Obama To Demand $1.6 Trillion In Tax Hikes Over Ten Years, Double Previously Expected

Tyler Durden's picture

If the Fiscal Cliff negotiations are supposed to result in a bipartisan compromise, it is safe that the initial shots fired so far are about as extreme as can possibly be. As per our previous assessment of the status quo, with the GOP firmly against any tax hike, many were expecting the first olive branch to come from the generous victor - Barack Obama. Yet on the contrary, the WSJ reports, Obama's gambit will be to ask for double what the preliminary negotiations from the "debt deficit" summer of 2011 indicated would be the Democrats demand for tax revenue increase. To wit: "President Barack Obama will begin budget negotiations with congressional leaders Friday by calling for $1.6 trillion in additional tax revenue over the next decade, far more than Republicans are likely to accept and double the $800 billion discussed in talks with GOP leaders during the summer of 2011. Mr. Obama, in a meeting Tuesday with union leaders and other liberal activists, also pledged to hang tough in seeking tax increases on wealthy Americans." Granted, there was a tiny conciliation loophole still open, after he made no specific commitment to leave unscathed domestic programs such as Medicare, yet this is one program that the GOP will likely not find much solace in cutting. In other words, all the preliminary talk of one party being open to this or that, was, naturally, just that, with a whole lot of theatrics, politics and teleprompting thrown into the mix. The one hope is that the initial demands are so ludicrous on both sides, that some leeway may be seen as a victory by a given party's constituents. Yet that is unlikely: as we have noted on many occasions in the past, any compromise will result in swift condemnation in a congress that has never been as more polarized in history.

From the WSJ:

Kevin Smith, a spokesman for House Speaker John Boehner (R., Ohio), dismissed the president's opening position for the negotiations. He said Mr. Boehner's proposal to revamp the tax code and entitlement programs is "consistent with the president's call for a 'balanced' approach."

 

Mr. Boehner hasn't specified a revenue target that would be his opening bid. He has said he would be willing to accept new tax revenues—not higher tax rates—if Democrats accept structural changes to entitlement programs, the ultimate source of the U.S.'s long-term budget woes.

 

The president's opening gambit, based on his 2013 budget proposal, signals Mr. Obama's intent to press his advantage on the heels of his re-election last week. However, before gathering at the White House with lawmakers on Friday, he will meet with chief executives of a dozen companies Wednesday. Many executives have aired concerns about the economic consequences of the looming "fiscal cliff"—and the risk of another standoff.

 

...

 

Speaking to reporters about Mr. Obama's plans for Friday's talks, White House spokesman Jay Carney said, "the president has put forward a very specific plan that will be what he brings to the table when he sits down with congressional leaders."

 

"We know what a truly balanced approach to our fiscal challenges looks like," said Mr. Carney, using Democrats' language to mean spending cuts combined with tax increases.

 

Republicans already have appeared willing to cut a deal that results in Americans paying more taxes if it averts the scheduled spending cuts and tax increases due to take effect at year-end.

 

"New revenue must be tied to genuine entitlement changes," Senate Minority Leader Mitch McConnell (R., Ky.) said Tuesday. "Republicans are offering bipartisan solutions and now it's the president's turn. He needs to bring his party to the table."

More here, but we can summarize it as follows: the lame duck congress will posture, prance and pout. And it is a certainty that in the 15 (see calendar below) remaining days it is expected to be session it will get nothing done. Which means, that once again, it will be up to the market, just like last August, just like October of 2008, to implode and to shock Congress into awakening and coming up with a compromise of sorts. Only this time, now that Bernanke has shown he will "get to work" at a moment's notice, the impetus to do anything as a result of even a market plunge will be far less. After all why lose face, and put your career in jeopardy when there is the Fed which, supposedly, can offset a market crash, courtesy of the shining example set by Chuck Schumer.

It is thus quite possible that this December, for the first time in history, we may get to a point where not even a 20% market drop will be sufficient to get a Congress, now habituated with the Fed bailing it, and by it we mean the market, out, to cross bitter party lines. The problem then becomes one of what we saw happen at 3:30 pm today, when the Fed's Chairman-in-waiting, Janet Yellen hinted at an even longer ZIRP, and... nothing.

To summarize: think the economy is doomed if the Congress doesn't get its act together? You ain't seen nothing yet.

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jballz's picture

 

You not the sheeple are distracted and link to post to put this fucking shit here too?

Kill  yourself.

Thanks.

Orly's picture

Ok. man.

I'm out.

See ya!

surf0766's picture

I agree doc. Either way he wins and the cliff still happens. One is just faster than the other.

Silver Bug's picture

Hey let's just get it over with. The Dollar is going to zero anyway. QE to infinity is here to stay.

 

http://ericsprott.blogspot.ca/

The Master's picture

Absolutely right. If we go off the cliff, the Republican congress will take the blame and this will ensure the extinction of the Republican party. To borrow a Star Wars analogy, Obama is Palpatine.

