Business as Usual: The Next Fiscal Cliff

Courtesy of Russ Winter of Winter Watch at Wall Street Examiner

More on the fiscal cliff talks: The Presidente’s opening bid – delivered this afternoon by Tim Geithner – calls for a $1.6T tax increase, a $50B economic-stimulus program, and delivering to the WH the power to raise the federal debt limit without congressional approval.  The White House also wants the payroll tax credit to continue and a “permanent” increase in the debt limit.  Lastly, they want to extend emergency unemployment compensation.  It’s a “step backward,” says Mitch McConnell.

The Presidente apparently graduated from the Fuck U School of Negotiations. Does a real ethical leader send a crook like Geithner to “open” with this particular irresponsible tract when Congress is adjourning on Dec. 14?  This is a deliberate attempt to obstruct the process.  I think we learned a lot about Obama’s second term here. No spending cuts and a token $42 bn from allowing expiration of the Bush tax cuts on those making over $250k is a spit in the ocean in comparison to the $3.6 trillion the government spends each year. Unless the GOP shows a little spine, deficits are going to blow sky high in 2013 and 2014. The overnight markets barely reacted to this. In fact I think the markets are hoping for business as usual, no austerity, no tax increases, just a phony facade. The Presidente is playing to extend all the items above to the next fiscal cliff.

Bruce Krasting points out that the Sandy request of $80 bn from New York and New Jersey, exceeds the annual payments of disaster relief of $11bn. So the extra $69bn is going to require a special spending bill. Eric Cantor says this extra spending “will need to be properly considered,”  meaning something must offset, or the amounts could also be questioned.

If this wasn’t enough a huge “Pineapple Express” is headed toward the West Coast, and will dump double digit rain over a very large region and in particular Northern California. This could require billions more in disaster relief.




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