First, the fiscal cliff is not a single event and it won't even be felt right away. It's a cumulative effect, more akin to a wave as money that was expected in the economy never shows up and consumers facing increased tax bills stop spending. The end result is $600 billion taken out of the economy in 2013. It is a combination of several separate pieces of legislation, all of which begin taking effect in 2013. If you change one policy, the others aren't affected.

It will affect every single American, including the unemployed, the working poor, the middle class, the upper middle class, and especially the rich. Every person will have something to bitch about. All of them.

The things that will happen under the fiscal cliff are, in order of size and importance, for 2013:

1. Expiration of the Bush tax cuts and AMT "patch".

2. Expiration of 2% payroll tax cuts.

3. Sequestration.

4. New Obamacare taxes affecting those making more than $250k.

5. Expiration of emergency unemployment insurance.

6. Other tax provisions, including a) dividend tax increases, b) end of the marriage penalty fix, c) end of the EITC, and d) estate tax going to $1 million.

So there are spending cuts (3) and huge tax increases (the rest) scheduled for next year. The Republican position is that they will not allow any tax increases whatsoever. The problem for them is that the baseline scenario, i.e., doing nothing, is a MASSIVE TAX INCREASE. If Republicans fail to act, the only thing that can happen is for huge tax increases to go into effect. With a Democratic president and Senate, they can do nothing without both signing on. Democrats can get things done by poaching a significant number of votes in both houses of Congress (unlikely, but not impossible).

So they're fucked, and here's why.

1) The expiration of the Bush tax cuts. This is the only issue that they REALLY care about, and their position is that the tax cuts should stay for all taxpayers, including those making more than $250,000. Obama agrees with them on everything except those making more than $250,000. Advantage: Obama. If no compromise is reached, taxes will go up on every American in the name of protecting the richest among us, and less than 3% of the country.

2) Expiration of the 2% payroll tax cuts. This is the easiest one. Taxes will go up on all workers, up to ~$2000 a year. Both parties probably want to extend this for another year, but no one is willing to die for it. It hurts everybody and amounts to a tax increase. Advantage: Democrats. The GOP can either agree to extend this for another year or not. Last year they refused to extend it without other agreements. If Democrats offer to do it as a single piece of legislation it will be the GOP voting against a tax cut.

3) Sequestration. This is the spending reduction. Because the super committee failed to balance the budget, sequestration takes place over the next 10 years, with the cuts split evenly between domestic and military spending. This one could go either way. It hurts both parties to the tune of about $25 billion in 2012. The Democrats are going to lose a lot of money for programs they like, the Republicans are going to lose a lot of money for the Military and basic functions of government (like the judiciary) are going to suffer. You can bet that every single lobbyist in Washington will be urging to Congress not to do this. Advantage: TIE.

4) New Obamacare taxes. These are some new tax increases on people making more than $250k per year and tied to the ACA. Obama's not even going to talk about this. Advantage: Obama. Veto pen fired up and ready to go.

5) Expiration of emergency unemployment insurance. This is the expiration of an emergency spending measure. Democrats probably would spend more on it next year, Republicans almost certainly won't want to do that. Advantage: GOP. This is the only thing they could offer Obama, but it would cause some tea partiers to bolt (which they likely will on any deal anyway). Chances are this one simply lives up to its name as an "emergency" spending measure and disappears.

6) Other tax increases. This is one of the smallest parts of of the fiscal cliff, but the shit in here is hilariously bad politics. If neither party solves these, the results will be very NOTICEABLE tax increases with tons of well tested political soundbites that will haunt Democrats and Republicans alike in the 2014 midterms, such as Death Tax, Making Work Pay Credit, the Marriage Penalty. But if you're a GOP congressman, do you really want to have been part of the gang that raised dividend taxes, raised taxes on the working poor, raised taxes on married people, and lowered the threshold for the death tax so that families with just a million in assets have to pay? Lol, no. 3/4 of those are GOP favored taxes, and all of them are politically unpalatable. Advantage: Democrats. They've got tons of goodies to trade here.

