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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FleaMarketPete's picture

No because there are plenty of black led superpowers throughout history.  I mean look at all the success they've had in Africa.  No wait.  Err.....guns, gold, and more guns.  The US, and world (sorry German fascists), are done for.

Kobe Beef's picture

hahaha. Haiti is not a superpower.

bank guy in Brussels's picture

Richest man ever in history, the only man to be declared richer than today's Rothschild family with their current US $350 billion, is said to be a black man, King Mansa Musa I of Mali (1280 - 1331 CE), who ruled the Malian Empire in Africa.

The net worth in gold of King Mansa Musa, is calculated in today's fiatsco money as US $400 billion.



jtz5's picture

I think the Dems look at this Fiscal Cliff as a means to completely destroy the Republican Party. I see no bargaining by the Dems in an attempt to portray the Repubs as USA haters.

With the House and Executive branch on the side of tax increases, they will just make it appear the Repubs are more for the rich. I think they don't care if the economy crashes. It will just reinforce the big gov mantra.

Colonial Intent's picture

50 cents of every tax dollar will still go to the military regardless of who has the presidency but you keep harping on about how your sides shit dont stink if it makes you feel better.

Given the repubs have been in a sulk since 2008 its pretty easy to paint them as negative.

The MSM line is that republicans value profit more than people, dems are the opposite.

Neither side plays fair, if any president of the last 50 years had been honest there would never have existed a class of people dependant on welfare which a rogue dem leader could use to win a class war.

Unless you forgot, the deal was, bush clinton bush clinton bush,etc etc

Obammy threw a spanner in the works by beating hilary, dont worry once obama goes there will be another rich white guy in the white house, the new sherrif wont last long, personally i'm amazed nobody has killed him yet.

But then again when romneys own campaign team photoshops his audience to look three times bigger when they had the choice to not release a photo of the event its beyond stupid.

Dont even get me started on the Orca thing, 37,000 repub volunteers sat on their ass looking at an error screen, they could have tipped the balance, the repub party paid the media to tell them what they wanted to hear.

Articles like this are just tylers way of giving repub voters a reacharound so they dont feel sad about the election result.

odatruf's picture

"50 cents of every tax dollar"

I don't think you understand numbers the same way most of us do. If by 50, you really mean 18.7, then you'd be correct.

In FY2012, defense spending was $677 billion of the total $3.6 trillion in federal spending. That's 18.7%.

But in case you are looking for more reality, all the mandatory spending (SS, Medicare, Medicaid and debt interest) combined claimed 61.9% of that $3.6 trillion.

Peter Pan's picture

No matter which way the US shuffles its deck of cards, the reality is that the deck no longer has any aces and the dealer has one arm tied behind his back.

Society and systems need such a fundamental overhaul in the USA that it seems almost impossible to achieve.

In the meantime we will alll be subjected to grand statements of intent from all sides and even more posturing but the unpleasant truth is that the downward spiral still has some way to go.

Mind you, the rest of the world is not much better off.

Number 156's picture

Dont worry, the Dow will cross 14000 again.

xtop23's picture

Ahhh, chasing Alpha. Can't blame 'em, what with ZIRP through 2014.....ummm I mean 2015...... uhhhh wait ... I meant 2016....

Of course a gallon of gas will cost 8 bucks.

Number 156's picture

Exactly. Inflation will drive up share prices just as it would gasoline, or anything else priced in dollars, and one will find that chasing alpha is like chasing wind.

People seem to forget that sometimes and rely on stock prices too heavily as a barometer for the economy.

SoCalBusted's picture

I don't think there are any more rabbits in that hat.  Even if it does cross 14K, the volume will be shit - a circle jerk of 3-5 algos.

ebworthen's picture

But of course he is.

Where else will the money come from to keep the Wall Street Mammon Sucking Machine going?

Bend over everyone!  Bend over because here it comes!  The Republicrats will of course go along to protect the Kleptoligarchy; the banks and corporations must be saved!!!

Bleed every last cent, every possible asset from the plebians!  Capital gains taxes, estate taxes, VAT tax, less medicare and S.S. and higher insurance premiums and banking fees!

That's right!  You pay them to hold your money!  You pay them to fuck you in the ass!

