As Geithner Says Supercommittee "Holds Key To Rebuiling Confidence" Supercommittee Says "Trillions Of Dollars Apart"
With the European drama seemingly on the backburner for a few days (although with so many promises of resignations, it is now Wednesday in Greece and who is PM? Why G-Pap, despite resolute guarantees he would have stepped down by Monday... at the latest... But aaaaaany minute now, he is resigning, promise) it may be finally time to switch attention over the US, and the fact that absent lots and lots of fiscal stimulus, Q4 GDP is rolling over, as virtually everyone has predicted. Amusingly, none other than Tim Geithner provides the perfect segue, having said earlier that "the supercommittee holds "the key" to rebuild confidence." This brings us to the supercommittee itself. And for that we go to Politico: "Congressional Democrats and Republicans are trillions of dollars apart on a deficit reduction deal as the supercommittee nears its Nov. 23 deadline." So, with confidence like that, who needs any doubt. It continues: "The most recent Republican offer, according to Democratic and Republican sources, includes roughly $770 billion in spending cuts and between $550 billion and $600 billion in new revenue from a variety of sources, including selling public lands, increasing the price tag on postage stamps and new energy leases. Republicans also say they’d be willing to limit deductions and certain tax breaks – sure to anger their conservative base – in order to reach nearly $300 billion in new tax revenues. In exchange, Republicans want to change the rate of inflation for Social Security, cut Medicaid and increase Medicare premiums for the wealthy." Needless to say this is going to go nowhere in a hurry. And all of this is happening as the second interim debt ceiling target is about to be breached after two more Treausry auction weeks. But none of this matters: the robots trading this market, saw the word confidence and sent us to highs. After all buy first, ask questions later is what the motto of the NYSE Borse is, or should be going forward. Probably in German - more fitting.
Some more details on the Supercommittee status from The Hill:
Republican supercommittee negotiators are willing to limit tax deductions for upper income households in exchange for lowering tax rates, according to a GOP aide.
Republicans say some of the revenue raised from limiting itemized deductions for the wealthy could be used for deficit reduction, and are painting the move as a serious concession made to galvanize the talks two weeks before its Nov. 23 deadline to reach a deal.
Democrats, however, argue lowering tax rates would cost the government more revenue than it would raise from changing deductions. They say the GOP offer, as a result, is more of an effort to avoid blame than reach a deal.
Republicans say their offer is a shift, since GOP members previously have said any tax increases generated by eliminating tax deductions must be balanced out entirely by lowered rates.
The GOP aide cast the idea as a response to a Democratic proposal to limit itemized deductions for the wealthy on mortgages and other tax breaks. The aide said it was not a formal proposal.
“This is not a Republican proposal,” the GOP aide said. “Why would Republicans propose increasing taxes? This is Republicans giving something in return for lowered tax rates.”
The exact amount of revenue to be used is shifting on an hourly basis depending on the fast moving negotiations, but could be characterized as hundreds of billions of dollars, the aide said.
The aide also said the hundreds of billions of dollars would be in the context of a $1.2 trillion package, the smallest possible to avoid across-the-board cuts, and would not include any revenues from economic growth.
And once the details trickle down to the "99" the result will not be pretty:
"This plan would provide the very wealthiest Americans with one of the largest tax rate cuts ever. It's a shell game. A thinly veiled attempt to appear to put revenue on the table while simultaneously removing far more with massive tax cuts for wealthy Americans. This plan is not a solution Democrats or middle class Americans would ever be willing to accept," a Democratic aide familiar with the talks said of the GOP move.
All of the above is irrelevant, simply remember: "Confidence." Cause the Jeethner said so. And no US downgrade. Ever.
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