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Townhall
Both Sides Must
Give Ground To Avoid Fiscal Cliff
by Michael Barone
Nov 19, 2012
In his first formal press conference in months, Barack Obama showed
that getting re-elected can increase a president's confidence and
combativeness. He staked out tough stands on several issues, especially
on the looming budget negotiations.
Looking ahead to the "fiscal cliff" on Dec. 31, when the 2001 and 2003
tax cuts expire and sequestration cuts government spending sharply,
Obama demanded $1.6 trillion of increased revenues as part of any
budget bargain.
That's twice the number he and Speaker John Boehner agreed on in the
grand bargain talks in the summer of 2011.
Those talks fell apart when Obama telephoned Boehner and raised his
demand to $1.2 trillion. Boehner refused, and as Bob Woodward describes
in "The Price of Politics," congressional leaders of both parties
worked out their own approach. Sequestration, first suggested by
Obama's budget director, became part of the deal.
There's a solid argument that limiting high earners' deductions could
raise $800 billion or more. A $25,000 cap on deductions, according to
The Wall Street Journal, would yield almost $1.3 trillion of additional
revenue. The Simpson-Bowles commission showed that broadening the tax
base could net $1.1 trillion.
And there's a solid argument that raising tax rates on high earners, in
conjunction with the increase that's part of Obamacare, would slow down
economic growth. That's because many small businesses are taxed at the
individual income tax rate.
Obama once accepted that argument, albeit reluctantly, when he
temporarily abandoned his quest for higher rates in December 2010.
Raising them, he conceded, would hurt while economic growth was still
sluggish.
It's actually more sluggish today than it was then, although as Obama
pointed out in the press conference, we are further away from the sharp
economic decline of 2008-09.
Read the rest of the article at Townhall
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