This page has been archived and commenting is disabled.
Cliff Deal - Winners and Losers
Note: I wrote the following after watching the Prez on TV. His smiling demeanor and tough guy talk led me to believe that a "patch" on the cliff might happen. Four hours later, and that is not the case. The House will not vote on anything today.
There is a chance that the House could vote tomorrow. This would bring results along the lines I describe below. But if the House does not vote, then it means there will be a long fight. A fight that could go on until the debt limit shuts the government.
These people are desperately trying to fail.
My read of the President's speech is that there is a deal that will avoid the cliff. So go enjoy New Year’s Eve. Give it another 30 days, and we’ll be right back into the soup. My scorecard on the deal.
-If you’re unemployed, you’re a winner. You get another extension of benefits.
-If you’re employed, you’re a loser. Fully 155m workers are going to pay 2% more on income starting tomorrow. The increase in FICA taxes will come to a lumpy $120B. This will rank as one of the largest YoY tax increases in history. This is a very regressive tax increase. There is a $108K cap on what is subject to FICA taxes, so high incomes do not feel the bite. But those who earn an average income will see a meaningful reduction in disposable income ($2,000 per household).
This is a decidedly un-Democratic outcome. The rich avoid taxes, lower incomes pays a disproportionate share. Who insisted that this unfair outcome was part of the deal? Answer: Harry Reid, Nancy Pelosi and Barack Obama. Don’t blame the Republicans when your next check has an extra bite out of it. “Go figure?”, on this outcome.
-If you make between $250 and $400k, you are a very big winner, congratulations. Half of the top 2% just got a free pass.
-If you make over $450k, the cliff deal says you may have to pay more taxes. I wouldn’t worry too much about the top 1% - that group has 18% of all income. The move from 35 to 39.6% for America’s richest will not matter a bit. None of them paid the old rate, they won’t pay the new higher rate either.
-If you’re one of the 33 million taxpayers who avoided falling prey to the Alternative Minimum Tax (AMT) by the last minute patch, you dodged a bullet. This would have taken an average of $4k out of your pocket. I’m happy for you.
-If you’re one of the 4 million hopeless losers who have been stuck with AMT in prior years, you’re going to get stuck again. I’m one of those poor souls who is mired in this tax trap. It's a very unfair outcome for me. I make a fraction of the top 1%, but because of AMT, I pay a minimum federal tax of 28% while the top 1% pays an average of only 15%. Where’s the damn cyanide?
-The defense industry will have the bubbly out tonight, no sequestration for them for the time being. Phew! I was really sweating this one!
-Investors will also have the Champagne out. They dodged a bullet – at least for the next 60 days…..Keeping the 15% Cap Gains rate for most incomes is a plus, the new 20% rate for the top filers is a gift.
-The American people are very big losers. The cliff deal just sets up another crises before the snow melts. Nothing has been accomplished that addresses the uncertainty factor. The deal insures a big deficit for 2013. It will not increase tax revenue from the top 1%. It will result in a big increase in payroll taxes that will hurt the bottom 40%.
-Washington is the biggest loser of all. Democrats, Republicans, Senate, House and Obama all come off looking like chumps. They didn’t deliver anything but a Band Aid. I give the cliff deal a D-.
- advertisements -




He's not going to finish his second term. Already a liability.
i would pay more to keep the air craft carriers
.
and the other shit
Damn unemployment ran out because I'm new to the system.
Need to earn $2,250 in the New Year so I can go on unemployment for another year.
That, or bust my ass at some corporate circus clown job sending $$$ to bankers and foreign governments.
What to do...what to do...think, think, think....
225 hours @ $10/hr. and you're golden...
It's the *least* you can do....
Enlist.
Bruce says—not too lightly or with a smile on the key board-----------------------------------------------------------------------
Wadaya think I've been doing the past four years?I have 1000 articles. Average 500 words. Comes to half-mil words. Your avererage novel goes 70-90K, so I've penned 6 full sized books. A full fucking book every nine months. And you suggesting maybe I should get into writing.... Where the fuck is that cyanide?If I did this in real life, it would be worth at least $5m. So far, the best I've done is a stupid hat from Business Insider....What I really, really wanna do is write comedy. Fuck this financial stuff.....
