once again just why they are not the answer to any sort of 'fiscal cliff', but are in fact, one of the contributors to -
Speaker John Boehner (R-Ohio) told House Republicans on Tuesday he will move to a “Plan B” on the fiscal cliff by having the House vote on legislation to extend tax rates on annual income under $1 million.There's the tax increases. Because, we have to and all that jazz... What about the cuts in spending?
The bill would allow tax rates on annual income above $1 million to rise from 35 percent to 39.6 percent, but make permanent lower rates on income below that threshold, Boehner's office said.
Boehner’s proposal would increase both the capital gains and the top dividends tax rate to 20 percent from 15, which matches Obama’s latest offer.Ok, so we have more taxes. Cuts?
“The Speaker laid out the plan in a very compelling way, and there’s just a lot of hard thinking going on,” conservative Rep. Trent Franks (R-Ariz.) said. “I’m going to let the Speaker have as much latitude as he needs to try to negotiate with this president.”Oh, you think hard...nice. Cuts?
Senior Republicans rallied reluctantly around Boehner.Kumbaya?! Come on, where's the cuts?!
“We're all going to support the Speaker because we're not fiscal cliff divers,” said Rep. Pete Sessions (R-Texas), the incoming chairman of the House Rules Committee and former campaign chief for the party.
Boehner said his talks with Obama could still yield a balanced plan that includes $1 trillion in spending cuts to match $1 trillion in revenue.That's not cuts. That's maybe cuts. If we feel like it this time. Which, we don't.
Even more important, this is a pittance of the increase which has ravaged this country over the last 4 years, let alone the last 30. (Hint, hint...This is why Republicans are losing elections)
But what is The Real Effect of this? Denninger sheds some light -
First, note that the so-called "$2.4 trillion in deficit reduction over a decade" is about 20% of the deficit at today's run rates, if it happens. And it won't, because it relies on (1) people not changing their behavior and (2) unrealistic economic growth predictions that won't occur because the nation's debt load as a whole remains too high and thus is and will continue to block economic output.So we're playing 'kick the can' again? Lovely. Guess what the market is going to do to you? (Hint, hint - It starts with cr and ends with ash.)
There are also reports that Boehner is willing to agree to a two year debt ceiling increase, an amount that would have to be more than $2.5 trillion. This, standing alone, should be worth a credit downgrade -- and probably will be.
Worse, let's assume that the $15 trillion in existing debt winds up with a 2% interest rate, blended. This is ridiculously low and presumes that economic growth is tepid at best; if it picks up more then the rate will go up. In that case the interest alone will be $300 billion annually, or more than the alleged "savings."