an average rate of just over 2% a year since the recession ended, and many economists expect more of the same in 2013.

That assumes a fiscal cliff deal. But the chances of a pact before year-end are now looking increasingly bleak, and a prolonged standoff could deal another blow to the fragile economy. The U.S. could fall back into recession, the Congressional Budget Office has said.

Even without a "cliff" shock, the National Association for Business Economics, the Organization for Economic Cooperation and Development and the International Monetary Fund all see 2013 growth at or just above 2%.

ITG's Blitz also thinks the U.S. will expand by about 2%, with some positive momentum in housing but not much improvement in consumer spending.

"What the economy is not going to do is accelerate toward the trend path where we were pre-recession," he said. "We're not going to make up that lost ground."

More at that top link.

While I think both parties suck, it's definitely the Democrats who're by design seeking to hold the economy back by punishing wealthy high-achievers in the name of social justice. Even far-left hack Jamelle Bouie admits it, "Why Democrats insist on upper-income tax hikes."

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."

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."

Taxes Are Already Higher Than You Think

From Edward Prescott and Lee Ohanian, at the Wall Street Journal:

President Obama argues that the election gave him a mandate to raise taxes on high earners, and the White House indicates that he won't compromise on this issue as the so-called fiscal cliff approaches.

But tax rates are already high—much higher than is commonly understood—and increasing them will likely further depress the economy, especially by affecting the number of hours Americans work.

Taking into account all taxes on earnings and consumer spending—including federal, state and local income taxes, Social Security and Medicare payroll taxes, excise taxes, and state and local sales taxes—Edward Prescott has shown (especially in the Quarterly Review of the Federal Reserve Bank of Minneapolis, 2004) that the U.S. average marginal effective tax rate is around 40%. This means that if the average worker earns $100 from additional output, he will be able to consume only an additional $60.

Research by others (including Lee Ohanian, Andrea Raffo and Richard Rogerson in the Journal of Monetary Economics, 2008, and Edward Prescott in the American Economic Review, 2002) indicates that raising tax rates further will significantly reduce U.S. economic activity and by implication will increase tax revenues only a little.

High tax rates—on both labor income and consumption—reduce the incentive to work by making consumption more expensive relative to leisure, for example. The incentive to produce goods for the market is particularly depressed when tax revenue is returned to households either as government transfers or transfers-in-kind—such as public schooling, police and fire protection, food stamps, and health care—that substitute for private consumption.

Continue reading.

Actually, other economic research says tax rates are considerably higher than that, particularly in California. See: "Ezra Klein: Yesterday's Revenue Can't Support Tomorrow's America."

The Face of Britain's Decline

From Dave Blount, at Right Wing News, "Leanna Broderick":

Even as once great Britain’s eyes go dim, life is still good for the freeloaders who are bleeding it to death...

Continue reading.

America Nears the Demographic Tipping Point

Ann Coulter's essay, how shall we say?, spilled the frijoles, at FrontPage Magazine, "'America reaches el tipping pointo'":

I apologize to America’s young people, whose dashed dreams and dim employment prospects I had laughed at, believing these to be a direct result of their voting for Obama.

On closer examination, it turns out that young voters, aged 18-29, overwhelmingly supported Romney. But only the white ones.

According to Pew Research, 54 percent of white voters under 30 voted for Romney and only 41 percent for Obama. That’s the same percentage Reagan got from the entire white population in 1980. Even the Lena Dunham demographic — white women under 30 — slightly favored Romney.

Reagan got just 43 percent of young voters in 1980 — and that was when whites were 88 percent of the electorate. Only 58 percent of today’s under-30 vote is white and it’s shrinking daily.

What the youth vote shows is not that young people are nitwits who deserve lives of misery and joblessness, as I had previously believed, but that America is hitting the tipping point on our immigration policy.

The youth vote is a snapshot of elections to come if nothing is done to reverse the deluge of unskilled immigrants pouring into the country as a result of Ted Kennedy’s 1965 immigration act. Eighty-five percent of legal immigrants since 1968 have come from the Third World. A majority of them are in need of government assistance.

Whites are 76 percent of the electorate over the age of 30 and only 58 percent of the electorate under 30. Obama won the “youth vote” because it is the knife’s edge of a demographic shift, not because he offered the kids free tuition and contraception (which they don’t need because it’s hard to have sex when you’re living with your parents at 27).