Yeah, well, New Years Eve and all that, hope you do better this next year. So Happy New Year. I am sitting in a motel room just east of Fort Worth having driven 22 hours over the last 2 days and am avoiding rain/dark/Dallas drunk drivers tonight on News Years Eve. The hard part is that I stopped only 3 hours from the farm. There are 4 guests in this Holiday Inn tonight. So I sat down with my lap top and read a couple of things and was happy to see that you had posted again today. regarding your last sentence
It may be that you have a willing readership on ZH to try out some comedy if you want to. There is a need for humor regarding this financial stuff. We need a new Will Rogers
Nice post man. Would like to hang with you a bit next year if you have some time. A question for you on definition of terms, what do you deem "comedy"?
Driving head long at high speed into a bridge post as our condition of understanding?
The correspondance of data on one view points to the postulstion above.
Of course there may be alternatve views.
How would you write the script?
I expect the divorce rate to go up and major battles on who gets to deduct the mortgage (while that lasts).
Turned 2013 where I am a few minutes ago, and probably for the first time in my life, the fireworks, the drinks, the fumbled kisses, and the forced joviality left me hopelessly unmoved. There's a cold feeling in the pit of my stomach clenched in anticipation of worse tidings on the wave of bad news to come this year. Believe it or not, I am an optimist by nature, but even though I've been wrong several years in a row now about an impending systemic collapse of the financial services industry and its minions (Einstein's definition of insanity does not count!) I cannot ignore the facts that stare at me in the face every day: The economy is dead, the idiotic notion of debts as assets is unsustainable, and the insane advocates of "Might is Right", and "Do as we say, not as we do", are (I think) about to learn Newton's third law of motion - every action has an equal and opposite reaction.
Ignore the above. Thanks for all your efforts this year Bruce. It's well appreciated.
YHC-FTSE
Be safe or dangerous as the case calls for.
Piling on your thanks to Bruce for a keen eye and love of sharing observations.
Dear God,
I've called Bruce as well as other contributors to ZH. They are here to sell. If you don't realize that, then let me introduce you to Barnum and Bailey.
Oddly enough, none of them ever were able to debate me on the various threads that I KNEW were bunk.
Fumbled kisses?
Count yourself lucky, I only have a stuffed tiger to kiss.
Best of luck to you and Bruce and everyone else in the New Year.
I need me a Woman.
Llike the bankers, our leaders will continue to get their paychecks and bennies, no matter whom or what they harm. Similarly, few if any will be called upon to answer for their misfeasance.
Has anyone considered they are failing On Purpose?
Long Soviets!
It was designed to fail. They.. your elected Reps have had 1 year to begin making headway into this inevitable spending problem. It's not a taxing problem.
Disenfranchised American Taxpayer.
I"M A LOSER AND i'M GONNA GET ALOT LOOSER TONITE! HOPE EVERYONE SURVIVES THE NEW YEAR!
High incomes do feel the bite, but only up to $108k. Those making over $108k do not escape it.
On what planet is 108k "high income" again? Sorry, I missed that.
hmmm ...maybe i been banned from the edge! (+zero h)
Site off-line
The site is currently not available due to technical problems. Please try again later. Thank you for your understanding.
If you are the maintainer of this site, please check your database settings in the
settings.phpfile and ensure that your hosting provider's database server is running. For more help, see the handbook, or contact your hosting provider.The real losers in all of this are the American people who know who this man is and voted to get rid of him and were undermined by the Jewish Controlled media who lied to those less knowledgeable time and again and promoted a phony recovery that does not exist and his propaganda and hatred of this country as American values. The media is the most disgusting group of shit in America and I expect as things progress into the tank, they will finally pay for what they have promoted in America.
Who made the brilliant choice to run Romney/Ryan? If the T-Pubs want to know why Obama is still calling the shots..........find a mirror. Stupid is as stupid does. Too Funny.
Best comment on the thread sans the Jew ref. I just hate all of the media equally with no bias- for or against- any particular race.
