what ugh said

via russell, but by ugh

ObWi regular and good buddy ugh posted this over on TiO.  I thought it was quite good - thoughtful, relevant, important topic.  I asked him if it was OK if I cross-posted it for him here.  He was cool with that, so here ya go.  NB: the "I" from here on out refers to ugh.

Thanks ugh!

I've been at a conference the last several days and there was a kind of frightening discussion of the budgetary and tax outlook for the rest of the year. 

1. The current budget authorization ends on 9/30/2012.
2. It now appears we may hit the debt ceiling in December.
3. On 12/31/2012, the 2001/2003/2010 individual rate cuts expire.
4. On the same date, the payroll tax cut expires.
5. There are several business tax breaks that expired at the end of last year (including things like the R&D credit) that have yet to be extended.
6. Many other provisions expire at the end of this year, including the AMT patch and the expansion of 100% depreciation.
7. Also at 12/31/12, the 1.2T sequestration kicks in as a result of the failure of the Super Committee.

Further, other than perhaps reaching an agreement on a continuing resolution for a few months near the end of December to avoid a government shutdown a little over a month before the Presidential election, no one seemed to expect any of these things to be resolved before the Presidential election. Thus, these will have to be addressed in a lame-duck session of Congress that will last around 5 weeks. 

If they're not, then we'll see a massive tax increase combined with large cuts in federal government spending beginning 1/1/2013, along with the possibility of a default on the U.S. gov't's debt right around that time; all this with an economy that currently has an 8.3% unemployment rate (though improving). That scenario, it seems to me, would be economically devastating to the country.

But addressing all the above issues would likely be impossible in a lame-duck session due to lack of time. The only potential solution suggested was perhaps they could reach a deal to extend everything for X months to give the next Congress time to attempt to address these issues in a less rushed manner. One other suggestion was just to not have a lame duck session, let all the expiring tax provisions expire and sequestration kick in, and maybe then Congress could come to some sort of agreement on budgetary/entitlement/tax reform under the threat of destroying the economy.

If I had to guess, I'd say there would be some sort of short-term agreement to kick the can to the next Congress on most/all of these issues, but who knows. It's not going to be pretty.

Comments

[Model62]

Probably a combo of can-kicking (sequestration) and lame duck Congress acting on the easiest items (R&D credits, AMT, Bush tax cuts extended, payroll tax cut allowed to expire).

Pelosi's Lame Ducks got a lot of stuff done, iirc.

[jrudkis]

Could the effect be actually a short term stimulus in that there would be a lot of economic activity in the 4th quarter as people and businesses attempt to front load purchases and income to avoid future higher taxes?

It seems that expected reduction in rates does it in reverse.

Other than the debt ceiling, everything else seems like good long term stuff, even if the timing is bad.

[Hartmut]

One thing is for sure: a new and sharpened season of the blame game.
And my bet is with Model62 that the Dems will be blackmailed and/or bribed to extend the upper bracket Bush tax cuts while letting the middle and lower bracket ones expire and will then be blamed for the fatal results. And it will work, i.e. enough people will believe it.

I am for letting all cuts expire to get rid of that particular zombie. Any new tax policy should start from scratch and not be an extension of existing ones the sun will not set over.

[Ugh]

russell - just a note that I was wrong and the AMT patch expired last year. Not that really matters for the outlook in general.

[sapient]

Dems will be blackmailed and/or bribed to extend the upper bracket Bush tax cuts while letting the middle and lower bracket ones expire and will then be blamed for the fatal results.

Nope. This will not happen.

[McKinneyTexas]

This will not happen.

Correct. Any number of things could happen, but not this.

[Rob in CT]

Yeah, no way.

I do not think the ultimate deal will be something I will cheer, but I can't imagine it being THAT bad. That's Beyond The Pale. The Overton Window would need to be yanked so far to the Right that people in CT could see Russia from their back yards...

Sorry, channeling Countme there for a sec.

[liberal japonicus]

Nice stuff, ugh. Since all my understanding about government comes from singing 'I'm just a bill', I'm wondering where the holdup is. What's the inside baseball on any or all of this?

[Hartmut]

10000$ bet? ;-)

No, I do not bet actually but I would not put it beyond either GOPsters nor enough Dems to do that. A dozen Senate Dems that would sell their soul, if the had not already done it? Those should be easy to find. Worse still, those same Dems would be even more inclined to sell out when they think, they will lose the next election. That could be their golden ticket for their post-congressional time. Few things are worse than a Demon-rat believing that the ship is sinking. It would not be the first time for several of them to stab their own party/president in the back because they know they would not face the consequences their GOP colleagues would under the same circumstances.