In 1980, Hispanics were only 2 percent of the population, and they tended to be educated, skilled workers who got married, raised their children in two-parent families and sent their kids to college before they, too, got married and had kids. (In that order.)

That profile has nothing to do with recent Hispanic immigrants, who — because of phony “family reunification” rules — are the poorest of the world’s poor.

More than half of all babies born to Hispanic women today are illegitimate. As Heather MacDonald has shown, the birthrate of Hispanic women is twice that of the rest of the population, and their unwed birthrate is one and a half times that of blacks.

That’s a lot of government dependents coming down the pike. No amount of “reaching out” to the Hispanic community, effective “messaging” or Reagan’s “optimism” is going to turn Mexico’s underclass into Republicans.

Any election analysis that doesn’t deal with the implacable fact of America’s changing demographics is bound to be wrong.

Perhaps the reason elections maven Michael Barone was so shockingly off in his election prediction this year was that, in the biggest mistake of his career, Barone has been assuring us for years that most of these Third World immigrants pouring into the country would go the way of Italian immigrants and become Republicans. They’re hardworking! They have family values!

Maybe at first, but not after coming here, having illegitimate children and going on welfare.

More at that top link.

Meanwhile, Coulter sent the progs into fevered apoplexy. See: "Ann Coulter Attacks Latinos In Column, As Conservatives Seek To Reach Out To Hispanic Voters."

A Public Service Message for America's Youth

From Doug Ross, "Here's How You're Being Ripped Off."

Raising the Medicare Eligibility Age

You know, it should come as no surprise, but it's still amazing to see how progressives turn every single domestic policy issue into a class war. Take the case of Adele Stan at the Washington Monthy, "Medicare Eligibility Age on the Table?" Life expectancy continues to rise, but according to Stan, longer life is only afforded to the 1 percent, or thereabouts:

Raise the eligibility age and PEOPLE WILL DIE.

No, that’s not an exaggeration, and the failure of certain wonks to take that into consideration speaks to their isolation from everyday people, even the everyday people who provide services to them, such as grocery-store clerks, waitresses, and construction workers in right-to-work states. These are people who cannot wait until they’re 67 for the full complement of Medicare benefits. Many of them are people who will wind up paying the individual mandate penalty in Obamacare, because even if purchased through an exchange, the monthly premium will be more than they can afford.

Not to mention the added health risks of doing physical labor into one’s golden years. Many of these people are lucky to make it to 65. As my AlterNet colleague Lynn Parramore notes, “longevity gains have gone mostly to high earners.”

Oooga boooga aaaahhhh!!! PEOPLE ARE GOING TO DIE!!!!

These people are so stupid I'm about to roll over laughing.

The elderly are the most pampered demographic constituency in history. There's a smorgasbord of social welfare programs for old people, which is why the old-age poverty rate is the lowest among all age groups, at 8.7 percent for those 65 and older in 2011. But if you're progressive, you can find any kind of perceived disparity, even among the most privileged group in the electorate, and make the case for further expanding government (and for continuing the national bankruptcy, and thus harming future generations). The Wall Street Journal had a symposium on this in September, "Should the Eligibility Age for Medicare Be Raised?" And from Maya MacGuineas:

Raising the Medicare eligibility age is partly just a reflection of the new reality. When people first began receiving Medicare benefits in 1966, the average 65-year-old old lived another 15 years; today that figure is 20 years. It's little wonder that Medicare costs have grown 14-fold, in real terms, since 1970.

One option would be to gradually increase the Medicare age to 67 from 65, as we are already doing with Social Security. If such a policy were phased in between 2014 and 2027, we estimate it would save the federal government almost $150 billion through 2022 (net of new spending to help seniors get coverage from other sources) and reduce long-term Medicare spending by 5% (net of costs related to the Affordable Care Act's new health-care exchanges). Indexing the Medicare eligibility age to longevity—in other words, allowing it to increase beyond 67 as life expectancy rises—would save the federal government even more.

Importantly, these savings would come without substantially increasing the rolls of the uninsured or hurting the most vulnerable. According to estimates from the nonpartisan CBO, 95% of those who would otherwise have been covered by Medicare will instead obtain coverage from employers, the ACA's Medicaid expansion or the health-insurance exchanges scheduled to be up and running in 2014. Many seniors making up to 400% of the poverty line would get direct government subsidies for this new coverage; those who earn more would still benefit from rules that will ban insurance companies from discriminating on the basis of pre-existing conditions and age.