Why leave out the truth? Oh the poor jew having all the power and control but please don't call them a jew?
Put the blame where it belongs, mutherfuckers always bitchin about individualism and as soon as someone calls out the individual its oops why you ragging on the jew, Yeah they control everything but its NOT their fault? They are FUCKING criminals who happen to be Jewish just like ALL the terrorists who happen to muslims. It's fine talking smack about the muslims because they kill innocents. The Jews kill no one I guess?
I wouldn't envy the unemployed too much--the vast majority of the unemployed don't qualify for any UIC for a wide variety of reasons.
But Barry can pretend to care while he dances with the equally cynical champion of the job creators.
One certain thing is that most workers and ex-workers will continue getting ever more fucked.
“It is in vain, sir, to extenuate the matter. Gentlemen may cry, Peace, Peace– but there is no peace. The war is actually begun! The next gale that sweeps from the north will bring to our ears the clash of resounding arms! Our brethren are already in the field! Why stand we here idle? What is it that gentlemen wish? What would they have? Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take; but as for me, give me liberty or give me death!"
-- Patrick Henry
Hmmm. Should the Government be choosing winners and losers?
"The American people are very big losers."
Isn't this what almost always happens when they do?
I'd say so. When it comes to the value of the dollar they've been selling me out ever since I was born. Now they're selling off the unborn as well in order to go further and further into debt.
Why do you keep making an issue of this ... "There is a $108K cap on what is subject to FICA taxes, so high incomes do not feel the bite".
Anyone who makes more than about $650 a month averaged over 35 years of employement gets shafted. Do you really want people to be shafted harder!
http://assets.aarp.org/rgcenter/econ/fs59r_ssbenefit.pdf
Umh,
Yes, I do want everyone shafted. Every last one of you turds!!
Sincerely,
Your Government Masters
Because there's always been a salary cap (in our nation that doesn't have economic classes and therefore no class warfare) it's just that over the last, say, 30 years it's been allowed to decay from inflation. Use a multiplier from, say, the early 70's, and you get a number about $200K to $250K.
But what's the logic of a cap, anyway? It just abets rather pointless consumerism.
What's the logic of a cap, anyways?
I thought the logic of the cap was that there was a subsequent cap on the expected benefits. Removing the cap introduces a "progressive" nature to the FICA withholding payments. From being a system where all workers contribute an equal portion of their salary to a group retirement plan for which in return receive an equal pro-rata share back, it may evolve to a system where higher income workers disproportionately fund Social Security, aka "redistribution of wealth". Its probably just a matter of time before SS becomes another welfare scheme.
I bring it up because I think this going to be altered at some point in the not too distant future. The result will be that some folks will get shafted.
I report on this stuff. Don't shoot the messenger.
Was that really a "feeling our pain" kind of speech (sometimes confused with gas) cause the bond monkeys should be jumping for joy, another year of squeeze out of joe and Judy punch bag. "But wait, there is more" as the late night infomercials screech. Wait until real estate tax jumps your azz due to fed induced distortions. You want more, ok, oblahbah monopoly sick care up the bung hole. Call now, limited time only.
The real losers - anyone who expects to receive Social Security and Medicare in the future. There is not enough money to pay these benefits. Also, there is already a shortage of doctors - this can not be fixed easily, since it takes 10 years to train a doctor.
However, the biggest losers will be the Republicans - they agreed to a tax hike and got nothing in return, followed by those who will lose theirs jobs as part of the tax hike, and those who are unemployed and will remain unemployed due to a lack of growth in small business. The Republicans just sold small business owners down the river.
Now lets talk about Cliff Dwellers.(banksters) "They disappeared!"
http://xrepublic.tv/node/1582
BTW Bruce, thank you for posting on ZH; I've enjoyed your informative, learned and sometimes provocative posts very much.
Happy New Year.
Bruce when was income tax ever "fair" There can be no discussion about fair income tax unless it's a discussion about a flat tax with everyone having skin in the game. Based on who is speaking at the moment, any fairness talk under the present income tax system is quickly reduced to rhetoric.
