This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.guardian.co.uk/commentisfree/2012/nov/19/fiscal-cliff-tax-consensus

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
The fiscal cliff-saving tax consensus rules everywhere but on Capitol Hill The fiscal cliff-saving tax consensus rules everywhere but on Capitol Hill
(about 5 hours later)
Where is the class war over the fiscal cliff?Where is the class war over the fiscal cliff?
It doesn't seem to be materializing, which indicates that the answer to solving the fiscal cliff may be easier than anyone thought, and that the political theater around it is completely unnecessary.It doesn't seem to be materializing, which indicates that the answer to solving the fiscal cliff may be easier than anyone thought, and that the political theater around it is completely unnecessary.
The fiscal cliff battle in Washington is really about taxes: whose taxes should be raised to close the deficit?The fiscal cliff battle in Washington is really about taxes: whose taxes should be raised to close the deficit?
The major block in the fiscal cliff negotiations is this: at the end of the year, if Congress does nothing, taxes will go up for everyone. Both Republicans and Democrats agree taxes should not go up for the middle class. What they don't agree on, and are willing to fight to the political death for, is whether taxes should go up for people making more than $250,000 a year, a group that is considered "rich".The major block in the fiscal cliff negotiations is this: at the end of the year, if Congress does nothing, taxes will go up for everyone. Both Republicans and Democrats agree taxes should not go up for the middle class. What they don't agree on, and are willing to fight to the political death for, is whether taxes should go up for people making more than $250,000 a year, a group that is considered "rich".
President Obama has long maintained that he won't allow the middle class to subsidize higher earners. In his first fiscal cliff speech after the election, he drew a sharp line:President Obama has long maintained that he won't allow the middle class to subsidize higher earners. In his first fiscal cliff speech after the election, he drew a sharp line:
"I am not going to ask students and seniors and middle-class families to pay down the entire deficit, while people like me, making over $250,000, aren't asked to pay a dime more in taxes.""I am not going to ask students and seniors and middle-class families to pay down the entire deficit, while people like me, making over $250,000, aren't asked to pay a dime more in taxes."
It sounds like the making for an Occupy battle, except for one thing: despite the rhetoric in Washington, the middle class and the rich actually agree on something: taxes can and will and should be raised. The idea that the rich are asking not to pay any more in taxes seems unsubstantiated. There are two data points for this. The first is that the CEOs of 80 of the biggest companies in the United States all united on a single bipartisan petition that calls for, among other things, raising taxes.It sounds like the making for an Occupy battle, except for one thing: despite the rhetoric in Washington, the middle class and the rich actually agree on something: taxes can and will and should be raised. The idea that the rich are asking not to pay any more in taxes seems unsubstantiated. There are two data points for this. The first is that the CEOs of 80 of the biggest companies in the United States all united on a single bipartisan petition that calls for, among other things, raising taxes.
The second is that the Wall Street Journal held a CEO Forum last week and found that "most of the CEOs in attendance had no hesitancy in endorsing higher taxes on affluent people like themselves." According to the Journal, 90% of the CEOs "indicated they would favor a package that included at least one dollar in tax increases for every four dollars in spending cuts."The second is that the Wall Street Journal held a CEO Forum last week and found that "most of the CEOs in attendance had no hesitancy in endorsing higher taxes on affluent people like themselves." According to the Journal, 90% of the CEOs "indicated they would favor a package that included at least one dollar in tax increases for every four dollars in spending cuts."
And here's where you can see the sets exposed in this political theater on both sides: the word from the 1% is that they seem to be completely fine with paying more in taxes. The question is, whether that message is getting through to the president, as well as his Republican adversaries.And here's where you can see the sets exposed in this political theater on both sides: the word from the 1% is that they seem to be completely fine with paying more in taxes. The question is, whether that message is getting through to the president, as well as his Republican adversaries.