And the low-income seniors we worry about most may even end up paying less overall than if they had gone on Medicare at the age of 65. According to a 2011 Kaiser Family Foundation study—which actually opposed raising the age—nearly one-third of those age 65 to 67 (and 60% of those without employer coverage) would see their out-of-pocket costs fall. Even those making up to 300% of the poverty line, about $70,000 per year for a family of four in 2014, would see a small reduction.

In addition to better targeting Medicare dollars, this plan would encourage those who can to work a bit longer. Many individuals time their retirement based on the Medicare age; by working a little longer, they would be able to save more, provide more tax revenue to the government and increase the overall size of the economy.

Not everyone would be able to work longer—and those who couldn't would be protected by Medicaid and the new health-care exchanges. But for an aging society, the best way to maintain vibrant growth is to work longer as we live longer.

See, idiot progressives, that's not so hard is it? And not that bad either.

But by the looks of the progressive angst at Memeorandum, this is practically the end of the world. Horrible, just horrible predations on the elderly!! Aaahhahh!!!

Here's poor old Libby Spencer, for example, and I do mean poor and old:

Our well fed, financially secure, very important pundits seem to be unaware, or perhaps they've simply forgotten, that there are millions of long term unemployed out there. I'm willing to bet a majority of them are between the ages of 50 and 65 years old. If anything we should be lowering the age limit to keep these people out of emergency rooms and prevent expensive medical crises that could be avoided with proper preventative care.

Meanwhile, there are some purportedly liberal contrarians of the very important pundit class who are asking what's the big deal about raising the age limit? They're finding "great" reasons to accept what would be a gross betrayal of the voters trust. They didn't re-elect Obama and give the Dems some gains to be sold out in lame duck negotiations. Which of course spawned the traditional December internet fights. If you like watching these unfold, you can probably catch up on the tick tock here.

Oh god, Libby, STFU you stupid old hag. Is that an autobiographical rant or what? Why don't you get a freakin' job and buy some insurance, you leech? It's not like moochers like you aren't covered. Hello, that's why the socialist Obama administration passed the PPACA --- to make sure everyone has health insurance.

Wake the f-k up people. Last I checked, there's still a thing called personal responsibility. Get some bloody health insurance and if you can't, pony up the few hundred dollars for the mandate tax and check into a Medicaid clinic. No one will be dying because of higher age eligibility requirements. God, what freakin' entitlement whiners. Jazz Shaw has more snarky smackdown of these dependency tools, "Oh no, Dems might not get everything they want":

The nation stands at the precipice of a tragedy. Progressive icon Paul Krugman fears that a horrifying vision of the future may come to pass. In this nightmare scenario – and I’d like you all to take a seat and quaff some sedatives here – Barack Obama may sell the liberal agenda down the river and not get everything on the Unicorn Wish List.

For sure.

It's welfare state Armageddon. We're doomed.

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.

The Immoral Obscenity of the American Welfare State

An intense talking points memo at Bill O'Reilly's.

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."

House GOP Counteroffer Includes Calls for $800 billion in Increased Tax Revenue

That Jake Tapper report at the video isn't too optimistic.

And at the Wall Street Journal, "GOP Makes Counteroffer In Cliff Talks: Proposal Calls for $800 Billion Increase In Revenue, Half What Obama Seeks":

House Republicans on Monday made a fresh deficit-reduction proposal to the White House that calls for $800 billion in increased tax revenue, half of what President Barack Obama has proposed.

The GOP offer was immediately rejected by the White House, but it provides the most detailed statement to date of what Republicans are willing to concede for now. It comes days after the White House put forward its opening bid in the high-stakes deficit talks. With both sides now having made preliminary offers, the parameters for future negotiations between Republicans and the White House are becoming clearer.

Monday's proposal would make $600 billion in cuts in Medicare and other health programs over 10 years, compared with the $350 billion the president proposed. It would also slow the growth of Social Security benefits, a move most Democrats oppose. The tax-revenue figure is one Republicans say could be achieved without increasing income-tax rates, one of their core objectives.

"What we are putting forth is a credible plan that deserves serious consideration by the White House," said House Speaker John Boehner (R., Ohio), in a briefing for reporters.

