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Boehner Proposes Conditional Tax Hike On High Earners, Obama Refuses

Tyler Durden's picture




 

The Fiscal Cliff cat and mouse game is entering its last two weeks of calendar 2012, with Congress now officially closed for the year. And while we would have expected major updates in the Cliff timeline to only hit during trading hours, usually just as AAPL once again threatens to trade with a 4-handle, Reuters reports that out of the blue Boehner, who last we checked is back in Ohio, has made a radical departure with the Norquist pledge status quo, and has offered to raise tax rates on high earners to break the "fiscal cliff" deadlock in exchange for major cuts in entitlement programs, "but President Barack Obama is not ready to accept, a source said late Saturday."

Which brings us back to political square zero, because at the end of the day none of this is about a fiscally sustainable America, and certainly won't be until one day the shadow banking mechanism, whereby PDs can extract par cash from custodians for TSYs just issued and purchased and immediately re-pledged, and use said cash to recycle TSYs as effectively infinite collateral, and where more issuance means more demand (which creates a Giffen good perpetual engine which of course works, until suddenly out of the blue, for whatever reason sentiment shifts rapidly and violently, and it no longer does), fails and yields spiral out of control.

In the meantime, both political parties will trundle along pretending a tax hike which covers about a month (max) of government spending is even remotely relevant.

More from Reuters:

While the White House considers Boehner's offer "progress," the source said more remained to be worked out between the two.

 

Tax rates are a major sticking point in negotiations to avert steep automatic tax hikes and budget cuts set for the end of the year if a deal isn't reached. Republicans have resisted Obama's demand to extend lower tax rates for everyone except top earners, preferring to extend them for all taxpayers.

 

The Boehner offer was the first departure from the position the House speaker has held for months.

The question now is whether the GOP can now spin the president's
negative response to the proposed "compromise" - and it will certainly try - to portray Obama,
instead of themselves, as the entity that wants to push the US over the
cliff in exchange for political brownie points. Because now Boehner will have all the leverage to tell any splinter GOP group in either the Congress or the Senate, that he made a good will offer, and it was the president who refused.

As for the actual cliff, we repeat what we said back on November 13: "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."

Nothing has changed since then.

 

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Sun, 12/16/2012 - 02:12 | 3068152 RobotTrader
RobotTrader's picture

Heh, I knew a deal would be reached.

 

Breakaway gap to the upside Monday morning?

Will the U.S. finally catch up to the superior strength of the foreign markets?

Well, the Nikkei has been outperforming.

Here are some juicy photos of Japanese models:

https://www.google.com/search?q=japanese+models&oe=utf-8&aq=t&rls=org.mo...

 

Sun, 12/16/2012 - 02:16 | 3068155 Tsunami Wave
Tsunami Wave's picture

................................

 

Sun, 12/16/2012 - 02:23 | 3068157 Yen Cross
Yen Cross's picture

Robo I can't hate you. You are second to my prowess.  Puts )buy/sell   Calls)buy/sell

  You are working on being a humble person. I like that.  Teaching is a good thing/

  Teach people the difference between taking possesion/ and taking posession on the sell side.

 Your friendly currency trader/

Sun, 12/16/2012 - 03:17 | 3068190 devo
devo's picture

I've only banged a half-Japanese, and it was pretty good, which leads me to conclude a full Japanese would be pretty great.

Sun, 12/16/2012 - 08:37 | 3068331 slaughterer
slaughterer's picture

Full Japanese is the way to go, but Korean chicks are catching up.  

Sun, 12/16/2012 - 10:52 | 3068453 hardcleareye
hardcleareye's picture

Brings to mind Pink's Stupid Girl song

http://www.youtube.com/watch?v=BR4yQFZK9YM

Sun, 12/16/2012 - 02:20 | 3068161 MyBrothersKeeper
MyBrothersKeeper's picture

I think the deal has been decided for some time.  The rest is just posturing for public opinion.  Still, why don't Rep frame the entitlement debate for what it should be: we need retitlement reform for it to remain solvent for future generations.  To say "cuts to entitlements" is disengenuious and not likely to win public favor.  The entitlements can be reformed to eliminate waste and bring things into a balance with those willing to do so.  But I also agree that nothing they compromise on will impact the debt trajectory.  They don't get serious until they are forced too....and as long as the Fed and convuluted statistics keep the masses from noticing, the politicians don't care.

Sun, 12/16/2012 - 02:29 | 3068168 Yen Cross
Yen Cross's picture

 Is it just me? Do all you

serendipitous  Traders hear a gasp, a fresh breath whispering?

