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View Diary: Grand bargaining likely to be a leadership affair (122 comments)

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  •  The sequester is part of the budget control (0+ / 0-)

    act.  The Bush tax cuts are not a part of that act. Those were due to expire in 2010 but the Dem Congress and President punted the issue and extended those through 2012.  

    If you assume that no deal is struck before January 1, all Bush tax cuts expire. In addition, the budget control act sequester provisions will kick in and that will result in across the board cuts.  To my knowledge the budget control act does not raise revenue.  What it does is allow the debt ceiling to be raised in exchange for spending cuts to be agreed by the parties or automatically if they don't agree.  That's where we are right now.  Obama has no obligation to include the upper income Bush tax cuts or any Bush tax cuts in any discussions with Congress relating to the budget control act.

    What the President and Congress will be negotiating post Jan 1 is to essentially revise the budget control act.  They could throw it out entirely, which is what I think they will do.  In its place will be a bill to extend the below 250k Bush tax cuts and eliminate some of the defense cuts.  All of these actions would be effective Jan 1 (i.e., retroactively).

    Note that the tax cut proposals are being made by Democrats as a way to get out of the budget control act. They are not a part of that act.

    Now, the Republicans are insisting on spending cuts including to medicare, medicaid and social security as a condition to agreeing to remove the sequester cuts (which fall on defense).  The parties will attempt to put together a package to address it, but I simply don't believe the GOP has the leverage or desire to hold out for big time cuts to social programs or to restore all of the Bush tax cuts.'  The likely result will be to restore some Bush middle class tax cuts, restore some defense spending cuts, override the budget control act sequester provisions and punt the rest.

    Obama gets to walk away with raising upper income tax rates in any event.

    Alternative rock with something to say: http://www.myspace.com/globalshakedown

    by khyber900 on Tue Nov 13, 2012 at 01:33:06 PM PST

    [ Parent ]

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