Market Drops As GOP Rejects Obama's "Uncompromising" Fiscal Cliff Offer

Tyler Durden's picture

Markets sold off earlier today when Boehner commented that "no substantive progress had been made" in the last two weeks, only to recover quite rapidly. The 'rejection' is now in full context as the WSJ has just reported the terms have not changed (or compromised) at all since we first discussed them two weeks ago. A $1.6tn tax increase (upfront), $50 billion economic stimulus, and most importantly (we suspect guided by the miscreant hand of Geithner) the removal of the need for congressional approval to raise the debt ceiling. Overnight futures are down 5-6 points pushing towards Boehner's intraday lows. This should throw a little light on exactly where the negotiations stand (nowhere) and how willing each party is to change and bring hope to the table for compromise (not at all). With DC this far apart still, the game for the next few weeks is not to solve the fiscal cliff but to avoid getting the blame for the cliff-dive.

 

We can't help but feel like this being Geithner's pet project that a) it is doomed, and b) the angle is all about the debt ceiling. He has already publily commented that we would be better off without that 'check and balance' - but of course in reality all that means is that the nation is free to spend at will theoretically (as if there were a limit now). Perhaps it is a subtle signal that (as we have pointed out) the debt ceiling debate is actually even more important than the fiscal cliff and maybe (just maybe) Timmy G has run out of deferred pension tricks up his sleeve to cover the gap.

 

Via WSJ:

President Barack Obama made an opening bid in budget talks with Republicans that calls for a $1.6 trillion tax increase, a $50 billion economic-stimulus program and new power to raise the federal debt limit without congressional approval, a broad set of demands Republicans viewed as a step back in talks to avoid looming tax increases and spending cuts.

 

The proposal, offered by Treasury Secretary Timothy Geithner as he made a round of meetings with congressional leaders in the Capitol Thursday, calls for increasing tax rates on incomes over $250,000, a one-year postponement of looming spending cuts in defense and domestic programs, and some $400 billion in savings over 10 years from Medicare and other entitlement programs.

 

The details of the proposal were described by congressional GOP officials. Earlier in the day, after GOP leaders met with Mr. Geithner, they made plain they didn't like what they heard.

 

"No substantive progress has been made in the talks between the White House and the House over the last two weeks," said House Speaker John Boehner (R., Ohio), who also spoke to Mr. Obama on the telephone Wednesday night.

 

...

 

The White House offer in some sense amounts to a formal start of the negotiations, which could take many twists and turns before any possible deal is consummated. The White House didn't have an immediate comment.

 

...

 

Mr. Boehner's tone was a change from earlier this week when he said he was optimistic a compromise could be reached...

 

"All eyes are on the White House, the country doesn't need a victory lap, it needs leadership," Mr. Boehner said at a news conference in the Capitol. ...

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Mr Lennon Hendrix's picture

They will make a bargain in the 11th hour.  It will contain tax increases that billionaires won't have to pay due to tax loop holes, cuts to programs such as Head Start, and it will have no impact on the debt issuance from the UST.  Until then Congressmen will day trade the wild swings their mouths bring forth.

spastic_colon's picture

indeed....what is monday?  the first day of the december trading month is what...and you can be almost as sure as shit that a weekend deal will be in the headlines whether there is any substance or not....make sure to buy ES calls late friday if markets are down.

redpill's picture

They better not remove the Congressional approval requirement, I've gotten fond of watching the farcical circus of debt ceiling increases.

Mr Lennon Hendrix's picture

Why do we need a debt ceiling when we don't have budgets?

Everybodys All American's picture

I think we have seen the last budget ever. That was over three years ago by the way.

Go Tribe's picture

Budgets? Inalienable rights? Who needs all that shit anymore?

GernB's picture

Who goes to jail if the federal government illegally spends beyond the debt ceiling?

CPL's picture

If you say it too loud...?

 

You do now.

A Nanny Moose's picture

At this point, I only care to see them do whatever it takes to hasten the demise of that which is unsustainable, and immoral.

icanhasbailout's picture

They won't cut Head Start. They need to start training kids in government values as early as possible; as cognitive dissonance rises, so does the failure rate of behavioral conditioning. Getting them early helps shape the brain to mroe comfortable accommodate that dissonance.

Mr Lennon Hendrix's picture

I used Head Start as an example because they've already cut Head Start.  Imagine that, Neo-Liberals, your President cut Head Start while bombing the shit out of Libya. 

a growing concern's picture

And somehow they can't see that he's the same fucking guy (albeit slightly better spoken) than Shrub.