Welcome to the Pyramid Scheme of the Kleptoligarchy!

Kneel!  Kneel slaves! 


Zgangsta's picture

This is news?

Obama is just following the first rule of negotiation:  always start out by asking for much more than you want.

archon's picture

Don't let a good crisis go to waste...  he'll crash the country, pick up the pieces, and declare himself Emperor for life....

Colonial Intent's picture

Bush tried that and he still lost, obama is just a black bush.

sitenine's picture

All else has failed, so now he's just using the martingale system.

Double down, bitchez!

Manic by Proxy's picture

Do you suppose that in the future, when after people have realigned as small groups and communities, living agrarian-based lives, that future historians will debate what happened to make people of our age so stupid? Was it a plague? Polluted water supply? Toxins in the food chain? Why, they would query, would a people enforce poverty and strip wealth from the populace and in the process create severe deprivation and a consequence-enriched environment known as "The Great Undoing". Why did they follow leaders who were so manifestly evil, incompetent and devoid of imagination?

Oh wait, everyone was just naturally stupid. Never mind.

UGrev's picture

Let me see..  16T now..  and then 1.6T in hikes over 10 years...  add the 1, carry the 3.. divide by stupid.. YUP!!! WE'RE STILL FUCKED BY 30T!!

Zero Govt's picture

so Senate and Congress can't do maths, all the way up to Mr President trying to balance the budget trying to shakedown taxpayers for more

is Bumma's advise really so piss-poor-stupid he doesn't understand he needs major spending cuts as Boehner is suggesting?

Colonial Intent's picture

We dont need no roads, police or fireservice, nor the army just stop wasting my money on that shit and give my taxes to those millionaire job creators, i'll just wait for the golden stuff to trickle back down on me......

UGrev's picture

Hey shit for brains.. there was a time when there was no income tax and this country did just fine. In fact it was quite prosperous.  You do also realize that the income tax was employed as a means to help pay for wars.. right?  

Colonial Intent's picture

50 cents out of every dollar you pay in taxes goes to MIC.

If that dont tell you who's in charge you are dumber than year zero govt above.

"Its the gubbermint thats evil and the MIC is my friend, it keeps me safe from all those evil freedom hating people who dont live in america...."

I love ZH, twice as many morons per sq foot as free republic and yet just as stupid.


UGrev's picture

It's actually 53 cents.. but I wont' be pedantic. We don't need to be spending 50%+ for this shit. I'm sick of it. It doesn't do anything. The ancient way of conquest is over.. this muscle flexing shit is legacy bones. The world is now too small for it. It needs to be reeled back in significantly. 

How is it that we have all this technology but we can't build roads that last a single, fucking, winter..  You know, NASA developed a composite material that would (as they say) last 100 years and endure the harshest weather with minimal maintenance. You want to know what happend to that tech?  BURIED!!! becuase it would make paving roads an obsolete effort. Too much is spent lining the pockets of politicians and their associated businesses.

My money going to actually making this country better would be better than it being ripped from my pockets without so much as a reach-around.  

Kindly go fuck yourself. 

Colonial Intent's picture

But that tech is long term stuff for the good of people, the current system both govt and business demand short term profit at all costs while bombarding muppets with propaganda about entitlements(obama/reagan phone), instant fixes and consumption (AAPL).

America is at that awkward stage, It's too late to work within the system to change it, but too early to shoot the bastards in charge.

TPTB will always try to reflate the bubble one more time and it will always work until it dont.

Wake me when that happens.


You can reduce your defence spending but then the USD crashes as it loses the only backing it had, the US military.

catch 22, good luck with that.


maximin thrax's picture

On the other side of the coin, the wealthiest 1% pay 38% of income taxes, which is about 20% of federal revenue. Corporations pay around 12% of federal revenue. And business gets credited for half of our FICA taxes. So in the eyes of our government the rich and the corporations are responsible almost half of all federal revenue. Thus, they are a priviledged class. So they get what they need to increase income and profits because that's the quickest and easiest way to significantly increase tax revenue.

youngman's picture

Now the income tax code is HOW POLITICIANS make money.....every interest group now has to donate to their politicians to get a meeting on an issue...its a revenue generator for them...