  Now it's nap time ;-)

Sun, 12/16/2012 - 02:45 | 3068185 devo
devo's picture

Any foreign citizens with a spare couch?

Sun, 12/16/2012 - 02:56 | 3068195 Yen Cross
Yen Cross's picture

 Back to to Tylers article/ If you rub my " ballsac" unicorns will magically erase debt. Am I wrong? Wait/ Let me put a bow tie on first.

Sun, 12/16/2012 - 03:52 | 3068232 tickhound
tickhound's picture

{overheard following bow tie puppet lecture}

So unicorns, huh?  Has anyone seriously looked into this?

Sun, 12/16/2012 - 03:35 | 3068218 savagegoose
savagegoose's picture

why does anyone have to work, or pay tax?  cant we just  be given money from the fed at par, and loan it back  at a  markup, then live off the interest,  half a percent on $10 mill aught to do me for a year.  o wait dont forget the taxes, make it 11 mill.

Sun, 12/16/2012 - 03:58 | 3068238 blunderdog
blunderdog's picture

Being part of the Fed system is really a noble and productive line of work, but we don't want to overdo it. 

If things ever became TOO good, we'd fire the politicians and forget to have wars and feed each other carcinogens and stuff.  Who would book ads?

Sun, 12/16/2012 - 12:17 | 3068603 Lednbrass
Lednbrass's picture

Nowadays they call that Modern Monetary Theory- and it has a growing number of proponents.

Sun, 12/16/2012 - 03:34 | 3068219 savagegoose
savagegoose's picture

oops

Sun, 12/16/2012 - 03:51 | 3068231 Bastiat009
Bastiat009's picture

How many times has the world ended since 2008? How many times can the world end? Boring ... 

Sun, 12/16/2012 - 05:31 | 3068273 Colonial Intent
Colonial Intent's picture

Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.

Sun, 12/16/2012 - 05:50 | 3068285 Whiner
Whiner's picture

Gosh! Is it coming fast or slow? Not the fiscal cliff, the demise of the world-wide fiat money. Will the west with Japan go first quickly followed by China? Why did Jim Rogers move his family to Singapore? Or was it Hongkong? Can I get Swiss citizenship?

Sun, 12/16/2012 - 07:54 | 3068319 orangegeek
orangegeek's picture

Barry believes that pouring more dollars into the markets will keep them up - worked for the previous 4 years.

 

But $7T later and a $1T deficit and there's no where to go but down.  Boehner knows that if spending is cut, markets tank.

 

And right now, the SP500 weekly is looking weak.

 

http://bullandbearmash.com/index/sp-500/weekly/

 

Barry also knows that with gridlock, he can use the media (the PR arm of the Democrats) to spin that it was Boehner's fault for gridlock and the market's collapse.

 

Should be fun to watch.

Sun, 12/16/2012 - 08:50 | 3068339 MFLTucson
MFLTucson's picture

Goodbye Bonier, he must go he is weak and letting this liar pull him around by the nose.  Bow out Bonier and let this clown do what he wants you have ruined our party.

Sun, 12/16/2012 - 11:00 | 3068462 dwdollar
dwdollar's picture

The party has ruined itself. Boehner is actually a perfect fit for it.

Sun, 12/16/2012 - 12:19 | 3068609 Lednbrass
Lednbrass's picture

They are exactly what they ahve always been- if you like Lincoln you shold love Boehner.

Sun, 12/16/2012 - 09:38 | 3068371 egoist
egoist's picture

One thing all of these ruling class fellows fail to grasp, Tyler's tech stuff notwithstanding, is the galactic scale of the devouring spending and spent. Did these guys ever get exposure logarithms in school?

Sun, 12/16/2012 - 10:04 | 3068396 Lost Wages
Lost Wages's picture

Like Gerald Celente says, "Washington D.C. is just Hollywood for ugly people."

Sun, 12/16/2012 - 10:09 | 3068401 poggi
poggi's picture

..first one to blink.

When I was negotiating labor contracts, we only made proposals that included all pieces.  Boehner's being cherry-picked and he's walking right into the propeller.

He should send his staff home and call it a year, letting O make a telephone call.

Sun, 12/16/2012 - 12:26 | 3068624 azusgm
azusgm's picture

He should tell Barry to go surf in Hawaii then call the House members back to do the work that is theirs to do. The House members can negotiate among themselves until they come up with a bill that passes. The bill can go to the Senate and pass or fail. It can be negotiated until it is ready for conference committee. Pass a bill out of the legislature then let Barry either sign it or veto it while the country is screaming about the clock ticking on the fiscal cliff.

