Debt Ceiling ‘Compromise’ Almost Concluded; Only the Middle Class Sacrifices

The White House and the Tea Party-led House are on the verge of announcing a compromise to raise the debt ceiling, after the monotony of grandstanding by politicians on both sides of the aisle.

 

Later on today an announcement is expected in this last minute 11th hour deal. The deal is close to the same one which was rejected by President Obama previously; the deal was negotiated by House Speaker John Boehner and Senate Majority Leader Harry Reid.

The Atlantic reports:

Among the newest wrinkles, according to informed sources, is an agreement to extend the current $14.3 trillion debt ceiling very briefly to give the legislative process time to work without resorting to emergency, hurry-up measures.

 

Other component parts of the tentative deal include:

  • $2.8 trillion in deficit reduction with $1 trillion locked in through discretionary spending caps over 10 years and the remainder determined by a so-called “Super Committee.”
  • The Super Committee must report precise deficit-reduction proposals by Thanksgiving.
  • The Super Committee would have to propose $1.8 trillion in spending cuts to achieve that amount of deficit reduction over 10 years.
  • If the Super Committee fails, Congress must send a balanced-budget amendment to the states for ratification. If that doesn’t happen, across-the-board spending cuts would go into effect and could touch Medicare and defense spending.
  • No net new tax revenue would be part of the special committee’s deliberations.

The most controversial issue between Tea Partiers/Republicans and Democrats has been raising taxes on the wealthy, which is now called revenue, for political posturing purposes — Tea Partiers claim it’s off the table since they oppose any taxation. Dems have been vocal stating that if there’s an apocalyptic economy and a call for shared sacrifice, then we should all sacrifice.

 

So, it’s almost settled and only the middle class will sacrifice.

 

Many thanks to The Atlantic

  • Diane

    So they’re going to protect the Bush Tax Cuts when they’re due to expire — again — in a couple years? Or worse, pull to make them permanent?
    Unacceptable. My unemployed brother and octogenarian mother pay more taxes than Bank of America, Exxon and GE, and they’re going to be getting a pay cut in the form of their unemployment and Social Security checks. Un. Accept. Able.

    How about cutting the tax break for couples with children? Have a kid, get a tax break. Stop it after the third child unless they adopt.

    How about ending Bush’s guest worker program? We’re shipping them over here, sticking them ten to a residential unit, paying them a dollar an hour, and sending them back to their country at will. It’s legalized slavery, and unconstitutional!

    Why do we have military bases in England and Germany? They’re friendly countries, we don’t need a presence there. Close the bases in friendly countries and bring the troops home.

    Stop corn subsidies. They don’t need it. Go ahead, Big Ag Lobby, scream and yell. What’re you going to do? Shut down your farms? Good, that’ll open the land up for wildlife and guerrilla farming. Gaia Bombs for the win!

    • http://FreakOutNation.com Anomaly100

      @Diane, Military bases are all over the world, some of them are not even occupied. The amount of money we spend on the military is almost equivalent to the rest of the world combined. I think we spend 43% of the entire world’s military expenditure. Certainly oversight is necessary.

      But, heaven forbid we take care of our own in America. Instead, we police the world while asking the middle class to sacrifice in order to pay for it.

      • Brandon

        @Anomaly100, Vote for Ron Paul!! He’s the only person in Washington with a clue how to begin to get us out of this mess.

        • DjMarquee

          @Brandon, Amen to that brother!!!

        • http://FreakOutNation.com Anomaly100

          @Brandon, I wish Bernie Sanders would run for office. He would get my vote.

        • CTW

          @Brandon, The only problem with Paul is he wants a Gold standard. How many Middle Class and poor have Gold Investments? Not many. But the rich do.

          • http://FreakOutNation.com Anomaly100

            @CTW, The ‘Gold Standard economy’ scares the hell out of me.

        • http://wehaveacoolsite.com/ Photography Nerd

          @Brandon,
          I wish that that will happen. But it’s just so unrealistic :(

    • hubufuwabuh

      @Diane, I don’t think you know what slavery is.

    • anothanony

      @Diane, are you saying that it is unfair that your unemployed brother has to pay taxes on the money he gets from the government for doing nothing?

      And after you understand how much more is to gain for this country by the people having children you will better understand why those tax breaks are in place.

      • Charles

        @anothanony, How exactly is collecting unemployment receiving ” …money .. from the government for doing nothing ..”? We know he must have BEEN working since he’s eligible to receive UIB. (Note: The “I” stands for “Insurance”) And, even though the employee doesn’t directly pay the premium, as we all know companies pay no bills or taxes; their customer’s do in the form of higher prices and their employees do in the form of lower wages.

