Category Archives: Taxes

Of vs. In vs. Adding Words

Over at Politico this morning, Michael Lind has an interesting item out that suggests Donald Trump “exposed the Tea Party.”

One line, very early in the piece, jumped out at me. Lind is quoting Trump here:

“People as they make more and more money can pay a higher percentage” of taxes.

Lind didn’t use an ellipsis (…) after percentage to show that he was cutting up the quote. This is a bit sloppy.

Here’s what Trump actually said on Sean Hannity’s show:

TRUMP: I actually believe that people, as they make more and more money, can pay a higher percentage, OK?

HANNITY: How high?….What’s the cap?

You can read the full exchange here, but Trump doesn’t answer the question, other than to suggest that hedge fund managers can afford a tax increase. (This as some surmised, and later was confirmed, had to do with the “carried interest” tax rate, which is lower than the personal income tax rate a hedge fund manager would typically pay.)

This is not a defense of Trump. He didn’t answer the question with specificity, so we still don’t really know. And specificity is a problem area for Donald.

I know what you’re thinking — who cares? “‘a higher percentage’ of taxes” vs. “‘a higher percentage’ in taxes” are six and one half-dozen of the other, right? Nope, not necessarily.

Since raising taxes is generally a no-no for the political right, a distinction is important.

To say one wants wealthier people to pay “‘a higher percentage’ of taxes” is to suggest — assuming we’re only talking income taxes — that you want their contributions to represent a higher percentage than present of the total amount of taxes that are collected.

Of course, when it comes to income taxes, the top 50% of taxpayers pay 97% of all federal income taxes. The top 1% pay 38% of it.

Now, saying one wants wealthier people to pay “‘a higher percentage’ in taxes” is saying you want to raise rates on individuals as they get wealthier, or change the tax treatment of certain types of income (like carried interest or investment income) so it is treated as ordinary income.

So, what’s the distinction? Well — Trump’s views are still a mystery, but Lind inadvertently put words in Trump’s mouth by butchering the quote.

Conservatives, rightly, claim that when you tax something, generally, you get less of it. It’s not an absolute principle, but it’s generally correct. (To those who disagree, why, then are cigarette sales declining? Could it be a $1 per pack tax increase Obama signed? OK.)

In some instances, raising taxes on certain activities or on certain individuals, could ultimately result in less of that activity or individuals doing less work. It could even result in lower tax revenues than at lower rates.

The distinction between a higher percentage of all taxes and a higher percentage in tax rates is real. But Trump still hasn’t made it clear, and Lind (wrongly, though probably unintentionally) tried to make it clear.

I guess we’ll find out when Trump releases his tax plan. Though, if it’s anything like his immigration plan, don’t expect many specific details.

Jack, Jack…

Friend and fellow SLU grad — now a St. Louis City Alderman — is apparently on board with a city-funded stadium in St. Louis.

He appeared on NPR‘s “All Things Considered” this morning in a sound-byte about the city’s frantic effort to keep the bottom-tier Rams from moving to Los Angeles.

Jason Rosenbaum (NPR St. Louis): People like Jack Coatar see this place as the future of professional football in St. Louis. The St. Louis Alderman says building a publicly-financed football stadium here will inject economic vitality into a blighted area, and keep St. Louis as an NFL city.

Jack Coatar: You know, we have the opportunity to completely change what that river front looks like. Take a blighted area north of the arch and completely regenerate that area.

Also joining the conversation was Holy Cross’s Victor Matheson. (Whose work I cited in an item arguing why Cleveland should turn down the GOP or Democratic conventions.)

The math on publicly funded stadiums (like political conventions or Olympics) usually does not add up to a net gain.

Here’s Matheson in a 2011 report, Financing Professional Sports Facilities:

Numerous scholars, starting with Carlino and Coulsen (2004), have used hedonic-pricing techniques to attempt to quantify the quality of life aspects of sports. If the presence of an NFL franchise, for example, is a vital cultural amenity for residents in the area then the value of the franchise to local citizens should be reflected in a higher willingness to pay for living in a city with a team.

One problem is St. Louis is a small, relatively poor city given its size with 318,000 residents. The region has 2.8 million people — and that includes Illinois. Missouri politicians (and not Illinois politicians, who represent a not-insignificant amount of Rams fans) appear ready to pour $400 million (plus) into the stadium.