SemperFord's picture

Archer would make a better president!

czarangelus's picture

No shit. Remember his brief, unsuccessful dint as a pirate king? He wouldn't even raid ships because small business owners would be ruined by the loss of their vessels! Can you imagine Obama letting them off?

Things that go bump's picture

For it is it is a glorious thing to be a pirate king.

http://www.youtube.com/watch?v=jQ7SVMVrick

Or perhaps more in the style of the Crimson Permanent Assurance.

http://www.youtube.com/watch?v=uc61tCfPXMk

JohnG's picture

Title I funding was cut severely THE DAY AFTER THE ELECTION.

Lord Koos's picture

Head start has proven itself to be effective and well worth the cost. The statistics show that kids who go through the program do better in every way. It's definite benefit for society and a fuck of a lot cheaper than incarceration, there really is no downside. Of all the things to cut, one of the most shortsighted... not to mention its a teeny part of the budget.  The rationale for cutting it is motivated by conservatarian ideology, not common sense.

GernB's picture

No amount of indocrination is going to save those responsible from the wrath of the youth when they figure oout just how badly they have been screwed over by their parents and grandparents generation.

nmewn's picture

Hush Michelle...I hear the pitter patter of Sasha & Malia's feet in the hall.

(Lock the door)

skipjack's picture

Haha, what a tool...  All you young idiots voting in the savior of redistribution will learn...and it will be all on your head.  You voted to continue the overspending and the cronyism and the endless wars and the abrogation of civil liberties.  Boomers have done NOTHING comparable to the blowing up of America that will be accomplished by their votes for Obama.

 

Good luck, hope you like living with your choice...'cause he sure wasn't the choice of the majority of those over 50.

Rathmullan's picture

yeah, but someone needs to remind the bulls(hitters) that the community organizer won't be running for president again and, given that, I suspect the secret sevice has probably stopped making visits to S&P.

Boilermaker's picture

Right...this will keep the FED from slamming the futures.

max2205's picture

I guess it doesn't hurt to ask for the max.

Fucking congress is useless so why not ask to dissolve it and el presidentie can do whatever the fuck he or she wants. I don't hope it comes to POTUS raising the ceiling. What a FUCKTARD

If repubs don't do the right thing here it all over for anyone that earns a living.

inevitablecollapse's picture

"the country doesn't need a victory lap, it needs leadership" - which of this group of ass-clowns on either side of the isle will be able to provide said leadership mr. boner?

icanhasbailout's picture

None of them will lead. Obama is deliberately setting things up so that they will go to all hell and the Republicans will take the blame. He did this out of the gate when he first got elected (poisoning any hope of cooperation with GOP lawmakers) and is following the exact same script now. Can you not see the pre-positioning? #My2k

 

FL_Conservative's picture

Your assessment is exactly right and "leadership" is in short supply inside the beltway.

NotApplicable's picture

By design.

Puppets can sing and dance, but have no faculties outside of their strings.

GernB's picture

When the press is on your side, you are never to blame.

csmith's picture

That's a clown-question, bro!

Conman's picture

What do the repubs have to lose, watch the economy crash and burn under Obama 2.0 and see a repub pres in 2016. how easy is that?

Mr Lennon Hendrix's picture

Like teens in the weight room they have to look tough.

buzzsaw99's picture

Boehner is full of beans. Enough House repugs will defect to pass it. Keep talking out your ass Boehner.

Conman's picture

And the motivation to do that is what with election past?

buzzsaw99's picture

don't kid yourself. both parties and their owners love a big spending gubbermint

Conman's picture

Ah right, but whats the motivation for repubs to sing cumbaya with the dems? Just becuase?

CrashisOptimistic's picture

Defect?  To what?  No alternative is going to get to the floor.  Boehner can prevent that.

ghostfaceinvestah's picture

Everything here looks good for holding gold.

Joebloinvestor's picture

Morsi is not alone........

Yen Cross's picture

 I have been hosed 2/times on the risk trade!  I see a weekly breakout/ I'm tired of breaking even!

chump666's picture

With Russia close by, no, it's Israel playing cyber warfare ready for the big one Iran.  Warm up was Palestine which was a 'bombing run', now this.  So next, will be the strike on Iran.   How many western embassy officials are left in Iran?  Apart from local support staff?

Counting down to war, after Jan fiscal cliff nonsense which only HFTs are trading off i.e most hedge funds are out of market.

nmewn's picture

Gore enforcing his patent...no more "spontaneous demonstrations" for you!!! ;-)

miker's picture

I'm convinced Geithner has a personality disorder.  The guy has no ability to recognize how he screwed up and leave things alone.  Instead he pushes on to try and make this house of cards work.  Removing the debt ceiling approval by Congress is a terrible idea.