The proposal was made in a letter sent to the White House and signed by Mr. Boehner and other GOP leaders, notably including House Budget Committee Chairman Paul Ryan (R., Wis.), who has been an opponent of any tax increase both in Congress and as Mitt Romney's vice-presidential running mate. His support will be vital to any final deal.

The offer's outlines are similar to a budget deal that was emerging in private talks between Mr. Obama and Mr. Boehner in mid-2011, when Mr. Boehner agreed to $800 billion in new revenues but Mr. Obama sought more. Those talks collapsed with each side blaming the other for the breakdown.

The immediate Democratic reaction was dismissive. White House communications director Dan Pfeiffer said the plan "includes nothing new and provides no details on which deductions they would eliminate, which loopholes they will close or which Medicare savings they would achieve."

He stuck with the president's insistence that the GOP agree to raising tax rates on upper-income Americans.

Administration officials were surprised by the GOP offer. They played down its potential to advance talks, saying Mr. Obama continues to wait for Republican leaders to soften on higher tax rates.

Still, officials said, congressional leaders and the president could meet by the end of this week. Their last meeting was nearly three weeks ago. Discussions between congressional and White House staff continued over the weekend, officials said.

Continue reading.

And at The Hill, "House GOP makes a $2.2 trillion debt counteroffer to Obama on cliff " (via Memeorandum).

Where the Real Money Is

Taxes are going up. Even if a deal is reached to avoid the fiscal cliff, Democrats will continue to push for more revenue to finance their never-ending spending binge, and the middle class will take the hit.

This editorial's from June 2011 but still as timely as ever. At the Wall Street Journal, "Where the Tax Money Is":

Consider the Internal Revenue Service's income tax statistics for 2008, the latest year for which data are available. The top 1% of taxpayers—those with salaries, dividends and capital gains roughly above about $380,000—paid 38% of taxes. But assume that tax policy confiscated all the taxable income of all the "millionaires and billionaires" Mr. Obama singled out. That yields merely about $938 billion, which is sand on the beach amid the $4 trillion White House budget, a $1.65 trillion deficit, and spending at 25% as a share of the economy, a post-World War II record.

Say we take it up to the top 10%, or everyone with income over $114,000, including joint filers. That's five times Mr. Obama's 2% promise. The IRS data are broken down at $100,000, yet taxing all income above that level throws up only $3.4 trillion. And remember, the top 10% already pay 69% of all total income taxes, while the top 5% pay more than all of the other 95%.

We recognize that 2008 was a bad year for the economy and thus for tax receipts, as payments by the rich fell along with their income. So let's perform the same exercise in 2005, a boom year and among the best ever for federal revenue. (Ahem, 2005 comes after the Bush tax cuts that Mr. Obama holds responsible for all the world's problems.)

In 2005 the top 5% earned over $145,000. If you took all the income of people over $200,000, it would yield about $1.89 trillion, enough revenue to cover the 2012 bill for Medicare, Medicaid and Social Security—but not the same bill in 2016, as the costs of those entitlements are expected to grow rapidly. The rich, in short, aren't nearly rich enough to finance Mr. Obama's entitlement state ambitions—even before his health-care plan kicks in.

So who else is there to tax? Well, in 2008, there was about $5.65 trillion in total taxable income from all individual taxpayers, and most of that came from middle income earners. The nearby chart shows the distribution, and the big hump in the center is where Democrats are inevitably headed for the same reason that Willie Sutton robbed banks.

This is politically risky, however, so Mr. Obama's game has always been to pretend not to increase taxes for middle class voters while looking for sneaky ways to do it.

Well, he's a sneaky f-ker, that's for sure. We've got $268 billion in ObamaCare taxes about to kick in, regardless of what happens with the fiscal cliff.

The left's appetite for ever-increasing revenue is insatiable.

GOP Takes Aim at Entitlements

At the Wall Street Journal, "Senate Minority Leader Calls for Bipartisan Support of Changes to Medicare, Social Security to Get Deal":

Senate Minority Leader Mitch McConnell outlined potential changes to Medicare and Social Security in an interview Friday, providing fresh clarity on the concessions Republicans would like to see from Democrats on cutting the costs of the federal entitlement programs.

Mr. McConnell (R., Ky.) said bipartisan agreement on higher Medicare premiums for the wealthy, an increase in the Medicare eligibility age and slowing cost-of-living increases for Social Security could move both parties closer to a budget deal that averts the so-called fiscal cliff, the combination of spending cuts and tax increases that start in early January unless Washington acts.

