The Thinker: Rich Galen

  
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Mullings by Rich Galen
An American Cyber-Column By Rich Galen
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Plan B

Rich Galen

Wednesday December 19, 2012

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  • We're now within 10 legislative days 'til the Fiscal Cliff - assuming the Members won't be decking the Halls of Congress with boughs of holly on Christmas Eve and Day.

  • There is movement in the positions coming from either end of Pennsylvania Avenue. The President campaigned successfully on the idea of raising taxes on the wealthy - with the wealthy being defined as any family earning $250,000 or more annually.

  • This is an untenable position with many union workers as with most government employees - two huge portions of President Obama's coalition. In the modern era of two working adults in a typical household, that $250,000 threshold isn't as lofty in major cities like Our Nation's Capital as it might be in places like Marietta, Ohio 45750.

  • The President carried major cities. I don't think he carried Washington County, Ohio.

  • So, the White House is, according to the Associated Press, "now offering a new threshold of $400,000 and lowering his 10-year tax revenue goals from the $1.6 trillion he had argued for a few weeks ago," to between $1.2 and $1.3 trillion.

  • House Speaker John Boehner's position had been that there should be no tax rate increases on anyone, but has now determined that he could accept a $1 million per year income as the floor for higher taxes which the AP wrote "would raise about $1 trillion in taxes over 10 years."

  • There's no question that a million a year qualifies anyone as being "wealthy" with the possible exception of a minor Prince living in Riyadh, but it is not likely that will be the final number.

  • The betting here at Mullings Central is that the number at which higher tax rates will kick in will be closer to the Obama level than the Boehner level - probably between $450,000 and $500,000 per year for taxpayers filing jointly - about halfway between zero and a million dollars.

  • The NY Times also noted that the President's proposal would "cut $930 billion in spending" over the 10 years at issue, which the Speaker called "unbalanced" meaning the proposal raised taxes more than it cut spending.

  • Democrats immediately dismissed the Speaker's position (as did the hardliners on the right in Boehner's Conference).

  • Nancy Pelosi, the House Minority Leader, called it "dead on arrival" which apparently raised no eyebrows for insensitivity among Capitol Hill Reporters given the events of Friday morning.

  • The Speaker's office has indicated that a bill to retain the Bush-era tax cuts on everyone making less than a million a year might come to the House floor on Thursday.

  • However, it does not deal with the spending side leaving in place the "sequester" cuts that would, according to people to appear to know about these things, have a significant detrimental effect on the Pentagon.

  • The NY Times' Jonathan Weisman quoted Ohio Republican Senator (and oft-mentioned running-mate to Mitt Romney) Rob Portman as saying the "Pentagon cuts would damage not only military readiness but also the fragile economy."

  • Part of the game of legislative chicken that is being played is shown by how the two sides are portraying this.

  • The House may vote on a bill that includes the Senate language raising taxes on the original $250,000 income earners which will fail.

  • That will show that the President's plan cannot pass the House

  • The House will then vote on the $1 million dollar plan and, presumably, it will pass.

  • But, Senate Majority Leader said yesterday afternoon that the Senate will not consider a bill that starts the tax increases at $1 million in income, so the Speaker's plan can't pass the Senate.

  • If it can't pass the Senate, White House Press Secretary Jay Carney said, the House, "will not protect middle-class families" because everyone's taxes will go up.

  • I have been wrong about just about every political prediction I have made in recent history. I thought the "Super Committee" would succeed. It did not which is what has led us to this situation - it was the self-inflicted punishment the Congress threatened in case of failure.

  • I am going to go out on a limb again - and will probably be wrong again.

  • Plan B might not pass, but Plan C or D, or Q will find its way to the floors of the two Chambers before December 31 and will pass.

  • Then we'll start the process of a long-term solution with fresh faces in the House and Senate on January 3 and a newly-inaugurated President on January 20.

  • I hope I'm correct for once.

  • On the Secret Decoder Ring today: Links to the AP, the LA Times and the NY Times stories.

  • Also a very interesting Mullfoto of the Washington Monument from last week.

    -- END --

    Copyright © 2012 Barrington Worldwide, LLC



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