There are a few more things, but they're not that important.

So that's why the Republicans are fucked. This will be Obama's first fight after winning reelection and he's not going to lose. He will tolerate a situation where he doesn't win because if he does he will BE THE SINGLE MOST FISCALLY RESPONSIBLE PRESIDENT EVER. He will have slashed the deficit by 50% and put the United States on a sustainable budgetary path. The US will suffer the effects of a drag on GDP growth and the economy will suffer, but it will still grow! The projections are that it's going to cost 2-3 points of GDP growth versus 2-4 percent growth next year.

Meanwhile, he's willing to deal with the GOP but they will have to agree to let the Bush tax cuts expire for those making more than $250k. That's it. They can get everything they want if they'll agree to do that. But if they do that after the gauntlet they've thrown down they lose.

And after winning reelection and with most Americans agreeing that the GOP has been the obstructionist party, Obama is going to win any battle for the hearts and minds of the American people. The GOP is fighting on ideology and Obama will look pragmatic and reasonable to the vast majority of Americans, even Republicans who disagree with him. The GOP will look like rabid dogs fighting on behalf of millionaires.

That's why the GOP will lose the fiscal cliff fight. Enough will cave and vote with Obama (for a ton of pork) or they'll help institute the largest tax increases in history.

Now, they do have one possible option, and that's the nuclear option of refusing to raise the debt ceiling later in 2013. If they tie the debt ceiling to all of this then they are essentially playing a version of Crazy Russian. If Obama doesn't cave in January, he won't in March. The country will be fucked if we're saying we won't pay our debts, but we'll see if the GOP is that crazy then.

IMHO

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22005037)

The one thing you don't mention here is that Obama has a lot of pressure from the left, so he'll have some extra backbone. The left doesn't want a grand bargain and gets most of what it wants from the fiscal cliff - e.g., higher taxes, defense cuts, no SS cuts. They lose some ground on domestic spending, but that's easier to get back than trying to undo entitlement cuts. The unions and lefty groups turned out in HUGE numbers to get O reelected, and he can't afford to sell them out this early.

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22026366)

Current hill staffer?

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22046621)

If I were the Democrats I would introduce bills to extend 2) the payroll tax and 6) the other tax issues. If the Republicans want to block them because they don't want the Bush tax cuts to expire, that's their funeral. But they'd be forced to vote against tax cuts.

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22005203)

*blank stare*

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22007850)

Bizarre flame.

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22047203)

Boehner already signaled this a bit when he said he was open to revenue increases.

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22005180)

McConnell went the other direction. We'll see who plays it best, but I think the GOP was just repudiated nationally. I think the best strategy for the GOP would be to solve the fiscal cliff asap and move on. Just fix some of it, get your moderates to cave on the tax increases and then everyone can fight about other stuff while voters start to forget.

The moderates would have to not be worried about primary challenges, but you really only need 30 or so to get it done.

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22005228)

Let's say Obama walks away and the Bush taxes will go up. You're John Boehner. What do you say to get Obama back at the table?

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22005313)

CR.

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22005630)

So do not expect a deal until January.

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22007654)

I also think you don't pay enough credence to the notion that no vote has to be taken for this to happen. It's harder to pin inaction on someone than it is to stick them with their actions. Also, both bills will have enough for either side to demagogue to justify a no vote if it comes to that (though a vote won't be taken if it won't pass).

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22013340)

Remmeber though, if things SUCK in the country, for any reason, Obama's getting the blame. People aren't smart enough to blame John Boehner.

Also, how are Obamacare taxes good for Obama?

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22046676)

And to answer your question, it funds Obamacare.

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22047215)

Obama just enacted the biggest and most progressive tax increase since WWII, so I think I have to score Round 1 to him.

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22351810)

Keepign bush tax cuts for everyone except those making $450K? And increasing the payroll tax on everyone?

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22353671)

And Obama did totally redefine the middle class, but folks above that are taking a 10% hit.

(http://www.autoadmit.com/thread.php?thread_id=2108972&forum_id=2#22353718)