In return for the support of Democrats, he said, Republicans would agree to include more tax revenue in a budget deal, though not from higher rates.

"Those are the kinds of things that would get Republicans interested in new revenue," Mr. McConnell said.

Democrats played down Mr. McConnell's comments and framed the debate from their own point of view: If Republicans instead agreed to raise income-tax rates for high earners, a deal to avoid the fiscal cliff could be quickly reached.

House Minority Leader Nancy Pelosi (D., Calif.) said there was "nothing new" in Mr. McConnell's comments. A senior administration official said the White House would make no new offers until Republicans changed their opposition to raising top tax rates.

Democrats said they were still awaiting a formal GOP proposal. "Republicans are still choosing not to put forward an actual offer, and we can't respond to an interview," said Adam Jentleson, spokesman for Senate Majority Leader Harry Reid (D., Nev.).

Mr. McConnell's cost-saving suggestions, however, mark a clearer articulation of the compromises his side was demanding.

Republicans have said they would agree to revenue increases if Democrats went along with proposals intended to put safety-net programs on sounder financial footing. Democrats have countered that Republicans have been vague about what they want.

Mr. McConnell on Friday resurrected suggestions that were on the table during deficit-cut talks between Mr. Obama and House Speaker John Boehner (R., Ohio) in the summer of 2011, negotiations that broke down in finger-pointing on both sides.

Talks to avoid the fiscal cliff, which government economists say could throw the U.S. economy into recession, were at "stalemate," House Speaker John Boehner (R., Ohio) said Friday. Still, he said, talks had not collapsed and added, "I'm willing to move forward in good faith."

Senate Finance Committee Chairman Max Baucus (D., Mont.) said it was premature to expect major compromises. "It's too early," he said. "It's 31 days away."

Tensions between the two sides increased Thursday when Republicans dismissed a White House proposal that included $1.6 trillion in new taxes and $50 billion in infrastructure spending, among other things.

Mr. McConnell reiterated his rejection of that plan in Friday's interview, saying he laughed when Treasury Secretary Timothy Geithner presented it. "He noticed that I laughed," Mr. McConnell said. "That pretty well summed up my view of what he was saying."

The White House defended its offer. "This is the approach that garnered the president a lot of support in the election," said White House spokesman Josh Earnest. He said the president's proposal shouldn't have come as a surprise to Republicans.

On taxes, Mr. McConnell repeated Friday the GOP's position that any new revenue should come from capping deductions, not raising rates. "It is revenue and it's from the group of people they want to get revenue from," he said, arguing for Democratic support.

Well, of course the Obama-Dems have no interest at all in cutting spending, much less compromising with the Republicans.

See the Heritage Foundation, "Chart of the Week: Obama’s Fiscal Cliff Plan Has $4 of Tax Hikes to $1 of Cuts."

And here's the latest at the Washington Post, "‘Fiscal cliff’ talks at a stalemate over tax hikes."

Democrats Fight to the Death for Bigger Government

My headline is only partly in jest. Government just keeps getting bigger and bigger, and congressional Democrats see this month's election as a mandate for even bigger government.

At the New York Times, "Efforts to Curb Social Spending Face Resistance":

WASHINGTON — President Obama’s re-election and Democratic gains in Congress were supposed to make it easier for the party to strike a deal with Republicans to resolve the year-end fiscal crisis by providing new leverage. But they could also make it harder as empowered Democrats, including some elected on liberal platforms, resist significant changes in entitlement programs like Social Security and Medicare.

As Congress returned Monday, the debate over those programs, which many Democrats see as the core of the party’s identity, was shaping up as the Democratic version of the higher-profile struggle among Republicans over taxes.

In failed deficit reduction talks last year, Mr. Obama signaled a willingness to consider substantial changes in the social safety net, including a gradual increase in the eligibility age for Medicare and limits in the growth rate of future Social Security benefits. An urgent question hanging over the new round of deficit talks is which of those changes Mr. Obama and Congressional Democrats would accept today.

While a potential change in calculating Social Security increases was part of the talks with Speaker John A. Boehner last year, the White House press secretary, Jay Carney, made clear on Monday that the administration was not considering changes to the retirement program as part of the deficit talks.

“We should address the drivers of the deficit, and Social Security is not currently a driver of the deficit,” Mr. Carney said.

