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Investment Analysis Clubs / Macro Economic Trends and Risks
|Subject: Re: The Fiscal Cliff-Solving the wrong problem||Date: 11/14/2012 12:32 PM|
|Author: n8larson||Number: 408471 of 511038|
This hasn't been mentioned yet in this thread, but I think it should be:
The CBO report, as simplified in the OP, appears to make a distinction between #1 and #3 as though these are menu items that must be selected. This statement also implies that there is a hard limit:
Only problem is that “the rich people” tax is by far NOT the largest dollar problem.
1. Bush tax cuts for lower incomes $288 billion
The line between "upper" and "lower" incomes is arbitrary! The total value of the benefit to letting the Bush tax cuts expire in 2013 is just the sum of those ($330B), but the relationship between the two sub-options is whatever Congress wants to say it is. To say we should let the Bush tax cuts expire for the 'lower' incomes as well because it produces 7x the 2013 revenue ignores the fact that in actuality, it's a continuum, not a menu with two items on it.
If $250k, or the top 3% or so, is the 'upper/lower' boundary that produces these numbers, then some other boundary would produce a different split. Why not $193k? $123k? or use a percentage of median income, which resonates with the whole 47%, 1%/99% way of looking at income. Do it by state if you want. If the goal is to stick it to the "upper class" without hurting the "middle class", then by all means, force households that WANT to think of themselves as "middle class", even though they're in the top 15% of HH incomes, to admit they're not. Quintiles work, too (lower=1&2, middle=3&4, upper=5, for example). And the cuts could shrink but not go away completely for some in the middle. There are better options than a single hard yes/no line at 250k.
-n8 (5th-quintiler, but well under $250k)
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