Republicans have offered more concessions including an agreement to hike taxes on those making as little as $ 400,000 (up from the $ 250,000 sought by Obama). They also backed down on a proposal to slow the growth of Social Security benefits.
They may as well throw out the white flag at this point. While I do not know if they reach a compromise today, it appears Senate Republicans are willing to do more than they should.
The fact remains this is a pathetic effort by both parties to rein in unsustainable budgets.
Please consider Fiscal deal stalls as clock ticks to deadline
Efforts to prevent the economy from tumbling over a “fiscal cliff” stalled on Sunday as Democrats and Republicans remained at loggerheads over a deal that would prevent taxes for all Americans from rising on New Year’s Day.
One hour before they had hoped to present a plan, Democratic and Republican Senate leaders said they were still unable to reach a compromise that would stop the automatic tax hikes and spending cuts that could push the U.S. economy back into recession.
“There are still serious differences between the two sides,” said Senate Democratic leader Harry Reid.
Progress still appeared possible after the two sides narrowed their differences on tax increases and Republicans indicated they would withdraw a contentious proposal to slow the growth of Social Security retirement benefits.
The two sides were close to agreeing to raise taxes on households earning around $ 400,000 or $ 500,000 a year – higher than Obama’s preferred threshold of $ 250,000 – several senators told reporters.
Republicans aim to pair any tax increase with government spending cuts to benefit programs that are projected to grow ever more expensive as the population ages in coming decades.
But their proposal to slow the growth of Social Security benefits by changing the way they are measured against inflation met fierce resistance from Democrats. Obama included the proposal, known as “chained CPI,” in an earlier proposal, but many of his fellow Democrats remain opposed.
“We consider it a poison pill – they know we can’t accept it. It is a big step back from where we were on Friday,” a Senate Democratic aide said.
Poison Pill Nonsense
The real poison pill is allowing Social Security and Medicare costs to escalate unabated. Does anyone in either party want to admit the truth?
Apparently not, but that is hardly news to anyone with an eighth-grade education in math.
As the bargaining continues, it will be up to the House to reject whatever nonsense the Senate comes up with, because if not in December, the Senate will come up with something in January at the current rate of Republican concessions.
Every compromise to date leaves the US worse off than if the fiscal cliff happens. Thus, the best hope still remains that all compromises fail.
Mike “Mish” Shedlock
Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
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