Fiscall Cliff

Obama's Opening Bid

Obama and Geithner settle the rates/revenues question; hard to see how this gets done.

So Obama's opening bid of $1.6 trillion over 10 years in new tax revenues from the well-off and corporations appears to have shocked the Republicans. Here's Daniel Strauss, reporting in The Hill:

House Republicans on Wednesday were incredulous at the president's opening bid.

"That is so 2009. It's like he is still in charge of this place," said Rep. Tim Huelskamp (R-Kan.), referring to the last time Democrats had a majority in the House.

Obviously, that's his opening bid, so I don't think it means much. The more interesting comment yesterday came from Tim Geithner, who is still the treasury secretary. He said: "I don’t see how you do this without higher rates. I don’t think there’s any feasible, realistic way to do it. When you take a cold, hard look at the amount of resources you can raise from that top 2 percent of Americans through limiting deductions, you will find yourself disappointed relative to the magnitude of the revenue increases that we need."

This clears up a question that arose after Obama's remarks at that event last Friday, the one where he pulled the pen out of his breast pocket. Since he didn't use the word "rates" then, lots of wise people said aha, he really just means revenues, which can be had by closing loopholes.

That led to discussions of Mitt Romney's one non-horrible campaign idea, capping the amount the well-off are able to deduct from their taxes. This was gaining a little traction, even among some liberals who basically don't want to see Obama do a deal. But Geithner seems to have closed that door.

Obama speaks to the press at 1:30 today. We'll know a little more then. The catch for me on all this is that I still don't see any kind of tax hike passing the House. So 20 Republicans (that would be the needed number, as of today) are going to back a hike? I can't see that at all.

That, in turn, means letting the deadline pass and concocting something that lets everybody off the hook, but I don't even see how that works. The idea there is to let all the rates increase on Jan. 1, then pass a bill retroactively lowering them on dollars earned below $250,000. That way they've passed a bill that just lowers rates, technically, and ignored the upper crust, so they didn't actually vote for an increase. But that would still amount to a tax increase at the high end, and so it would still require Republicans backing down from this position of supposedly great principle.

More to say on this after the press conference.