I do not say it will definitely happen but it will be attempted and the chances are high that the attempt succeeds.

[wj]

What happens in the lame-duck session will depend critically on who wins the election. If Romney (or, in some low-probability scenario, some other Republican candidate) wins, expect a continuing-resolution-type action to kick the can down the road several months. That will (perhaps) give the new Congress enough time to get itself together and beck back to work.

But if Obama wins, I suspect that the Republicans will double down on their existing strategy: Refuse to cooperate on anything; try to trash the economy, and the nation, as badly as possible, and put all the blame on the President for it. I would wish that they would give a moment's thought to the good of the nation. But on the record of the past couple of year, I just don't see it happening. They have way too much invested in demonization to do anything else.

[Ugh]

LJ: I'm wondering where the holdup is. What's the inside baseball on any or all of this?

Mostly because it's a Presidential election year and members of Congress fear that they'll be blamed for anything "unpopular" (however defined) that happens to pass, whereas, if nothing passes, who is really to blame for that? Plus everyone is out campaigning and explaining why they're better than the opposing party's candidate, but how can you say that if you're simultaneously compromising with the opposing party?

Also, the GOP's discipline is hard to overcome and they've been yanked rightward in the past couple years so that they don't generally see the need to compromise unless they're going to take a huge political hit. And they have to deal with the fact that they've all sold their souls to Grover.

Plus the Dems cave on a regular basis in response to threats (much like Superman flying away after General Zod and friends starting attacking the humans in Superman II, only without the ending in the Fortress of Solitude).

We really are close to having the perfect storm here.

[hairshirthedonist]

...much like Superman flying away after General Zod and friends starting attacking the humans in Superman II

Now that just hurts.

[Gary Farber]

It's doubtless my settings on Chrome -- probably the ad-blocker -- that's preventing that ABC video link of Phil's from working for me (as well as all the rest of the ABC videos from some of their pages), but if anyone else has that problem, this and this worked for me, instead.

[Gary Farber]

Whoops, drat: wrong thread. Sorry!

[Shane]

wj: I think a lot depends on whether Obama beats a moderate RINO or a Real Conservative(tm). If the former then yeah, what you said.

I do take the last two years as a solid refutation of the canard that it's not Democratic presidents that reduce the deficit, it's divided government (Different parties holding Congress and Presidency).

[Ugh]

Two other interesting points from this conference. First, requiring tax reform to be "revenue neutral" is a problem in and of itself. Both sides of the aisle claim they want any tax reform to be revenue neutral, so what's the problem? Well, the issue is: revenue neutral compared to what baseline?

As noted in the post, we have a great deal of expired and expiring provisions in the tax code. So, when one does your "revenue neutral" analysis as compared to the baseline, do you assume those provisions have expired, or not?

The second point is the importance of revenue estimates by the Joint Committee on Taxation. If the JCT says repealing provision X will result in a revenue loss/gain of $Z, then it's pretty much taken as gospel on the Hill and will significantly shape the debate.

[wj]

Shane, I would say that deficit reduction efforts come in three flavors:
1) divided government, with both sides willing to compromise to get things done
2) one party controls Congress and the Presidency.
3) divided government, with one side totally unwilling to give the other anything that might possibly be construed as a "win"

What we had in the 1990s under Clinton was case 1. What we have now is case 3. Which, as you say, is demonstrably unsuccessful at reducing the deficit. Or doing much of anything else constructive.

[hairshirthedonist]

Both sides of the aisle claim they want any tax reform to be revenue neutral, so what's the problem? Well, the issue is: revenue neutral compared to what baseline?

That's one issue. Others are that such thing is impossible, even with an agreed to baseline, and that it's just a stupid, dogmatic way to approach things in the first place, rather than doing something that makes sense regardless of whether or not it changes overall revenue (relative to something or other).

(I'm feeling cranky today - like I'm overwhelmed by the level of bullsh1t that gets peddled every friggin' day. I'm sick of it.)

[Slartibartfast]

Completely off-topic, I'm wondering if we can get a lawyerly opinion on this pleading?