        Why are you faulting this person for having to utilize a fallback plan that he is forced to contribute to? I have been steadily employed for 19 years now and have been lucky enough to not have to use UIB, but if the time comes that I do, I have more than paid my fair share into it.

        I assume you must just one awesome individual who has never needed any help from anyone. Hopefully, some day you’ll contract a disease that your insurance company denies coverage for and have a chance to learn why it’s necessary for those of us with means to provide a little assistance for those without.

        And, BTW, no, I do not believe that insurance benefits are “profit”and so they should not be taxed.

  • Shiva

    If that is the case I will not be voting in 2012

    Screw a super committee

    • http://FreakOutNation.com Anomaly100

      @Shiva, Not vote? I shall smite thee on twitter if you don’t!

  • http://www.stoxservices.com Robin

    Vote, YES!, VOTE.

    There is a old saying, “No mater who you vote for, the governement always gets in”.

    Time to start a 4th party and sweep house.

    :)
    Robin

  • radii

    Obama – Capitulator In Chief

    too bad he doesn’t mind … but we should mind that this corporate toady is our president

    all Obama has to do is draw a hard line if he really wanted to:

    “I demand the Congress send me a ‘clean’ debt ceiling bill that only raises the debt limit for a period of 18 months and does nothing else and I’ll sign it – anything else and I’ll veto it and invoke the 14th Amendment to let the world know our debts are secure and will be paid to calm the markets.”

    • Jim

      @radii, are you freaking kidding me?!!

      The white supremacists have a gun to this black dudes head, are pouring gasoline over his family that are trussed up in the corner. The head wizard keeps pricking him with a knife just to see iffin his blood is red ‘like da rest of us’ … while his psychotic side kick likes to be called ‘the tea man’ covered in the gas he’s been spraying about is struggling to work out how a lighter works so he can burn down everything! ….. click .. click … click ..

      and then his kid pipes up in that reedy little annoying child like voice of the blithely ignorant… ‘ gee dad! … you’re a Caterpillar Capitulator!! naaaa!’

      …. there is no justice only the lies of the GOP and their willing blind followers….

      • radii

        @Jim, decaf, buddy … bring it down … bring it down

  • yadda

    @anothanony,
    You do realize that unemployment money is not free money from the government right? Almost all of it comes from money the unemployed person and previous employer which was money that was all ready taxed, twice. So when you receive unemployment really it has all ready been taxed 3 times and that’s not even counting SS, medicare, etc.

  • DLink

    @radii
    The people back this President more than congress at this point. Time to step up to the plate and take a swing.

  • Walter O’Reilly

    Seems a bit of a stretch to keep calling ourselves the”United” States anymore, doesn’t it? It’s more like ‘Rich Man versus Poor Man, round 12′. Say, don’t us poor folks outnumber them rich fellers? Why don’t all the non-rich people in the country vote for only Democrats. And the Rich only get to vote for Republicans, only. Ignore all TV and internet news reports that concern politics until the next election is over and we’ll see which side wins, okay?
    It IS really just that simple. If the Tea Party only cares about buttering the bread of the wealthy, and their candidates are all for the GOP, why not assure they all lose on their next re-election or elections by voting for their opposition? The good people (aka “good guys”) mostly reside on the Democratic side of the fence. When even our shared environment isn’t safe from these radical, political ‘terrorists’, why should we allow them to hasten our world’s ecological destruction. What’s next? Deregulation of the big drug companies and the elimination of the FDA??? Don’t put it past them in the climate of “anything that’s good for big business, is good for America”.

    • Charles

      @Walter O’Reilly, The problem is that the Republicans have convinced a bunch of under-educated, lower-middle-class to poor people that they are actually the wealthy people that Obama’s trying to tax. Considering that most of the Teabaggers come from demographics that tend to be racist it wasn’t too difficult.

      How hard is it to follow the money? Look at the amount of money that just the Fortune 200 companies spent on lobbying last year and ask yourself 2 questions: 1) Are these companies lobbying for things that would be in my best interests? 2) How much money WAS spent last year lobbying for my interests? The American people are severely underrepresented in DC. I’m not saying the Democrats are any better, but at least they throw us a bone every now and then.

  • aaron fleszar

    These talks are nonsense. Pure political theater and nothing else. Here’s the real story.

    A Coup d’etat began during the 2008 presidential election.

    Obama is not the president, he’s the acting president. He disappeared for 2 weeks after his election win only to reappear looking exhausted sitting next to John McCain, with a bad poker face, for a press photo shoot. Obama is now a Pentagon puppet.

    Here’s what Obama, Osama, Biden, Bin Laden, the FBI’s Most Wanted Terrorists, and Sarah Palin had to do with the last presidential election and the military’s overthrow of our government. Thousands of people are learning about this and sharing it everyday. Help us restore our democracy now.

    http://ElectNoMoreSpys.blogspot.com

    • http://www.facebook.com/sammysings Sammy

      @aaron fleszar, Bend over and suck yourself and quit posting your nonsensical crap here.