That's how you twist Obama's arm up behind his back. The clock is your friend if you actually follow the Constitution.

Sun, 12/16/2012 - 10:11 | 3068403 stant
stant's picture

my new spectator sport is watching the country argue over a corpse. if i knew were to go i would leave here

Sun, 12/16/2012 - 10:24 | 3068411 Tom Green Swedish
Tom Green Swedish's picture

Message to Boehner: The Dems are in control.  They will be for the next 4 years.  Let them inrrease taxes on the wealthy.  This will do two things.  First, it will be good in the short term because it will allow the government to spend more money and collect more taxes.  We are at a historic low.  Second, once the taxes collected reach a certain amount per household, the market will eventually tank just like always does and we will start all over again, with another market crash, and another lost decade, or we can have it tank now because be sure the ratings agencies and the rest of the world will lose confidence in your ability to come up with a solution.  This I think is more important than the issues at hand.  Just give up GOP, let them do their thing. Face it, what you are arguing is completely irrelevant to the direction of this country. Income Taxs and Entitlements are a relatively new stupid thing, and until the stock market fucked everything up I'd say we were doing just fine without them. What are you afraid of?

Sun, 12/16/2012 - 10:36 | 3068426 Catullus
Catullus's picture

Because there's not going to be a crash.  There is no cliff.  And if there's no crash, then the democrats just scored a huge layup and bark at the republicans by saying "see, it wasn't that bad."  Highstep it into the endzone and spike the ball in their faces for the next 20 years. 

Sun, 12/16/2012 - 10:31 | 3068422 Catullus
Catullus's picture

You can only wonder what would have been discussed had the republicans nominated Ron Paul instead of Mittens.  They would have been working from a start position of "bring all the troops home by Christmas, and then we'll know you're serious about spending cuts."  But alas, the republicans nominated a warmongering, elitist democrat from Massachusetts.  Maybe Mittens can tact is way into a secretary post 8 from now like the other loser, warmongering, elitist democrat from Massachusetts -- John Kerry. 

The republicans are not even smart enough to call the tax increase "the Clinton Tax Rates".

Sun, 12/16/2012 - 10:36 | 3068427 Xibalba
Xibalba's picture

If one is provided with housing, food, and the basic life stuffs from the State, then what's wrong with the State taxing such a person 100%? 

Sun, 12/16/2012 - 11:05 | 3068467 max2205
max2205's picture

Kerry set up to win in 2016

Sun, 12/16/2012 - 11:19 | 3068490 I am Jobe
I am Jobe's picture

Pussification of Amerika.

Sun, 12/16/2012 - 11:25 | 3068500 Fix It Again Timmy
Fix It Again Timmy's picture

The outlook is not looking very rosy, if politicians could solve problems they would have become engineers rather than politicos.  If government was efficiently and effectively run and all politicians were given a detailed set of instructions on how to maintain it, the system would perhaps prosper, not a guarantee, but at least there would be the possibility.  The way government is run today, there is no hope that problems will be solved... Get used to it...

Sun, 12/16/2012 - 13:26 | 3068762 SKY85hawk
SKY85hawk's picture

You have forgotten an important fact!

Obama signed the 2011 Budget Deal. 

If Barry was true to his campaign promises, he would have vetoed the expiration of Bush tax cuts for the NON-wealthy.

The following points suggest  the gummint is going to reduce spending whether you like it or not.

In addition to the $100 Billion mandatory spending reductions, the Congressional Budget Office published a "Budget Options" series identifying more than$100 billion in potential spending cuts;

http://www.heritage.org/research/reports/2009/10/50-examples-of-governme...

 

Wasteful Govt Spending – Source: Unconventional Wealth newsletter pitch

National Institute of Health (NIH) funded studies include:

$386,000 to study massaging rabbits: a study to determine proper massage duration time on rabbits;

$453,000 to study breathing during meditation: a study to determine how important breathing is during meditation;

$1,158,000 to study how to lose weight through meditation: a study to find out if meditation encourages weight loss;

$458,000 to study yoga & meditation therapy: a study to see if meditating and doing yoga helps you lose weight;

$438,625 to study behavioral effects of meditation: a study to see if meditation relaxes people when stressed out;

-General Services Administration spent $800,000 at a party hosted in Las Vegas with the goal of finding ways to streamline the administrative duties of government workers;

I don't see how these cuts would affect the Social safety net, do you?.

 

Sun, 12/16/2012 - 11:30 | 3068505 RKDS
RKDS's picture

The rich give up some table scraps (maybe) and working people give up their lives.  Sounds like a fair trade...NOT.

