Tuesday, January 1, 2013

After the Deal on Taxes – Where Are We Going on Expenditures?

Jonathan Weisman reports on the deal that passed the Senate:
In one final piece of the puzzle, negotiators agreed to put off $110 billion in across-the-board cuts to military and domestic programs for two months while broader deficit reduction talks continue ... Democrats were incredulous that the president had ultimately agreed to around $600 billion in new tax revenue over 10 years when even Mr. Boehner had promised $800 billion. But the White House said it had also won concessions on unemployment insurance and the inheritance tax among other wins.
Before spring arrives, we will have to face up to the issue of spending cuts. I suspect that the Republicans will insist that these cuts represent at least $600 billion over the next ten years and that none of these cuts come from the defense department. In other words, the Republicans will want cuts in Social Security, Federal expenditures on health care (think Medicaid and SCHIP), and a host of large cuts in other small Federal programs. But why not reduce defense spending? Progressives should call for all of this $600 billion over the next ten years – which turns out to be a mere 0.3% of the decade’s potential GDP. After all, current defense spending is running at 5.3% of GDP. Barney Frank recently made this case. Progressives need to continue to hammer this argument. We may not get all of the cuts in government spending from defense but if we don’t make this argument, I fear that the Republicans will get all they want at the end of the day.

3 comments:

Ken Houghton said...

"But the White House said it had also won concessions on unemployment insurance and the inheritance tax among other wins."

Horse manure. A $10MM exclusion (more, if you consider most Estate Tax cases involve bullsh*t accounting) is "a win"?

I'm starting to think The Biden Administration is lying and stupid, not just lying.

Bill H aka run75441 said...

Ken:

Maybe there is other math on the inheritance tax of which I am not aware? The last I read the inheritance tax was set at $5 million exemption and a 40% taxable rate after the $5 million. Let me know if I am wrong. http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/31/your-fiscal-cliff-deal-cheat-sheet/?tid=pm_business_pop

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