  • http://www.gorgeousworld.net/ Eric

    wow, they can solve a fake made up problem 6 months after they should have and that they solved many times under Bush II.

    Now maybe they can work on something real like health care, jobs, two wars or anything else that effects real people and not just those with yatchs and private planes.

  • http://usa-wethepeople.com/ economics9698

    I get tired of repeating this, but I am a economics professor so this will not be the first time and it will not be the last.

    When Bush cut taxes in 2003 from 39.6% to 35% tax revenues increased 40.1%. Was this all because of the Bush tax cut and the Laffer Curve affect? Of course not. But tax cuts for the “wealthy” means more tax collected not less above 28.6%.

    The Federal government has NEVER collected taxes above 20% of GDP with tax rates ranging from 7% to 95%. You can raise the tax rate to 70% and you will not collect more taxes. People avoid tax rates above 28.6%. See above.

    We are currently collecting 15.8% of the GDP in taxes. This has nothing to do with the tax rates. It has everything to do with high debt and a dysfunctional economy. Raising taxes will not collect more taxes.

    Bill Clinton had the lowest poverty rate, 11.5%, and highest labor force participation rate, 67.3%, because he reduced the size of the federal government from 22.1% of the GDP to 18.2% of the GDP.

    There is so much more. Basically if you believe in the federal government to provide for you and save you, I guarantee you, 100%, you will be very disappointed. IT will not happen. If you had 100% Democrats and every program you wanted you would still pay dearly for your socialist folly with inflation. And you will. Guaranteed, 100%

    • http://FreakOutNation.com Anomaly100

      @economics9698, History proves otherwise ‘professor’.

    • http://helpfixamericafirst.blogspot.com WASP

      @economics9698, We do have a dysnfuctional economy. We broke our trade paradigm and abandoned the U.S. domestic labor market to increase wealthy investor shareholder wealth while engaging in massive deficit spending. That was the recipe for the failure we now experience and we’ll never have a jobful sustainable recovery until we solve both problems.

      http://helpfixamericafirst.blogspot.com

    • Charles

      @economics9698, i ain’t smart as you is but i know how to read a earnings history and i know that companies are turning record profits during this “recession” and they still ain’t hiring nobody.

      I know that companies are hiding their profits and not paying their fair share of taxes. I know what a “Double Irish” and a “Dutch Sandwich” are and I’d like to give a Cleveland Steamroller to each and every CEO of every company that has robbed America using these legal scams.

      I might be dumber than you, but even I know that you don’t have to be smart to know what’s right.

    • CTW

      @economics9698, I worked for a CPA. He was real good with the pencil. One day I told him, I would make more money stopping the job and going home for a week. The CPA looked at me Dumbfounded and said how do you figure. I said since he had chiseled me down from original estimate I was in the negative and not making a nickel. He still didnt get it. There is a real world out there that a lot of people have never lived in.

  • http://www.thehappyguy.com David Leonhardt

    I am not sure I follow the path from the various points in the agreement through to the conclusion that “only the middle class sacrifices”.

    I understand how the tax on the wealthy – oops, I mean “revenue” would make the rich sacrifice.

    I understand how cuts to be defined later might make the middle class sacrifice and/or the poor sacrifice and even maybe the rich as well.

    I also understand how raising the debt ceiling means everybody will sacrifice (long term it means either higher taxes, lower services or both).

    But I don’t see anything that specifically targets the middle class or leaves them holding the proverbial bag.

  • Michael Xavier

    I’m probably going to manage to piss /everyone/ off with this, but here goes.

    I’m a left wing commie pinko when it comes to being pro helping-people programs, but more right wing when it comes to economics.

    Here’s where the left might scream:

    I have to admit that it’s hard to argue that at the end of the day, all figure compressing and focus and misdirection and manipulation aside /ultimately/ Reagan’s economics program lead to a 15 trillion dollar increase in American wealth.

    and here’s where the right might scream:

    And a 2 trillion increase in American debt.

    The upshot however is that factoring that in, you wind up with a gain of 13 trillion dollars in the American economy under Reagan.

    For that reason, I’m open to the argument that he must have done something right economically.

    That just seems fiscally logical to me.

    And here’s where the left AND right might scream:

    One doesn’t relate to the other.

    The argument that you can inversely relate growing the economy and taxes to say, “see, we don’t need your left wing commie pinko social programs” is an illogical statement.

    Because again, Reagan didn’t cut 15 trillion dollars of “commie pinko left wing socialist pigdog” programs to grow the economy by 15 trillion dollars, he didn’t cut anywhere near 15 trillion dollars to social programs, so I think if you want to learn how to grow the economy, you look to Reagan.

