Originally
posted by
Trife:
'Raising tax rates for those with the highest incomes challenges the supply-side proposition that even moderately higher rates would hurt growth. President Bill Clinton’s 1993 deficit reduction plan increased income tax rates for roughly the top 1.2 percent of incomes. Opponents said this would lead to recession. Instead, we had enormous job creation and the longest economic expansion in our history.'
http://www.nytimes.com/...ml?smid=re-share&_r=0
Yep, those tax hikes clearly led to the job growth--it wasn't the emerging tech sector, 300 trade agreements (including NAFTA0 they signed or the low interest rates that caused the job growth ;).
Of course Rubin's full editorial is more amusing given he thinks you can solve the problem by matching revenue hikes on the rich and entitlement reforms. Maybe if you get them all to stay in the US, define rich as Obama does as $250,000 or more, include those S-corps and tax them at French rates or higher, then maybe it's possible. Otherwise it's a pipe dream.
I think Republicans will cave on the top marginal rates IF they can get a concession on premium support model or combo of capped Medicare growth/+ age increase. Boehner hinted at it already. Of course then Boehner has to deal with the right saying zero tax changes and all spending/entitlement reform and Reid/Obama with the left saying zero entitlement changes and all tax hikes (look at Sen. Feinstein today saying do not change the age...as if the program created during the Vietnam War shouldn't be indexed to some form of growth).
I think the most likely outcome is age on SS is phased in with a one to two year age increase (it should be indexed from there forward to average death age, but they won't do that). Medicare will be shifted from 65 to 67 over a 10 (maybe 20) year time frame. Top marginal tax rates will go up for those earning one million or more (maybe $500,000, definitely not $250,000). Medicare and Social Security benefits will be means-tested. Domestic spending will be capped to some index tied to inflation. It's the only way I see everyone feeling like they got something of what they were looking for and everyone with some egg on their face permitting them to go back to voters to say, we got some and we lost some.
The reason it won't be $250,000 is because of the number of S-corp filings. Unless they fundamentally reform the systme, it'll hit tons of small business owners, whose real profits are far slimmer. Not to mention the "progressive" income tax isn't that progressive when you index income to geographical cost indexes. Hence, a minimum of $500,000, but likely more.
They will have to raise the age on Medicare benefits. It's the easiest way to get accumulated savings. BUT to avoid the wrath of voters they will phase it in.
Means-testing of Medicare and SSI is a no-brainer given it satisfies the left's desire on dealing with wealthy folks and because the right already conceded it in their various plans.
The big two question marks are capping Medicare growth and tax hikes. That's where the deal is cut.
Ultimately, I suspect it will be a $3-4 trillion package.
That's my take on where things are going. Now, just wait a few months while they pass yet another stopgap measure and everyone can say look how wrong you were.
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