Stocks drop as U.S. Speaker Boehner drops ‘Plan B,’ fiscal cliff approaches

“House Speaker John Boehner scrapped a plan to allow higher tax rates on annual income above $1 million, yielding to anti-tax resistance within his own party and throwing already-stalled budget talks deeper into turmoil,” Richard Rubin and James Rowley report for Bloomberg News. “Boehner said last night that President Barack Obama and Senate Majority Leader Harry Reid should come up with legislation to avoid more than $600 billion in tax-and-spending changes that would probably cause a recession in the first half of 2013 if left in place.”

“Now that Boehner has pulled his plan, House members and senators won’t vote on the end-of-year budget issues until after Christmas, giving them less than a week to reach agreement to avert tax increases and spending cuts set to take effect in January,” Rubin and Rowley report. “The partisan divide hardened yesterday, making the path to a deal more uncertain. ‘The odds go up that we go over the fiscal cliff,’ said Representative Rob Bishop of Utah, a Republican.”

Rubin and Rowley report, “Stocks sank. The Standard & Poor’s 500 Index retreated 1.1 percent to 1,428.85 at 9:33 a.m. in New York. The Dow Jones Industrial Average slid 62.51 points, or 0.5 percent, to 13,249.21. Treasuries rose, as the U.S. 10-year yield dropped five basis points, or 0.05 percentage point, to 1.75 percent at 8:44 a.m. New York time. It slid the most since Nov. 7.”

“Obama wants Boehner, 63, to allow a House vote on a Senate- passed bill that would extend tax cuts on income up to $250,000. That bill doesn’t address several parts of the so-called fiscal cliff, including the payroll tax, unemployment insurance, estate tax, spending cuts, expanded unemployment insurance and miscellaneous tax breaks,” Rubin and Rowley report. “A House leadership announcement said the chamber will hold no more votes until after the Christmas holiday and will return ‘when needed.’ Reid said yesterday that the Senate won’t address the end-of-year budget issues until Dec. 27.”

Read more in the full article here.

“Economic data today showed spending by U.S. consumers climbed in November as Americans pushed aside the threat of higher taxes next year, buying gifts for the holidays and making up for shopping lost to superstorm Sandy. Purchases increased 0.4 percent last month after a 0.1 percent drop in October, Commerce Department figures showed. The gain matched the median forecast of 80 economists surveyed by Bloomberg. Incomes rebounded after being depressed in October by lost wages due to Sandy,” Inyoung Hwang and Corinne Gretler report for Bloomberg News. “Technology, consumer discretionary and financial stocks posted the biggest losses, falling at least 1.1 percent.”

Read more in the full article here.

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

66 Comments

    1. The fiscal cliff is the ultimate in unplanned political compromise. Both parties offered up their worst nightmares as incentives to formulate new budget legislation, and the irony is that those nightmares are now going to come true because of the gridlock in Congress.

      From my standpoint, the fiscal cliff appears to be the only way that this country will take the painful medicine it so badly needs – a mixture of revenue hikes and spending cuts that will truly change the course of this nation and head us towards a balanced budget. Neither party would have done this voluntarily, as demonstrated by years of gridlock. Democrats insist on trying to cure all social ills, real or perceived, through legislation, while Republicans insist that tax cuts will magically pay for themselves despite the fact that they cannot identify the optimum tax rate from a revenue standpoint. And far too many people are sold on enormous defense spending even though that played a major factor in the demise of the USSR just a few decades ago. At least the fiscal cliff makes everyone share the burden. Major sacrifice is the only way to climb out of our deficit spending that has been growing since 2000.

      Bring on the fiscal cliff. It is actually the closest thing to fiscal sanity that we have right now.

      1. Actually the beat way out is to get people back to work. The middle class pays a majority of the taxes that run the country. Improve jobs and get people paying taxes instead of drawing unemployment. Think Clinton. Surplus.

  1. The bad thing about this whole cliff thing is that, even if it doesn’t hit you that hard in the pocketbook, just the perception that it will should be enough to send the economy into a tailspin. People will just cut back on purchases, so both parties need to at least get something done, temporarily.

    1. Yeah! Because his ideas are so unfair!!!

      As I said before (and you contradicted me) the republican right is too far right. Until they become more moderate, enjoy a democratic president…

      1. Actually, if you look at the Republican’s position on most issues, they have stayed pretty consistent, agree with them or not.

        The Democrat Party has moved so far to the left since 1968 that the resulting chasm left moderates (conservative foreign policies, liberal social policies) without their old Democrat allies.

        The more this country drifts to the left, the more the über libs claim the Republicans are too conservative.

        The answer you gave is completely backwards.
        Until the Republicans run a true Conservative, they will continue to lose as they have with Dole, McCain and Romney (all very decent men).

            1. I can put it into words. After the bush debacle, no one was a republican. Tea party or “conservative”. Now after a string of pathetic representatives of “conservatives”, you are all looking for “true conservatives”.

              Just keep changing the definition.

            2. I have consistently described myself as a Conservative.

              The three candidates I mentioned are middle of the road Republicans, conservative in some areas, not so much in others, but to the far left, they were Conservatives, hence why I say ‘true Conservative’.

              I generally vote Republican in national elections but not always in state or local, where many Democrats are also Conservative and aren’t controlled by the Hollywood/Media wing of the party.