That means that financing of the stadium is likely to be borne by state taxpayers as a whole. I recall during my time at SLU seeing highway billboards farmers put up that said “If Cardinals build highways, we’ll build stadiums.”

I’m dubious about publicly funding any pro-team’s sports stadium. This, despite being from Cleveland. There, our politicians helped hasten Art Modell’s decision to move the Browns to Baltimore by giving stadiums to the Cavs (not so great at the time) and the Indians (historically bad but on the verge of being good enough to lose in the World Series twice) and not the Browns. Modell just wanted improvements to a stadium far more inferior to the Edward Jones dome.

After the Browns left, we fought to keep the name and got a new franchise which, like the Rams, has under performed. Browns fans, happy(?) to have a team again, will likely hold the bag for a team’s stadium that, at best, hosts 10 games a year there. After paying for 74% of it.

At least the Cardinals are there more often and have a chance at going to playoffs.

But here’s the thing about the Matheson report. The benefits of new stadiums tend to benefit apartment building owners, not necessarily citizens writ large:

Carlino and Coulsen (2006), for example, find that rental housing in cities with NFL franchises command 8% higher rents than units in other metropolitan areas after correcting for housing characteristics…

Others such as Feng and Humphreys (2008) and Tu (1995) find localized effects of stadiums and arenas on housing prices but also that these effects fade quite quickly as the distance from the stadium grows. (Editor’s note: St. Louis is nothing if not spread out.) Conversely, Coates, Humphreys, and Zimbalist (2006) find that Carlino and Coulsen‟s results are highly dependent on model specification. Kiel, Matheson and Sullivan (2010) find that the increase in housing costs does not extend to owner-occupied housing and also find that the presence of stadium subsidies lowers housing values, a finding also uncovered by Dehring, Depken, and Ward (2007).

Here’s a rare intersection where Vox and I agree. Let the Rams build their own stadium or leave.

Matheson concludes his report by saying this:

Improving citizens’ quality of life is clearly an important goal for public policy makers, and there is evidence that sports are a valued amenity for local communities. Evidence of significant direct economic benefits from sporting events, franchises, and stadiums is lacking, however. While public-private partnerships can be justified on quality of life grounds, voters and public officials should not be deluded by overoptimistic predictions of a financial windfall. Sports may make a city happy, but they are unlikely to make a city rich.

Love you, Jack. Happy you’re succeeding as an elected official. But you’re wrong here.

Drop the economic vitalization argument and just say you want to keep an NFL team because the city likes sports. Voters appreciate honesty.

You can listen to the NPR report below:

Paul Krugman Was (Probably) Right!

It pains me to admit this, but Paul Krugman was probably correct about something. (Though, modern-day Krugman might disagree.)

I’d point you to this excellent NRO item:

But what if 2014’s jobs boom is mostly thanks to the expiration of a program that the Obama administration and Democrats fervently pushed to renew?

That’s the finding of a new NBER working paper from three economists — Marcus Hagedorn, Kurt Mitman, and Iourii Manovskii — who contend that the ending of federally extended unemployment benefits across the country at the end of 2013 explains much of the labor-market boom in 2014.

About 60 percent of the job creation in 2014, 1.8 million jobs, they find, can be attributed to the end of the extended-benefits program. That’s a huge amount, and suggests that long-term unemployment benefits, while there’s a good charitable case for them, could have played a big role in the ongoing lassitude of our labor market. (Indeed, an earlier working paper from a few of the same authors argued that extended benefits raised the unemployment rate during the Great Recession by three percentage points; see a summary of that paper here.)

This brings me back down memory lane, nearly five years ago, to my days as a young and brash aide to Senator Jon Kyl (R-AZ) in 2010.

Here’s what Krugman sneered in his column back then about floor remarks made by my boss regarding the large expansion of unemployment insurance:

Here’s what Senator Jon Kyl of Arizona, the second-ranking Republican in the Senate, had to say when defending Mr. Bunning’s position (although not joining his blockade): unemployment relief “doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work.”

To Krugman fanatics and haters, it’s not news that Krugman will write one thing, and then, years later with a newspaper column, write something completely different.

So, we went to the Library of Congress and pulled out the text book he had written with his wife, called “Macroeconomics” and look what we found:

Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of “Eurosclerosis,” the persistent high unemployment that affects a number of European countries.

Golly.