Republicans insist that changes in the major entitlement programs be on the table in exchange for their willingness to accept increases in tax revenue. But Democrats have given no indication that they are willing to consider policy changes or savings of the magnitude demanded by Republicans. The underlying dispute highlights a reason the politics of the deficit are so thorny: even as many voters say they want Washington to reduce the budget deficit, they oppose many of the benefit cuts and tax increases that could help achieve that goal.

As the negotiations enter a crucial phase, influential outside advocacy groups like AARP and the National Committee to Preserve Social Security and Medicare are weighing in, alerting their members to possible changes in the popular programs.

In the current negotiations with Congress over deficits and the debt, Mr. Obama said he would take a serious look at how to “reform our entitlements” because “health care costs continue to be the biggest driver of our deficits.” Unless Mr. Obama and Congress reach some agreement, tax increases and budget reductions will take effect automatically on Jan. 1.

Mr. Obama’s room for maneuvering is limited by several political factors. In the presidential campaign, for example, he attacked cost-cutting proposals by his Republican opponents and won support from millions of voters by promising to defend Medicare.

Moreover, since the Supreme Court upheld the new health care law in June, Mr. Obama has become skittish about cutbacks in Medicaid, the federal-state program for low-income people. The court said the expansion of Medicaid was an option for states but not a requirement. Cutting federal Medicaid payments to states could reduce the federal budget deficit, but could also cripple Mr. Obama’s efforts to persuade governors to expand the program, the foundation of his health care overhaul.

Even if Mr. Obama and Republican leaders in Congress could agree on savings in Medicare and Medicaid, the president would face resistance from some liberal members of his party who oppose cuts in the two giant health care entitlement programs. Medicare and Medicaid insure one-third of all Americans, account for more than one-fifth of the federal budget and are expected to grow much faster than the economy in the coming decade.

I would hate to be a college-aged individual these days. As I've been reporting with the ObamaCare monstrosity, as government continues to expand the Democrat collectivist welfare state is literally raping today's generation of young people.

When Work is Punished

From Tyler Durden, "The Tragedy of America's Welfare State."

Exactly two years ago, some of the more politically biased progressive media outlets (who are quite adept at creating and taking down their own strawmen arguments, if not quite as adept at using an abacus, let alone a calculator) took offense at our article "In Entitlement America, The Head Of A Household Of Four Making Minimum Wage Has More Disposable Income Than A Family Making $60,000 A Year." In it we merely explained what has become the painful reality in America: for increasingly more it is now more lucrative - in the form of actual disposable income - to sit, do nothing, and collect various welfare entitlements, than to work. This is graphically, and very painfully confirmed, in the below chart from Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania (a state best known for its broke capital Harrisburg). As quantitied, and explained by Alexander, "the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045."

And Check Instapundit as well from some video, "It’s as if there’s some kind of Dependency Agenda at work here."

Hope and Exchange

At the Wall Street Journal, "The feds blame the states for refusing to become ObamaCare subsidiaries":

ObamaCare is due to land in a mere 10 months—about 300 days—and the Administration is not even close to ready, so naturally the political and media classes are attacking the Governors and state legislators who decline to help out. Mostly Republicans, they’re facing a torrent of abuse in Washington and pressure from health lobbies at home.

But the real story is that Democrats are reaping the GOP buy-in they earned. Liberals wanted government to re-engineer the entire health-care system and rammed the Affordable Care Act through on a party-line vote, not stopping to wonder whether it would work. Now that implementation is proving to be harder than advertised, they’re blaming the states for not making their jobs easier.

The current rumpus is over ObamaCare’s “exchanges,” the bureaucracies that will regulate the design and sale of insurance and where 30 million people (and likely far more) will sign up for subsidized coverage. States were supposed to tell the Health and Human Services Department if they were going to set up and run an exchange by October, but HHS delayed the deadline to November, and then again at the 11th hour to December.

Sixteen states have already said they won’t participate. Another 11 are undecided, while only 17 have committed to doing the work on their own. Six have opted for a “hybrid” federal-state model. That means HHS will probably be responsible for fallback federal exchanges in full or in part in as many as 25 or 30 states.

Continue reading.

It sucks. It's bad law. It'll be interesting to see how the massive resistance of the states plays out.

More at National Review, "States Should Absolutely Refuse to Set Up Obamacare Exchanges."