Dr. Engali's picture

I don't know that I agree the republican party will go extinct, they are definitely relegated to the minority, after all TPTB need us to have the illusion of choice. And they also need somebody to point a finger at. Otherwise  your Star wars analogy is accurate.

CrashisOptimistic's picture

One of the most timeless lessons of politics is that much can be accomplished for a particular party by allowing the other party to proceed with its agenda.

In this case, the GOP can step back and ask to see the tax proposals pass in the Senate first.  They won't.  The Democrats themselves will never vote for this.  It's just like Obamacare.  An overwhelmingly Democrat Congress could not get a single payer healthcare system passed.  They just barely got Obamacare passed and it is a very much watered down version of what they wanted.

The GOP can just sit back and watch as the Democrat Senate, again and again, fails to pass these tax increases.

you enjoy myself's picture

+1

this is exactly what the 2013 House should use as their gameplan.  we saw the same thing with O's two absurdly irresponsible budget proposals - they were voted down 98-0 when push came to shove.  the House should sit back and play truth or dare with the Senate.  dare them to own their demagoguery.

 

Herodotus's picture

A tax bill cannot originate in the Senate.  Per the constitution, it must originate in the House.

Urban Redneck's picture

A revenue bill must originate in the House, a bill addressing spending cuts, however, can originate in either house.

odatruf's picture

The Senate can pass a tax bill and then the House can take it up by introducing a House bill that mirrors the Senate language and pass it. The Senate will have to rubber stamp it one more time, but this happens all the time.

The idea that the House must go first is fine as far as the academics go, but in practice it is mostly meaningless.

 

Bobbyrib's picture

The Democrats wouldn't need to do anything to raise taxes when the Bush tax cuts expire. They are just going to go up by that amount. Any new taxes Obama wants to add in are fantasy.

Colonial Intent's picture

We all know that eliminating the Bush tax cuts on the wealthy will not make much of a difference in the deficit ($42 billion a year) and if raising taxes on the rich is redistributionist socialism, someone should should have told Eisenhower, Nixon, and Reagan, whose rates on the rich were 91, 70, and 50 percent.

Beam Me Up Scotty's picture

Again, no one ever paid those rates either because there were all kinds of tax loopholes.  Who would ever work if their effective tax rate was 91%?  Would you work 10 days to give 9 days of it to the government?

odatruf's picture

They weren't just loopholes. Before the 1986 tax reforms, deducting every dime of interest paid on credit cards, auto loans, etc. was as much a part of end of year tax work as deducting mortgage interest still is today.

 

northerngirl's picture

I am no fan of the Republican party in general, but I think you are correct.  Elections have consequences and to the, "Victor goes the spoils".  Let Obama and company run with their agenda, because it will all end the same.  There will be a lot of talk, but no action.

On the passage of Obamacare, I think it was, "Deemed", passed because the Senate seat held by Ted Kennedy flipped to Republican Scott Brown. 

zuuma's picture

Nice.

I guess Mr. Obama will just have to find my assets to tax them.

Very best of luck!!

ReactionToClosedMinds's picture

eliminate the Army, Navy Air Force, Marines & Coast Guard ... they are all part of Eisenhower's military -industrial complex.  And the veterans benefits are a scam anyways.    We need to save the entitlements.  Let MoveOn .org defend us ... but we don't need defending as the USA has already made the world safe so get rid of the entire war-mongering Dept of Defense!

JustPrintMoreDuh's picture

WooHoo!!  Tastes like freedom.  

Zero Govt's picture

the President just can't stop picking others pockets ...must be the Chicago upbringing, or training as a lawyer

disabledvet's picture

here's your chart of the day: http://seekingalpha.com/symbol/hd?source=search_general&s=hd and let's see how it was doing while everyone here was calling the end of the world: http://seekingalpha.com/symbol/hd?source=search_general&s=hd wow..."looks like a total retard is in charge"...OF THE ECONOMY. what's next? "land redistribution"? how about wooden nickels? plastic pennies? can't even afford that can we....

jal's picture

Ask for more than "the cliff"

Settle for "the cliff"

 

Everyone is happy!

 

surf0766's picture

All your taxes are belong to us..

fuu's picture

That is only about $5,073.56 every second for 10 years.

Ben is printing $30,864.20 every second starting in January right?

 

A Lunatic's picture

Cut Obamacare. Presto, bitchez.

1eyedman's picture

o'care is a tax hike....very regressive even....

 

at some point things need to be paid for, we have to decide what we want, b/c we cant pay for it all w/out massive tax hikes...

i'd like to move the military back out of every country on the planet, eliminate medicare, and welfare, that would make a dent

 

Colonial Intent's picture

Dont forget farm subsidies and tarp.

three chord sloth's picture

Q. Obamacare = regressive?

A. True!

The only way the numbers work is if we get the low demand folks -- the healthy with a job -- to subsidize everyone else... and that means the young and employed must pay MORE than they would've paid before. Yet every young working person I know thinks they are one of the ones who will be on the "getting" side of this program.