So, a letter to the NY Times — something they are known for not publishing if critical — was drafted. And wouldn’t you know? It got published.

Though, we never did hear back from Paul Krugman. But I hope pre-NYT Krugman is feeling somewhat vindicated.

Here’s the letter:

jk nyt unemployment

Hot Pockets, US International Tax Law, and Corporate Inversions

Here’s a recent appearance on One America News Network where I discuss the global economy, corporate inversions, and everyone’s favorite treat: Hot Pockets.

Can Reason Save Cleveland?

Earlier today, I shared Matt Yglesias’s story on why Silicon Valley should relocate to….Cleveland.

The facebook post I shared came with this message:

Yglesias writes “It’s time for tech hubs to go where they’re welcome.” And he picks…. Cleveland? What? Off his rocker.

The post received a number of comments, including one from a thoughtful a neighbor, whose son I played hockey with. He writes:

So Jimmy, you have been away long enough that you are now a Cleveland basher as well? True, we have three months of bad weather…..but unbelievable property values, great cost of living, great culture (I would put the Cleveland Orchestra up against any from San Francisco or Washington), the largest theater district west of NYC, a great art museum, the Hall of Fame, fantastic restaurants, great music ……and, oh yeah, you can actually get to all of them within 30 minutes – not 2-3 hrs. BTW…how much would your old home on Eaton Rd cost in either SF or Washington?

I frequently, and sometimes more harshly than I should, criticize Cleveland. I’d like to clear the air and share my thoughts on the matter. I don’t hate Cleveland, I criticize because I love where I grew up and want my hometown to thrive — despite its efforts to snatch defeat from the jaws of victory.

Here’s my response to my former neighbor, an all around good guy who frequently inspires great discussions on my facebook wall:

Dr. S. — I don’t disagree with your points on Cleveland the region. I do think, and agree, that the region would be good to host a wide range of industries for the reasons you express. And, for what it’s worth, I love the bad weather.

Indeed, the house I grew up in on Eaton road would easily go for a million or two here in Washington or San Francisco, if not more. (So, three to six times the cost.) Detroit, as Yglesias notes, has even more affordable housing, but he wrote them off as a lost city, noting that if he had picked Detroit, people likely migrate to Ann Arbor. I don’t think Cleveland is lost yet, but it’s not going out of its way to improve things, in my opinion.

Solving Cleveland’s inability to attain the growth it could attain is a puzzle, one with locally imposed constraints and with ones imposed by the state. The Cleveland area has many great attributes and it also has some things it needs to work on. That goes for Ohio, as well.

While I am frequently critical of Cleveland — sometimes more harshly than I should be — it’s because I’d love for my hometown to be the next Silicon Valley, but at present, I don’t think it can be. But that doesn’t mean that it can’t. Some of that is on the city of Cleveland itself, some on the suburbs, and some on the state. Before I forget, some of it is on Cuyahoga County — now with less corruption!

One reason is because I think that municipal income taxes are a poor way to structure things, especially if individuals who live in one city but work in another have to pay taxes to both in some respect. Unlike other comparable jurisdictions in other states, potential employers would have to pay more in salary and benefits to offset the tax differential. Not exactly a welcome beacon to relocate to NE Ohio. Sure, low-income earners get an exemption, but, in the case of the Yglesias example, tech employers probably employ fewer people exempted than those subject to paying taxes in Cleveland and (insert name of other jurisdiction).

Like the electoral map, Ohio has a bunch of residential clusters and a larger swath of area with lower population density.  Yes, California has high taxes — but it doesn’t allow city income taxes the way Ohio does. I do think an examination of the state’s tax policies are in order. That could benefit Cleveland and NE Ohio greatly.

Yglesias is correct to note that, unlike Detroit or Buffalo (no offense to my Buffalo friends), Cleveland could be fertile ground for such a resurgence. But, knowing that Cleveland and nearly every other major city does what it can to sell itself to businesses (like Philadelphia is doing to California’s Sriracha maker, under fire from the city in which it does business), businesses aren’t flocking to Cleveland. I wish they would, because I’d love to move back some day and watch the Browns lose in person. Maybe some day, we’ll win big.

My other concern/criticism with his piece is, at least as it pertains to the city, is this: If Yglesias thinks that it’s time for “tech hubs to go where they’re welcome” because SF residents are complaining about private bus stops — wait until he learns about some of Cleveland’s NIMBY problems.