The top 1% rich will never pay meaningful taxes anywhere in the world since their friends write all the tax laws. My daughter with 3 kids really gets hurt with this deal. Its just terrible
Dual taxation without representation, is one of Ben tools, to be used by the maker of that tool.
Am I the only one missing the big giant fat [SARC] tag on Bruce's post?
I didn't notice a reference to the reported proposal re. the Federal Estate Tax:
*** Permanent death tax with $5M exemption and a tax rate of 40% for estates above $5 million ***
I am glad there is some sanity in Washington re. this issue. Personally, I believe the Federal Estate Tax should be abolished (considering how many nations in the world don't have such a tax - e.g. Canada, Russia, China etc.).
Federal Estate Tax is nothing more than wealth confiscation by bureaucrats.
The death tax is one of thousands of taxes. Even tax accountants do not know how many taxes exist, and politicians love them all like a pig loves truffels. Congressional spending diarea has no off valve, even when congress us all in hopeless debt.
Once you breakdown HOW they made their money, all the taxes make sense. And we know who the problem people are, by not be able to criticize, or question them, and given enough time, they even stop talking to ya.
"Once you breakdown HOW they made their money, all the taxes make sense."
Federal Estate Tax is nothing more than wealth confiscation. It is immoral and unethical.
Inflation is nothing more than wealth confiscation. It is immoral and unethical.
Agreed. There is no love for the Chairsatan on this site.
You must be grading on a curve!
Only defense contractors, lobbyists, and political talking heads are the winners in this mess. Let's see if the D. C. bozo's can spend several trillion more of make believe money before reality strikes.
I don't really care to bash the unemployed. Sure some are losers but who's really at fault with the big NWO plans, NAFTA etc? Not to mention the amount of $ the gov't blows on other crap---like themselves.
Also, it's not a tax increase. It's the end of a tax break that the country could never afford in the first place with it's current spending levels that sprialed even more out of control with even less tax revenue. They can't give up on their little world takeover plans and need all the money they can get even if it sends you straight to tent city.
"It's the end of a tax break that the country could never afford"
"it's current spending levels that spiraled even more out of control"
Think you could maybe make up your mind as to which it is?
How about a Government that is unable to spend more than it takes in? Either you have such a Government or you don't. You can't have it both ways. You can't say that we need higher taxes because the Government is spending more than it takes in. Do you really think that if the Government could somehow take in more from taxes, that's going to end the problem of a Government that spends more than it takes in?
If you were able to spend more money than you earn and you somehow started earning even more than you did in the past, would you finally stop spending more than you earn? You could answer this for yourself, but you can't answer it for anyone else or for the Government. But let's say you answer me, and you answer with a yes. Am I really going to believe you?
Trying to make those two quotes opposites is, shall we say, either dishonest or ditzy.
Shrub's cut to his rich employers lowered revenue, and the Wars of Empire and gifts to stupid speculators raised spending. Use your fourth grade math and see those both send the deficit in the same direction. The fact Barry has continued both policies just means he has the same employers.
And don't use that 'If government was a household' blat, or any restating of it. It's an insult.
Barry created a deficit in current revenue/expense in Social Security because he wants to cut it, starting the long process of destroying the program and handing the reserves to Peterson. One proper thing is the rise in FICA taxes taking away that deficit, so now his lies don't even have the appearance of reality. While the real answer is raising the salary cap, this will have to do while Wall Street can buy as much Congress as they need.
It would be nice to think the rich were really going to pay their excess to society. Don't hold your breath.
Socialist InSecurity and all that other welfare/warfare corporatism crap is just one big giant ponzi scheme. Good luck with it.
My Main Point: there is no way to cut Government spending. As others have said, the Government does not contain any mechanism to cut it's spending. It only knows how to print out of thin air and go deeper into debt, until such time that it has all the assets of the entire country on it's balance sheet, and all freedoms, rights, and money come from it and it alone. Will it's greed and avarice finally be satiated then? Perhaps I should go out drone watching whilst being watched. And while I pull down my pants for the TSA Agent to inspect my crotch I shall keep telling myself that I'm free. But at least I'll know that everyone is getting their Government is god gov't issued Socialist Security check!