Looking for McKinneyTx's take in particular, and whether he knows the guy that scribed it. Something about this reminds me of John Thullen:

BUDDY TRAHAN’S METAPHORICAL REQUEST FOR A RIDE ON THE STREETCAR NAMED REMAND

I. BUDDY TRAHAN’S BIG EASY BLUES.
Buddy Trahan needs a ride. He needs that ride every bit as much as he needed the help and kindness of strangers to escape the inferno aboard the Deepwater Horizon. Having survived that disaster catastrophically injured but alive, he is now in a first circle of waiting from which there is but one avenue of escape. That avenue is remand, but remand has been closed to Buddy Trahan for a long, long time. And so, like a beleaguered passenger who fruitlessly waits for a streetcar that will not come, Buddy Trahan has waited, and waited, and waited some more to be transported back to state court in Houston so that he may begin anew his long-derailed journey to justice. Yes, Buddy Trahan needs a ride, and he needs a ride on, as it were, the streetcar named remand. In sheer exhaustion from his torturous ordeal, he respectfully--but stridently--requests that the Court reopen the only avenue of escape, and grant him the ride he needs and deserves.

[Ugh]

HSH: Others are that such thing is impossible, even with an agreed to baseline, and that it's just a stupid, dogmatic way to approach things in the first place, rather than doing something that makes sense regardless of whether or not it changes overall revenue (relative to something or other).

Actually, one of the panelists made this point, i.e., we should start with what makes good tax policy and then go from there, rather than being tied down to revenue neutrality, which just means that the current crappy tax code is crimping the style of the next (hopefully not as crappy) tax code.

OTOH, if both sides can agree to the baseline and are willing to accept JCT revenue estimates, that at least takes basic measurement issues off the table.

[Tom Allen]

Ah, I see: Democrats are standing up for stimulus rather than deficit cutting.

Oh, wait. Democrats are opposing austerity measures instead of working toward a Grand Bargain to cut Medicare and Social Security.

Oh, wait. Liberal bloggers are leading a revolution against idiotic Democratic policies and heading towards Greens or Socialists.

Oh, wait.

[Tony P.]

"Revenue-neutral" means you collect the same aggregate tax dollars.

"Tax reform" means you change what any particular taxpayer pays.

"Revenue-neutral tax reform" means BY DEFINITION that some taxpayers will pay MORE and some will pay LESS. You can't cut EVERYBODY's tax bill and stay "revenue neutral". You can't leave every individual's tax bill unchanged and call it "tax reform".

"Revenue-neutral tax reform" is code for changing YOUR PERSONAL SHARE OF TOTAL TAX REVENUE. If your income is north of $300K "revenue-neutral tax reform" is Republican code for "You should a smaller share of total IRS revenue, you poor, put-upon job creator." If you make less, it's Republican code for "You should pay more tax because 1)we can't come out revenue neutral otherwise, and 2) you're just a job consumer, anyhow, so why should we give YOU a break?"

--TP

[Countme-In]

A cursory reading of the legal brief turns up the following:

Tennessee Williams --- Check
Bob Dylan --- Check
The Book of Revelation --- Check
Kafka's Joseph K. --- Check
Walker Percy's Binx Bolling --- Check

However, a deeper textual analysis of this attorney's --- one Lance H. Lubel --- submission to the Court while pointing in the direction of John Thullen's whereabouts, finds the omission of other key indicator references and allusions (and delusions), which could just as well mean that Thomas Pynchon has found deep cover as an attorney practicing in Houston, Texas, or that Lubel could be this guy, minus the expensive suit:

http://www.nj.com/entertainment/index.ssf/2012/03/bohemian_rhapsody_drunk_guy.html

Specifically, no references (backwardsly mispelled or otherwise) to Strawberry Fields Forever, the Looney Tunes Daffy Duck episode wherein our feathered friend gooses The Scarlet Pimpernel, one or all of the following movies -- Invasion Of The Body Snatchers, Lonely Are The Brave, The Conversation, A Day At The Races, Goodfellas, and The Fountainhead (a comedy of terrors) -- or to the life and death and times of Mickey Mantle -- all identifying referential fingerprints -- can be detected here.

Additionally, if Part II of the brief in question, entitled "Wrong Place, Wrong Time", in reference to the plaintiff's complaint, had read "Wrong Ef*ing Place, Wrong E*fing Time", one might, circumstantially, conclude that the aforementioned John Thullen had finally found an identity in one Lance H. Lubel.