Cleveland’s zoning and regulatory policies, for me, leave much to be desired. In my opinion, the city of Cleveland’s problem isn’t due to one-party rule, it’s more a problem of ideology. It’s more of a “our job is to help business ‘thread the needle‘ of regulations” than it is to make the regulations and laws more conducive for businesses to want to locate there in the first place.

My TL:DR is this — If Yglesias were revealing some secret about why everyone should “flee to the Cleve” and move their business there, people would already be doing it. I wish they were, as Cleveland is a great area with a lot to offer. But they aren’t. It’s not because of a lack of publicity or PR. Other journalists, with a love for Cleveland and Ohio, have already suggested some reasons why Cleveland might want to shun PR and focus on change, but they’ve largely been ignored.

While I’d love it if Ohio and Cleveland adopted the Texas and Houston models, that is unrealistic. It won’t happen. It’s part of the culture, which is fine. Even some modest changes in that direction, though, could help Cleveland.

bsig

UPDATE: I recommend this post by Daniel McGraw on the same topic.

‘Jackass’ Approved for Ohio Motion Picture Tax Credit

bgThe upcoming film Bad Grandpa, part of the Jackass series, was filmed in Northeast Ohio.

I noticed a frame of the Veteran’s Memorial Bridge, a bridge I crossed frequently during my high school years on Cleveland’s West Side.

In an effort to win filming locations, Ohio offers the “Ohio Motion Picture Tax Credit” as an incentive, though many films use Cleveland as a backdrop for other cities like New York, Chicago, or Washington, rather than a feature. In other words, Ohioans are subsidizing Hollywood firms to turn Cleveland into New York.

So far as these incentives go, Ohio isn’t alone — over 75% of states offer some form of incentive.

According to the website of the Ohio Development Services Agency:

“The Ohio Motion Picture Tax Credit provides a refundable tax credit that equals 25 percent off in-state spend and non-resident wages and 35 percent in Ohio resident wages on eligible productions.”

It also specifies that “[e]ligible productions must spend a minimum of $300,000 in the State of Ohio”.

The Ohio Development Services Agency confirmed to me that, while “the production company has not yet sent in their final audit … the project was approved for a $1.5 million Motion Picture Tax Credit.” The production company projected that “47 percent was to be shot in Ohio.”

Motion Picture Tax Credits and other incentives for filming are popular among state legislators. The Tax Foundation observes:

“Forty-four states [in 2010] offer significant movie production incentives (MPIs), up from five states in 2002, and twenty-eight states offer film tax credits.”

While they are popular, they are not without controversy. The Economist called such incentives a “stupid trend.”

Since 2010, three states have dropped their motion picture incentives. Many others, including New Jersey — the epitome of states with silly policies, have suspended such programs.

The non-partisan Tax Foundation is skeptical of the value of incentives and credits for motion pictures:

“While broad-based tax competition often benefits consumers and spurs economic growth and development, industry-specific tax competition transfers wealth from the many to the few … Movie production incentives are costly and fail to live up to their promises.”

The report continues:

“Based on fanciful estimates of economic activity and tax revenue, states are investing in movie production projects with small returns and taking unnecessary risks with taxpayer dollars. In return, they attract mostly temporary jobs that are often transplanted from other states.”

and:

“Furthermore, the competition among states transfers a large portion of potential gains to the movie industry, not to local businesses or state coffers. It is unlikely that movie production incentives generate wealth in the long run. Most fail even in the short run. Yet they remain popular.”

I’m in agreement. Scrap them.

But if you’re going to keep them, at least require that they say they’re in Cleveland in the film, so that you can pick movies that cast Cleveland in a positive light.bsig

Here’s a screen grab from Google street view of the bridge seen in the movie.

gmaps

The next frame cuts immediately to Charlotte, North Carolina. From the trailer, it appears most of the film is depicted in North Carolina. (Also, Cleveland’s tallest building one of Charlotte’s tallest were both designed by Cesar Pelli and look similar.) Other scenes were filmed in North Carolina.

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You can watch the trailer here:

Bomblecast #20 — The Minimum Wage

ep20

In this podcast, we talk about the minimum wage and President Obama’s proposal to raise it $9 an hour.