What is funny to me..is that Obama is all for cutting the military...but when his economy tanks..and it will and 30% are unemployed...that is when he will need a strong military to protect him....maybe he thinks he is going to use the unions....but any communist or dictator will tell you pay and feed your military well...as they have your back....this guy spits on them

Kobe Beef's picture

At this point, I'd welcome a coup. Come on Colonels, we know you're watching...


UGrev's picture

we know you really didn't mean [sarc].. so do the suits..

Kobe Beef's picture

You're right. The best thing that could ever happen is DC burning to the ground. A coup would just try to prop the whole empire back up again. You got me, UGrev.

Colonial Intent's picture

Impotence and ignorance in a single statement, salutations.

Never happen, the US military only does coup in foren cuntryz.

Kobe Beef's picture

I would say JFK, McKinley, and Lincoln, but that was a different group of plotters. Not the US Military. They only do it for the benefit of the same plotters who've already taken over the USA.

Shit. now I'm gonna get extra-judiciarily expedited for sure. But before I get droned, I'd just once like to the see "the defend the Constitution from all enemies, ... domestic" part in action.


Chaos_Theory's picture

Probably safer to just sacrifice a goat so Odin directs an asteroid the size of Manhattan right at the center of the Mall.  Anything else gets the fisting from TSA (if you're lucky...if you're not, those 40 S&W HPs fit perfectly in the skull of domestic "terrorists"). 

Kobe Beef's picture

Praise Odin!

Yep. Which is why I left the USSA a long time ago and don't come back. Now, the Kommissars could still twist my local government's arm, but I'm neither a "terrorist" nor "domestic". Funny how far you have to go for a little Freedom of Speech these days..

UGrev's picture

Is see what you did there :D

Colonial Intent's picture

Taxation isn't about what you need, the Govt doesn't work out what they need to spend and then think how to raise the money, they pitch for as much as they think they can get away with and then think what to spend it on.

zilverreiger's picture

Payback time for you american freeloaders! the world sighs with relief now the north american leech is going to pay back, too bad he needs 10 times more to make any form of actual progress.

Floodmaster's picture

Housing capital gains should be taxed. Boomers must pay their bills.

overmedicatedundersexed's picture

if you convince enough people that what you are doing is hopeless and the end is always a month away..why you can do anything and the people will say things are so bad that the .gov people need to do it..

create a crisis then use it to move your plan foreward has been used time and time again and damn it it works,

Just to let everyone on ZH know: the answers to our worlds economic problems are simple, but add in the one item most important to bought pols: how do we do it and keep the 1% wealthy and in power..that requires the madness we see today for it is not solved by simple honest means, but only thru crime and lies.

BlackholeDivestment's picture

Mark of the Beast ...bitchez.

overmedicatedundersexed's picture

when they come for your IRA and 401k mr buffett and munger will cry I am not taxed enough!!

when they come for buffett and mungers wealth and not the sheltered income ,,what will they say then?

in the end somebody has to go to jail ...is the best outcome for the elite's much better than the rope.

falak pema's picture

FDR, FDR, FDR....replaces USA, USA, USA.

Seriously, if USA produces 11 MMBPD oil/liquids and all that frack gas  like a nation gone abiotic in 2020, Potus's problems are over! By 2030 he is exporting to China! 

We can now plan the great ecological revolution fellas, and peak oil is no longer OUR concern. When it comes we'll be on solar forever! Yippee...So cough up now and I'll build your future! 

Who can argue with that? Ten years down the road people will want to buy more n more USD, and so whatever the debt level, it'll only be to fund the world's participation in the greatest innovative nation on earth.

Ain't that a purty dream? Lets  dream on! Can we call this the NEW new deal?

If reality fits that picture...then life is good from 2020 onwards. Fasten seat belts! 

falak pema's picture

that is the crux of the matter; no real growth means no way out of this maze. Simple as that. 

That is not a sustainable propostion if we continue not only to import energy but also export manufacture. Done deal, we explode economically around 2015-2017.

More on the enegy perspective : look at this recent chart : Saudi Bakken - Business Insider

Mr_Wonderful's picture

$1.6 T over ten years = chicken feed.

The annual government deficit using GAAP instead of their mickey mouse accounting is $11 trillion per year.