One last point. Knowing of John Thullen only via his unfortunate presence long ago on the OBWI boards, I would conclude that Thullen finding some semblance of inner peace residing in the State of Texas is about as likely as King Kong being moved to New York City and after a short period of adjustment in psychiatric therapy on the Upper West Side, riding the subway (standing, broken but bemused, the Times under one arm and steadying himself on an overhead strap with the other) to his desk job on the 34th Floor of the Empire State Building.

That's an evolution even Clarence Darrow wouldn't defend.

Bob McManus might, but Darrow would never.

[liberal japonicus]

Count, I'm in Southern Mississippi and driving down the interstate towards NOLA and am thinking of Love in the Ruins, where the utopian Dr. More sits at an interstate cloverleaf a lot like the I-59/I-10 and I-12 with a sniper rifle. A link for you and any other Walker Percy fans out there.

[Countme-In]

lj:

Any sign of Ellen, Moira, and Lola?

Weeds (sumac, wild broccoli?) sprouting thru the cracks in the interstate? That's a sign.

If your "scalp feels airy and quilted and now or then pops a hair root like a dirigible popping its hawsers one by one", it's probably the albumen in the gin fizzes.

But it could be the noxious particles. I'd suggest a quick diagnostic pass of the More Qualitative/Quantitative Ontological Lapsometer over your temporal and parietal lobes (Brodman 28 and Brodman 18) as a cautionary measure.

Try to avoid the extreme inane insanities of our modern age visible along the road -- evangelical shouters emerging from the swamp clutching scripture in one hand and Atlas Shrugged in the other, raving about the prosperity Gospel while cackling operatically and Scalia-like over suggestions that obligations to provide medical care to the uninsured be removed from the social contract -- Gary Busey presenting rearwards like a chimpanzee while Dennis Kucinich pleasures him with rolled-up glossy photos of Huntz Hall and Leo Gorcey providing foreign policy advice to Mitt Romney and Vice President Rand Paul -- Dartmouth college frat recruits swimming in pools of vomit, urine, and semen, and drinking beer poured down the a*s-cracks of their hazing brothers while simultaneously being courted by Goldman Sachs suits to think up new ways of f*cking the world from a corner office on Wall Street (Sullivan has that, today, scroll down) .....

One would just as soon awaken to oneself in a trench at Verdun to notice (really see) one's hand for the first time, only to also note an unexploded grenade with the pin pulled a few feet away.

Drive carefully. Don't get bored.

P.S. I've been meaning to say, inconsequentially, that I read a Paris Review interview with writer Thomas McGuane in which he expresses admiration for Walker Percy, something I suspected, and then reading weeks later, in one of McGuane's phenomenally-written essays on fly fishing he recounts a moment waiting for trout to rise when a heron or some other large bird flies low in front of him and, sure enough, that bird's sinews are creaking just like the heron Thomas More observes in the swamp in "Love In The Ruins", a passage you quoted in a post here some time ago.

Homage.

[russell]

That long paragraph in the middle was kinda like a tour of the last 10 years or so with William S Burroughs.

It's scary when the line between hallucination and reality gets so blurry.

[McKinneyTexas]

Completely off-topic, I'm wondering if we can get a lawyerly opinion on this pleading?

Looking for McKinneyTx's take in particular, and whether he knows the guy that scribed it.

Lance wants back in state court. He got sucked up into multi-district, federal litigation in Louisiana and is experiencing 'docket death'. He wants to be 'remanded' to state court. I know Lance. Good lawyer. Curiously, the court I'm going to trial in next Tuesday was presided over by Lance's wife until she ascended to the court of appeals a while back. I'm pretty sure I have a case or two right now in which Lance was kind enough to sue one of my clients.

I'm sorry Thullen won't be seen in Texas. I'd buy him a drink. Maybe two.

[liberal japonicus]

Count, the frightening thing is that the roads have always been pretty crappy down here, so Walker Percy didn't really have to imagine much to get to the where he was writing.

headed back tomorrow night, right between Kentucky and Louisville's grudge match and the Kansas-OSU game.

[Countme-In]

MckT:

Drinks, you say?

Well, I imagine Thullen has principles regarding Texas, but maybe he others as well in a pinch.

Which is to say even Kong might visit New York City for a banana or a blonde and not complain too much.

[McKinneyTexas]

Drinks, you say?

Yes, drinks. Plural. I don't carry a gun either. Just a sawed-off atlatl. They're legal down here.

[Ugh]

The NYTimes is STEALING MY MATERIAL! Harumph.

Or maybe, I should be happy?

[Ugh]

Now Foxnews is stealing my sh1t.