Here’s Episode #20:

Sim City and Markets

SimCity 4 Deluxe Screenshot 2_656x369

This afternoon, I watched a live broadcast celebrating the 10th anniversary of Sim City 4, an excellent and fun game to play. I tweeted that I was watching this broadcast, which in addition to celebrating SC4, promotes the upcoming Sim City title to be released next month.

A few of my friends started g-chatting about how cool the video was. It was well produced, interesting, and revealed a lot about what went into making the new Sim City an improvement over SC4.

While Sim City 4 isn’t perfect, people who play it tend to realize its flaws, but do so anyway because it is fun. I realized that I tend to be friends with these people, because they’re analytical thinkers. After all, doing well at SC is kind of like succeeding at defeating a simulated, changing puzzle. People who hate Sim City and do not think analytically, well, aren’t usually my friends.

One of the developers pointed out how in the new game, people have to get to hospitals instead of being magically beamed health based on their proximity to a facility like in SC4, no matter if they lived on an unconnected island across the way. In short, the new game is a little more realistic.

In talking with a friend, I wondered whether the CVS-like stores in the new SC will have minute clinics — a market reaction to flaws in our current health-care delivery economy. We concluded this is unlikely.

As an advocate of open markets, that bothers me about Sim City — in the game, the only way people receive education, healthcare, garbage removal, protection from fire or crime, is basically through your (the government’s) doing. Of course, that’s not the way the world actually works.

In Sim City 4, for example, one of your earliest perks is that you’re asked whether you’ll grant a denomination lacking “House of worship” the ability to exist. I don’t know anyone who says no to the church, but had I not built a school, how am I to know the church wouldn’t have built one? Or a private-sector actor? If I didn’t build a money-sucking university, how am I to know the Jesuits wouldn’t build one, complete with a hospital? Or that both might exist, along with the University of Phoenix or the University of Southern California.

When I build a residential district in a high-end part of town, how am I to know the residents won’t form their own Home Owners Association — replete with private trash, snow removal and security? You get the point.

In real life situations, the market responds. One of the beauties of unintended consequences is that good things often come from them. (Some also bad.) Of course, nobody who has played the game extensively would argue that SC4 lacks unintended consequences.

What does excite me about the new Sim City is that trade is a much more important part of the game, whereas in SC4, it’s more of a last minute add-on. Trade, of course, is important for any society and economy. The actions that people take in the online version of the game will impact neighboring cities. In the broadcast, we’re told that you can sell water (like in SC4) to your neighbors, but you can essentially make it so that you’re exporting polluted water if you want. This will make the interactivity quite interesting to be sure.

Is Sim City perfect? No, the amount of work that it would take to replicate the market as it exists in real life in a video game would be exceedingly difficult, practically speaking, not possible. (Which might explain why Keynesians have such a difficult lot in life.) Then again, Sim City is just a game. A fun one at that.

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Confusing Argument to Support Minimum Wage Increase

One of my least favorite new proposals from last night’s State of the Union was the proposed increase in the federal minimum wage. Now, I don’t support minimum wages because I don’t think the government should be able to tell individuals what they can ask in recompense for their labor. That’s my underlying reason for opposing them.

But, today, the pundits and advocates are out duking out whether raising the federal minimum wage to $9 is a good thing. I don’t think it is, but regardless that it’s bad policy, people will be out arguing nice-sounding supposed benefits from such a change and others its harrowing unintended consequences.

However, one of the arguments I read was a tad confusing to me. In The Week, Harold Maass writes:

A 2011 Federal Reserve Bank of Chicago study found that minimum-wage workers increase spending by $2,800 a year for every $1 increase in the minimum wage.

The National Employment Law Project’s Christine Owens says this is a good thing. But the math is confusing.

If you work 40 hours a week, every week of the year, a minimum wage increase of $1 an hour will net you an additional $2,080 before taxes.

After taxes, you’d net about an additional $1,913. Yet, increasing the minimum wage by $1 increases people’s spending by $2,800? Huh?

This does not appear to a very beneficial reason to increase the minimum wage.bsig

Will we get a deal?

fiscal-cliff-contact-congress

It’s increasingly unlikely that Congress will work out a deal to solve the so-called “fiscal cliff” before the December 31 deadline.

This time two years ago, the ink was drying on the President’s signature of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

The clock is ticking and by most public accounts, we are nowhere close to a deal. Especially now that the House couldn’t get the votes together for a deal.