Sun, 12/16/2012 - 11:40 | 3068507 virgilcaine
virgilcaine's picture

It's a deal only Monty Hall could make.  Try Door Number 2.

Sun, 12/16/2012 - 12:04 | 3068566 surf0766
surf0766's picture

O wants the cliff to help "save" the people from the cliff with a further move toward the communist agenda.

Sun, 12/16/2012 - 12:44 | 3068665 Monedas
Monedas's picture

MDB  ....  Million Dollar Boehner .... gets rolled again .... for billions of Boehner "beans" (dollars?) .... he's the "Tostada of the town" .... remember, a tostada, is basically an open faced bean sandwich .... on a "rolled" tortilla !       Monedas    1929      Comedy Jihad Trying To Make Cents Of It All World Tour   

Sun, 12/16/2012 - 12:49 | 3068681 Monedas
Monedas's picture

"When I was a kid .... I had a little dog named Snuffy .... he got run over (rolled?) by a milk truck .... I haven't been able to drink milk since !" .... Frank Sinatra to Kim Novak in Pal Joey        

Sun, 12/16/2012 - 13:27 | 3068768 Jeepers Creepers
Jeepers Creepers's picture

Raising taxes on higher income earners will pay for the federal government expenditures for about a week.  Bernanke will get about two more minutes on his printing press. 

All it's going to do is raise taxes for small business owners like me.  As far as who is "paying their fair share" I'm much more concerned with the bottom half of freeloaders that pay nothing yet demand their Obamaphone and EBT card.

When it's all said and done, I spend more on taxes than food, clothing, shelter, transportation, my children, etc.  If we were going by who is "paying their fair share" my taxes should be cut in half.

Sun, 12/16/2012 - 14:00 | 3068837 Catullus
Catullus's picture

So here's the deal... the empty suit cocksucker in the white house is just going after those making between $250k and $1M a year.  They were given their "tax the rich" scheme.  Hate to break to some of your socialist fucks, but $250k/yr is NOT rich.  It's basically two working professionals with masters degrees.  It's a saleperson who closes their big account once every 3 years. It's every doctor that's done with medical school.  And it's every small businessowner. It's hardly enough to live in any house along the major metropolitan areas of the eastern seaboard.  AND THAT'S IN 2012.  Not 2020 when inflation is going to cause the wonderful condition of BRACKET CREEP. Those of you on the margins, you're absolutely going to get hit with this over the next decade.

Face it, if you're upper middle class, those no-talent fuck sticks in government "adminstering" your life want a big piece out of your ass.  If you make combined $150k a year, you're a fucking dipshit if you're a democrat.

And god forbid you've been investing in companies that pay dividends to their shareholders.  Fuck long-lived assets that drive free cash flow.  Should have loaded up on those social media stocks that leverage their balls off with no real revenue streams.

Does that mean any of you should support republicans?  No.  They're seeking other "revenue enhancements" aka Tax Increases all the same.  The only debate is "raise taxes on the upper middle class, everyone, or take away everyone's tax breaks". 

Sun, 12/16/2012 - 14:45 | 3068924 Walt D.
Walt D.'s picture

What is wrong with Boehner - doesn't he remember what happened to George H. W. Bush when he caved?

All Boehner has to do is the pass a bill in the house that leaves the "Bush Tax Cuts" in place and drops all rates, except the top one, by 5 or 10%. This actually gives the "middle class" a tax class, as opposed  to the Obama plan that  gives nobody  a tax cut in the sense that you will see less taxes taken out of your paycheck. Under Obama the only people who will get a "tax cut" are those workers who get laid off or cut back to part time.

Sun, 12/16/2012 - 15:21 | 3068990 tedstr
tedstr's picture

READ: " I'm ready to give you more methadone, but you have to tell me you'll serioulsy get treatment."  "no"

Sun, 12/16/2012 - 15:25 | 3068997 luckylogger
luckylogger's picture

You guys got it all wrong..... The FED is buying all the debt and then pays all interest payments on the debt to  the treasury dept. so essentially The treasury department is paying itself interest on the debt that they issue and buy... So just cancel all the debt that the FED has and vola no debt and we have the debt under control.  No bullshit it has already happened... all we need is for the pols to admit it and get on with life. Then we will hear about all the poor bankers jobs that are lost and it will turn into but we cannot get rid of it because of all the poor bankers that will loose their poor dear jobs............

Sun, 12/16/2012 - 16:07 | 3069079 supersajin
supersajin's picture

Come on Mayans!! They are our only hope at this point!!

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