That is in marked contrast to the prevailing narrative about the difficulty of the fiscal cliff, which holds that the 1% are completely opposed to raising a dollar more in taxes. In fact, that doesn't seem to be the view of anyone except the powerful lobbyist Grover Norquist. Republican lawmakers have pledged to Norquist that they will not raise taxes. Norquist is not an elected official; he runs a group called Americans for Tax Reform. He is perceived to have the political power to get Republicans elected or force them to lose office. That is in marked contrast to the prevailing narrative about the difficulty of the fiscal cliff, which holds that the 1% are completely opposed to raising a dollar more in taxes. In fact, that doesn't seem to be the view of anyone except the powerful lobbyist Grover Norquist. Republican lawmakers have signed the Norquist-backed pledge that they will not raise taxes. Norquist is not an elected official; he runs a group called Americans for Tax Reform. He is perceived to have the political power to get Republicans elected or force them to lose office.
As a result, many Republicans, including those key to the fiscal cliff negotiations, have signed Norquist's pledge – swearing not to raise taxes. Currently, over 200 members of the House of Representative and 39 members of the Senate are bound by Norquist's pledge, according to the Hill. As a result, many Republicans, including those key to the fiscal cliff negotiations, have taken the no-tax oath. Currently, over 200 members of the House of Representative and 39 members of the Senate are bound by Norquist's pledge, according to the Hill.
But how useful is Norquist's pledge on taxes as a proxy for what the actual 1% think? That is what the lawmakers who signed his pledge have to consider as they bring America closer to the fiscal cliff. If 80 CEOs of the largest companies in the US are willing to agree to pay more in taxes, the no-tax pledge may not be as representative of powerful interests as one might think.But how useful is Norquist's pledge on taxes as a proxy for what the actual 1% think? That is what the lawmakers who signed his pledge have to consider as they bring America closer to the fiscal cliff. If 80 CEOs of the largest companies in the US are willing to agree to pay more in taxes, the no-tax pledge may not be as representative of powerful interests as one might think.
The pledge is also certainly not constructive to fiscal cliff negotiations, when realistic math dictates that taxes must go up and government spending must go down. And whatever is not constructive to fiscal cliff negotiations is also destructive to the economy. According to the Wall Street Journal, half of the 40 biggest-spending companies in the country have been pulling back on spending and investment because they are worried about the fiscal cliff.The pledge is also certainly not constructive to fiscal cliff negotiations, when realistic math dictates that taxes must go up and government spending must go down. And whatever is not constructive to fiscal cliff negotiations is also destructive to the economy. According to the Wall Street Journal, half of the 40 biggest-spending companies in the country have been pulling back on spending and investment because they are worried about the fiscal cliff.
The tortured negotiations about the fiscal cliff have businesses unsure what kind of tax rate they'll be paying in the new year. And as long as businesses can claim "uncertainty" as a fear, that means they will pause before hiring.The tortured negotiations about the fiscal cliff have businesses unsure what kind of tax rate they'll be paying in the new year. And as long as businesses can claim "uncertainty" as a fear, that means they will pause before hiring.
The cuts in government spending as part of the cliff are already likely to hit the US economy. Vince Reinhart, chief US economist for Morgan Stanley, estimates that cuts in government spending will result in a loss of about half a percentage point in US GDP in the second half of the year.The cuts in government spending as part of the cliff are already likely to hit the US economy. Vince Reinhart, chief US economist for Morgan Stanley, estimates that cuts in government spending will result in a loss of about half a percentage point in US GDP in the second half of the year.
And then, in February, the US will hit its borrowing limit – the so-called debt ceiling. That means more negotiations, more posturing and, very likely, more delay to a solution. As Morgan Stanley's Reinhart suggests, more of the patch-and-promise that Washington has been doing means that "politicians' solution to the 2012 fiscal cliff will be to create another one in 2013."And then, in February, the US will hit its borrowing limit – the so-called debt ceiling. That means more negotiations, more posturing and, very likely, more delay to a solution. As Morgan Stanley's Reinhart suggests, more of the patch-and-promise that Washington has been doing means that "politicians' solution to the 2012 fiscal cliff will be to create another one in 2013."
The US is likely to go over the fiscal cliff, since no one seems particularly interested in fixing it before January. That's a shame, because fixing it is not such hard work as Washington is making it out to be.The US is likely to go over the fiscal cliff, since no one seems particularly interested in fixing it before January. That's a shame, because fixing it is not such hard work as Washington is making it out to be.
• The article was amended to clarify that the pledge signed by Republican representatives and senators is not to Grover Norquist, but is backed by him; amendment made at 7pm ET on 19 November 2012