Earlier this month, press secretary Jay Carney said that Speaker Boehner’s oddly named “Plan B” isn’t acceptable to President Obama because “it can’t pass the Senate.”

One wonders whether or not the President’s proposal can meet his own Senate passage test. What’s more, it’s worth asking whether Boehner’s Plan B can even pass the House — since it already failed once.

With less than a week left until the end of the year, this is pretty much where we are: the sides are talking, but no plan seems to exist that is guaranteed passage in either chamber.

Details are scarce. We’re only offered broad descriptions about rates and income thresholds. Specific line items are being kept out of the public eye to avoid a thousand side debates over the necessity of a certain program, or whether or not current funding levels are justified.

In 2010, a similar deadline loomed. A select group of lawmakers huddled in secret to work out a deal on expiring tax rates and other provisions. The details of the negotiations weren’t public, but the names of the negotiators were.

This time around, it appears no such secretive group exists.

Which means that either the only people doing the negotiating are the President and Congressional leadership or a super-secret group of lawmakers negotiating exists. The latter is doubtful, since secrets like this are too big to keep in a gossipy place like Congress.

In 2010, a deal was struck with time to spare. But not after weeks of deliberations behind closed doors. Once it was struck, it was swiftly passed by the Senate by a large margin, and eventually passed in the House by a vote of 277 – 148 (with mostly Democrats and a few conservative Republicans voting Nay).

The sentiment in 2010 was that most people wanted a deal. For a deal to happen, consensus had to be reached, and consensus is hard to build when you go through the normal process, since Congress has a tendency to pick things to death.

Thus, why the details were hashed out in private. Prying eyes will try to kill a deal. They tried. And failed.

Hundreds of lobbyists and activists converged on the hill to see if their sacred cows would be spared or slaughtered. Multiple calls, emails, impromptu office visits to this secretive cadre of elected officials took place on a daily basis. Usually in vain.

Most of those inquiries were ignored by those officials and their staff. Even confirming to a party that their provision was in the clear would make it more clear to others that their interests were at stake. Washington is a small town, and word travels fast.

Revealing much of anything would cue a flood of further lobbying — not that it wasn’t happening already in the form of spam emails from CapWiz . So the way the 2010 tax compromise happened was because people kept a tight ship, and a take it or leave it deal was presented to the rest of Congress.

Neither side seemed very happy with the 2010 deal, but compromises often yield ugly results. They took the deal.

In 2012, neither side seems to want a deal, or at least a deal like the one struck in 2010. Back then, the House was about to change hands and Democrats had to worry about whether or not a new Republican majority would be more insistent on getting their way. The incentive was there to compromise.

Like in December of 2010, an election has recently taken place and the voters have spoken. A “status quo” election as Fred Barnes described in THE WEEKLY STANDARD, since no chamber lost its majority and the President retained his job.

The President and his supports think this means voters sided with them. House Republicans think since they kept the House, the voters sided with them. Not a very propitious climate for a compromise.

Which leaves us with a few possibilities:

Boehner and Obama are closer than we think and a deal is close to being reached. This would probably require bi-partisan passage in both bodies, since the more polarizing members in each chamber are likely to eschew compromise.

We are going off of the cliff and a deal comes in January. If either side holds out in an attempt to cash in on an imaginary mandate come January, markets will crash and voter discontent will soar. It’s a risky gamble for either side, but it has the potential to pay dividends and can’t be ruled out.

No deal is in the works in the short-term. If enough members hold out, and the newly-elected 113th Congress can’t muster a deal, we could go over the fiscal cliff and stay there for months. Some conservatives want voters to see the real cost of a big government is – despite the fact deficits would still likely exist even under this scenario. Others don’t believe a compromise will truly cut spending and put the country on a path to fiscal sanity. Some liberals want to hold out for imposing even higher tax rates on high income earners and on capital gains, while others want to see deep cuts to defense spending.

A super-secret group of elected officials is working on a ‘Hail Mary’ like 2010. It is unlikely such a group could exist without some spurned member blowing its cover, but it’s always possible. There are retiring members like Senators Kyl, Conrad,  Lieberman and Hutchison who are known deal makers and would avoid the pains of re-election. But retiring members don’t hold as much sway as Party leadership does with people who still have to be re-elected.

Will we get a deal? It’s always possible, but the incentives have changed for the worse since 2010.

And from the little we do know,  there’s not much promise. PageLines- bsig.png