It would be funny if it weren't so sad.

Beam Me Up Scotty's picture

"Yet every young working person I know thinks they are one of the ones who will be on the "getting" side of this program."

The young are dupes.  Many of them have no idea what they are doing.  They don't have a dollar in their pocket, they think their plastic will work everywhere Visa is accepted.  They have no clue about debt or slavery.  Those that read ZH are probably the only ones that have a clue.

rockface's picture

None of this matters.  Check out Michael Campbell's opening monologue Nov 10,

Bear Market Trend in government confirmed:

http://www.cknw.com/Episodes.aspx?PID=1211

orangegeek's picture

Tax hikes are just in time to tank these markets even faster.

 

http://bullandbearmash.com/chart/big-losses-for-dow-jones-weekly-year-ol...

 

More job losses pending.

 

Who voted this guy in?  Nicely done.

adr's picture

Good luck with that. There won't be any workers left to raise taxes on and no corporations either.

Sherwin Williams is just about dead, guess nobody is painting homes aymore.

Even massive reruns of The Big Lebowski couldn't save AMF, bowling is bankrupt.

And with a big FU to Obama another crproate welfare favorite, New Energy Ethanol just went bankrupt. How the fuck did that happen?

But Cisco beat by a couple pennies using mark to fantasy, BACK THE FUCKING TRUCK UP and buy stocks full tilt, BET THE FARM!!!

Agent P's picture

"Sherwin Williams is just about dead, guess nobody is painting homes aymore."

I highly recommend checking the stock chart before repeating this statement in public.

Agent P's picture

By my calculations, that takes care of 1 year of deficit.  Now, if we can just figure out the other 9 we'll be all set.  I'm sure he'll cut spending to take care of those.

BWAHAHAHAHAHAHAHAHA!!!!

bart12's picture

I am all for going over the fiscal cliff. The media is fear mongering about the "fiscal cliff". People need to understand that this fiscal cliff is the best gift to USA to finally tackle its 17 trillion $ debt and increasing. The fiscal cliff will be the first step to resolve US debt problem immediately...Automatic Tax increase and spending cut is the only option for USA if anyone know how to do the math of addition and subtraction. If the US govt decide to kick the can down the road, the empire will definitely collapse worse than anything we have witness in history.. As for stupid Congress & Obama, the best they can do is to do nothing (when did they ever fix anything??)..

odatruf's picture

Totally agree. If only their inaction would also trigger the right outcome in other cases.

 

SillySalesmanQuestion's picture

For Ultimate Do-Nothing Championship of the World!

In the Red Corner: The Crying Tan Man, Mitch the Bitch, & Grover the Groveler.

In the Blue Corner: Nancy Nazi, Scarey Harry, and two-time defending champion of the teleprompter, TOTUS.

Each round will consist of 86% fillibustering and the remaining 14% for verbal jousting.

Lets get ready to RRRRRRRRRRRRRRRUUUUMMMMBLE.....

CrashisOptimistic's picture

As I said above, the House doesn't have to act.

The Senate, with a Dem majority, will never pass these tax increases.  The GOP House doesn't have to obstruct.  The Democrats won't get this through their own caucus.

ilovefreedom's picture

How does 160B a year solve anything without complementary spending cuts?

Beam Me Up Scotty's picture

Thats the 16 trillion dollar question.

Essential Nexus's picture

Is this bullish, or double bullish?

Spitzer's picture

So ZH thinks that the repubs and Obama will not neg anything ?

This isn't the National Hockey League...

dwdollar's picture

For all you still confused, let me sum up how it will really go down: The can will be kicked until TEOTWAWKI.

Tenshin Headache's picture

The can will be kicked until the kickers are swept away by the debt tsunami. There are a number of ways that can happen, but happen it will.

Insideher Trading's picture

Taxes are good citizen. Taxes are like vitamins.

Government spends your money efficiently.

Curt W's picture

It took us 219 years to add our first 10 Trillion of debt.

Obama thinks he can beat that in under 8

FleaMarketPete's picture

No, Obama doesn't give a fuck about the debt or you.

FleaMarketPete's picture

$1.6 billion in taxes < $1 trillion per year vote buying. Can the Obama mongrel parasites be, I mean new minority superpac, really that stupid?  Yes they are. But what’s a couple trillion in healthcare for white trash bitches, free 40ozers for blacks, and free education for mexicans among friends.   I'm moving to leach off Germany.

Big Ben's picture

Best time for a recession is just after an election. You have four years to recover.

If Obama is determined to drive over the cliff, Repubs should make sure they are not blamed. They could pass a bill that kicks the can for another 3 years but also requires the Fed to be audited and requires the House or Representatives to approve all Fed members every 2 years. This will never make it through Obama and the Senate. So Repubs can claim Obama sent us over the cliff because he didn't want to diminish the powers of the Fed.