    And if you want to promote social programs, you look for example to Clinton, who also presided over an economic boom AND still managed to spend on social programs.

    The point is they’re /separate/ issues that need to be compartmentalized and tweaked by pros in their respective fields.

    As long as the left and right keep arguing that one MUST come at the expense of the other, we’re fighting a dunderheaded illogical unnecessary apples-and-ibms battle.

    How about instead of this endless political ideological fighting we separate the issues and try to figure out how to improve the economy AND how to improve our commie pigdog social programs?

    Because, history shows that they are not only not inversely related, they’re barely related at all.

  • logan42

    Prof,

    I was intrigued until you cast the line “If you want the govt. to provide and save you..” which is just a tired right wing line to attack even a moderate point of view these days.
    That immediately moved you from economics professor to right wing troll. Nice touch throwing the “socialism” word around.

  • j gordon

    At this point what i know for sure, is that i will never vote for a democrat again . Obama screwed the middle class back in december and now he is doing it again with the , no revenue issue . He is weak , his party is weak they should be voted out. ASAP.

    • http://FreakOutNation.com Anomaly100

      @j gordon, So, you’ll just allow the country to continue to be ruled by the Tea Party then?

  • Michael Xavier

    I’m not an expert, but my point is, there is no evidence that you need to cut spending to increase economic growth.

    One has little to do with the other.

    Reagan’s economics actually proves that, because as previously stated, he didn’t cut 15 trillion dollars in social programs to generate 15 trillion dollars in growth, so I don’t know why some in the right wing insist on making that false correlation.

    Again, I’m not an expert, but I think it’s more logical to approach it this way:

    What you need to do to increase economic growth is focus on increasing economic growth.

    When you focus on cutting spending, our eye is off the ball and on the entirely wrong court.

    imo.

  • http://helpfixamericafirst.blogspot.com WASP

    The GOP wants to ensure that the wealthiest Americans, who own the multinationals that are hollowing out the U.S. labor market and innovation creating high (and often unreported) long-term unemployment and poverty for average American workers, be given a tax reduction (in an era of historically low tax rates for them) so that they can further invest in the large public multinationals to ACCELERATE this hollowing out of America.

    They have deceived the average Republican into believing Keynesian trickle-down theory will save America. It won’t. Trickle-down increasingly flows from the wealthy into the multinationals, via investment, out to foreign countries and foreign workers to produce foreign made consumer goods (which are increasing in price due to increasing demand for them overseas as a result of transferring American jobs and wealth to foreigners) to be sold in America (in an ever softening American consumer market due to growing joblessness and poverty in America) enriching the wealthy elitists bypassing American workers. Look at our rising Gini Index.

    Exacerbating the situation is that the foreign countries benefiting the most from U.S. unilateral trade dismantlement have kept their trade barriers as strong as ever (e.g. China, India, etc…) and have no forseeable plans to dismantle them. Their markets are primiarily served by their own businesses today and they have no need of U.S. products enmasse. The USA sells more product to the tiny nation of Belgium than ALL of China! Our trade deficit tells the story.

    The GOP completely ignores decertifying public employee unions, decreasing military spending (which is headed to one trillion a year currently), etc… focusing all their attention on denying people medical care and trying to place senior’s medicare and ss funds at the mercy of nefarious financial profiteers who periodically lose all their money in the markets as they did recently with senior investments in the financial meltdown of the unnecessary Great Recession (which they were heavily responsible for creating along with the Democrats) so that we can have tens of millions of future elderly people starving on the pavement with nothing to look forward to one day. That’s not a “solution” that’s insanity.

    This IS THE GOP PLAN FOR THE FUTURE! Don’t let it happen!

    http://helpfixamericafirst.blogspot.com

  • Michael Xavier

    My point is that even if you look to Reagan, there is no evidence that cutting spending leads to substantially growing the economy.

    Because as previously stated, he didn’t cut 15 trillion dollars in spending to generate 15 trillion dollars in economic growth.

    He focused on increasing Federal revenue.

    (cut taxes but increased tax revenue overall)
    generated an entrepreneurial spirit, et cetera,

    If we focus on cutting spending, or any other ideologically inspired or other misdirection, our eye is on the wrong ball, and the entirely wrong court.

    I’m not an expert but, it seems to me that to increase economic growth, what we need to do is:

    Focus on Increasing Economic Growth.

    With that, we will have more money to spend on social programs and everyone might be happy.

    imo.

  • http://helpfixamericafirst.blogspot.com Wasp

    There will be no jobful sustainable economic recovery in the U.S. until trade is fixed.

    http://www.helpfixamericafirst.blogspot.com

  • chilo

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