Friday, December 28, 2012

Why they aren't fixing the "Fiscal Cliff"

Because they don't want to.


  1. The Democrats think that if the tax cuts expire, then when Obama re-instates new ones, then everyone will believe that the Bush Tax Cuts were a failure and the new, Obama Tax Cuts, are good.  This of course ignores the budget deficit and sequestration issues.  Not to mention worrying everyone that just wants things to go back to 'normal'.
  2. The Republicans would rather vote to create new tax cuts (even if they are "Obama Tax Cuts"), than vote to 'raise taxes'.  Note, they are not afraid of losing to Democrats, they are afraid of losing primary elections to "T partiers".   In effect, they think their own people are so stupid, they can't tell that voting to extend tax cuts only for a small group is exactly the same as letting them expire and voting for new tax cuts for only that small group.
In my opinion, the GOP is mostly to blame.  Mainly because they have tried a really stupid, ease to see-through trick.

There is a basic negotiating tactic called High Ball.  You start with something ridiculous that you know they won't get.  Everyone does this.  It's normal.  But there is a higher stakes version.

It is something called Padding.  You start not at something you really want but instead something that you have zero interest in, that you call essential - something called 'padding'.  You try to convince your opponent that giving up your padding is a huge concession. Then you don't have to give up much more.
 It's the difference between saying "I will only vote to raise the debt ceiling if you cut entitlements on a one for one basis with tax hikes on the rich."  and saying "I don't want to raise the debt ceiling at all, just to get me to do that, you have to say no new taxes.  Then we can negotiate where to cut spending."

A variant of this is called 'false concession'.  That's what they did this time.  They put forth a bunch of crap and said "What do I get for this?"

Obama did not fall for that trap.  He responded with "Nothing.  You get nothing for that.  It's the base value."

I know, you guys are going to say "But they were offering something."  No, they weren't.  they offered nothing, and for nothing, you get nothing.

You see, the base start of the negotiation is not your ideal platform, because anyone can pad the ideal platform.

The base start of every budget negotiation is the last agreement you have.  The current agreement is as follows:

1)  All of Bush's tax cuts go away.
2) Debt ceiling goes up, preventing us from paying back the loans we already have.
3)  Sequestration of the budget
4)  AMT tax rates start applying at the low, un-indexed for inflation rate.

 Oh, and one more thing - Obama was re-elected and the GOP lost Congressmen which puts the DNC. The GOP had the chance to negotiate before hand.

The GOP CHOOSE to not try for a negotiation before the election.  They stupidly thought they would win the election and have a better shot.

They lost that bet.  That means they start out at a disadvantage.  That's how that works.   Obama doesn't have to get re-elected.  he doesn't have to worry about pissing off the voters.  He doesn't have to worry about anything.

It's the GOP that has to worry - and they damn well better.   

What's going to happen with the budget negotiations?  I think we will go off the fiscal cliff and then they will have a new agreement:

1)  Debt Ceiling will go up.
2)  AMT indexing will be at least temporarily extended (if not permanently - or perhaps the AMT will go away with some other simpler method put in).
3)  Sequestration will not happen (or it it does, it will be quickly ended)
4)  Taxes will go up for people making over somewhere between 250 and 500 k.  They won't go up for people making less.  Pay roll tax will probably be modified as well.

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