Idea for a tax extension compromise

[Mr.Phips]

The best compromise for the Bush tax cuts would be to extend the cuts for everyone making under $1,000,000 a year rather than $250,000 a year.  This would likely affect less than .05% of all taxpayers and would not harm the economy, as most people making this much money dont spend a high percentage of their income, unlike middle class taxpayers. 

Obama should throw cold water on any plan that extends all of the Bush tax cuts for any amount of time.  Its bad politics, bad economics, and bad for economic equality. 

[Mr.Phips]

The Bush cuts will be extended for everyone after the election, except that for the "rich" it will just be for two years. Obama will accept the Boehner deal - after the election. You can write that down.

Why would Obama accept an extension for two years? Wouldn't that mean having the same exact fight right before the presidential election?

Right. He will do it, because given the election result, and all, and because the GOP is holding everyone else hostage, it is a reasonable Faustian bargain, and the voters have made clear that they expect compromises. If he does not do it, and the economy continues to disappoint, then he will be blamed. On this one, I am pretty confident.

What is to stop angry defeated Democrats like Barbara Boxer, Russ Feingold, and Patty Murray from filibustering any extension in the lame duck session?  They could give a sh*t if taxes are increased on everyone once they are defeated.  Im pretty sure that the only Democrats who would vote for cloture on this would be Evan Bayh, Ben Nelson, Bill Nelson, Kent Conrad, Mark Warner, Mark Pryor, Mary Landreau, and maybe Jim Webb. 

That's only 49 votes to shut off debate, not anything close to the 60 they need.

Democrats will be in no mood to compromise after the way the media and Republicans treated them for the last two years. 

[Mr.Phips]

The Bush cuts will be extended for everyone after the election, except that for the "rich" it will just be for two years. Obama will accept the Boehner deal - after the election. You can write that down.

 

And Obama will earn himself a primary challenge in 2012 if he does this. 

[Mr.Phips]

Sure it might have to wait until January.

And there will still be a filibuster.  You would not believe how angry Congressional Democrats are at Obama, the Republicans and the media.  He will be forced to veto any extension or face primary challenge.  

Besides, even if Republicans get 51 votes in the Senate, they will still need nine Democrats to support them to shut off debate.  Right now, I can only count Ben Nelson, Bill Nelson, Conrad, Warner, Pryor, Landreau and possibly Webb.  That is only 58 votes, at most,  for cloture.  Most Democrats wont be doing any favors for Obama and Republicans after this election. 

[Mr.Phips]

We shall see. Someone should make a list of all my wild predictions. It might turn out to be a very fun roast - at my expense.

Well, you were wrong about healthcare not passing. 

My prediction here(about taxes) is that a bill wont even get to Obama's desk. 

[Mr.Phips]

The best compromise for the Bush tax cuts would be to extend the cuts for everyone making under $1,000,000 a year rather than $250,000 a year.  This would likely affect less than .05% of all taxpayers and would not harm the economy, as most people making this much money dont spend a high percentage of their income, unlike middle class taxpayers. 

Obama should throw cold water on any plan that extends all of the Bush tax cuts for any amount of time.  Its bad politics, bad economics, and bad for economic equality. 

this idea occurred to me as well, but I'm not sure if it makes sense. how much revenue will that actually take in? and just as importantly, how will it be used? if we using it to support other tax cuts or decrease the deficit it could be a good idea, but what assurance is there it wont just be used for more spending? if it's just more spending, there's really little case for not just letting it be spent privately.

Lets actually figure this out.  There are about one million taxpayers who make over $1,000,000 a year.  Lets say the average of these million make around $5,000,000 per year.   This comes to a total of four trillion dollars.  Four trillion taxed at 35% gets you 1.4 trillion, while four trillion taxed at 39.6% gets you 1.584 trillion.  Thats almost $200 billion a year in savings right there.