              I have also been a steady supporter of Bush and don’t run from that. Just like any president, I agree with some of his moves and not others. Where I agreed with Reagan about 85%, W. Bush 75%, I agree with Obama around 30%.

              I think your problem is you are a solid Democrat no matter the issue, because you are a team player and don’t take the time to even try to understand an opposing view. I have never read a response from you that indicated you have much depth of understanding, but a pretty quick knee-jerk that is as simplistic as what the media tell you to believe.

              Other than that, I’m sure you are a decent guy.

            3. “I think your problem is you are a solid (Republican, TP, conservative or true conservative) no matter the issue, because you are a team player and don’t take the time to even try to understand an opposing view. I have never read a response from you that indicated you have much depth of understanding, but a pretty quick knee-jerk that is as simplistic as what the media tell you to believe.”

              See how easy that is? You would be surprised at how conservative my fiscal values ultimately are along with some of my social values. I am pro choice but my vote in the 3 times the subject has come up in my life is for life. That being said, I support choice over my wants. I believe in personal responsibility but I also realize that there are others less fortunate than me and that as a society, we have to deal with them and if we are going to pretend like we care as a society, then society has to do something. I understand opposing views much better than you give me credit for.

              Just like your party doesn’t serve your needs, neither does mine but what choice do we really have. I am not going to vote agains my interest.

              My comment was regarding the rights metamorphosis of a united Republican party becoming one of members looking for “true conservatives”, or becoming Tea Partiers. I think it is funny and telling. It brings to mind something I believe.

              “Excuses are the tools of fools to build monuments of nothing.”

              You didn’t lose the election because McCain or Romney weren’t “true conservatives”. The right lost because ultimately your policies don’t fit the needs of American People and won’t until you guys start to change. I don’t look forward to the day when Megan McCain is your candidate for President. I might even support her.

        1. Sounds good. Actually to all those spending cut people, I say…..
          Lets start at the top. We disband congress and cut all retirement and other pay to all federal level reps. We will become 50 independent countries. Fighting each other to the bottom.

          But look at the money we will save. / s.

          Just a thought.
          En

    2. @BLN: Really?? You’re blaming Obama because Boehner doesn’t even have enough support or control of his own party to pass a watered down Plan B??? The Tea Party is an extremist organization that is out of control and way outside the mainstream. The Repubs said the election was a referendum on their tax plans. They lost and the Dems won – at POTUS, Senate and House levels. Repubs need to get real, stop playing party politics and holding the country to ransom, and do what the electorate voted for.

    1. Both parties are obviously to blame.

      Republicans believe that tax increases are the wrong thing to do to a sputtering economy. Democrats refuse to deal with out-of-control entitlement spending.

      It’s tough to see the common ground where they meet. For a deal that gets enough votes to pass, both parties will need to give significant concessions.

      1. During a sputtering economy the entitlements spending would do more to inject money into consuming and crating demand than tax cuts for the upper tax brackets. And it’s not like these are really tax hikes, it’s more like the end of a tax holiday that did nothing to prevent the current economic troubles that we have.

        1. Yes entitlement spending the last 4yrs has worked out so well. We’ve had 2% or less economic growth, it should be growing between 4 & 5%. What entitlement spending got us was 6 trillion in new debt in just 4yrs, but somehow when Bush gave us 5 trillion in 8yrs it was a problem. If the economy was growing at typical rates of 4 to 5% there would be no need to raise taxes as tax revenue would be normally where it’s been in the past, the biggest problem is government spending. The government doesn’t make a profit so infusing more money into the economy by entitlement spending just takes more money out of the private sector and the economy doesn’t grow like it should and tax revenues go down not up, like they should. Government spending has to be reduced or it will be Greece for all of us.

          1. I would like to point out that my argument is really about short term increase in spending and taxation. A long sustained cut in taxes and increase in spending is not good as you point out. The point I was referring to is a sputtering economy, which USUALLY is a short term thing. However, because spending was INCREASED during the good times we are left with both the need for short term increased in government spending (WARS) AND a large debt. As such, we have some major pain. The least painful thing do in the short term is to end the tax holiday to increase revenue, when GDP begins to rise, cut spending and retain the tax level where it was before 2000. What we need is redistribution of wealth down to the lower tax brackets. I would rather it be through jobs and increased wages, but failing that there is little else to do but to tax and redistribute via government spending. Unless the lower tax brackets get some income relief, GDP will continue to be stagnant. Also, 4-5% growth is really not typical growth over a long period of time.

            1. Heh. Yes, well that seems to be what the Speaker wants. Is lower spending and lower taxes for the upper brackets at a point where neither none of those choices really make any sense to the nation as a whole.

          2. When you talk about too much government spending, are you talking about too much money spent on war and killing people, or are you talking about too much money spent on keeping people alive like medicare and social security?

            Which would you like to see cut? …and could you explain what entitlement means to you? I always thought that if you pay into something you are entitled to get a return. What’s wrong with that?

            1. The governments job is not to provide for the general welfare, it is to PROMOTE the general welfare, this is where our government and every other get off course thinking they should play god and provide for people what people should do for themselves. Essentially they are buying votes with all their handouts and enslaving people to depend on big daddy government instead of depending on themselves and family.

              The government is on trk to spend 3.7 trillion, you can take 100% of every one in this country making $100K and above and that would just about pay for the spending this government is doing, then what? This fallacy of just raising taxes on the rich doesn’t cut it. You can’t put 1000 people on a boat that only holds ten, the boat will sink.

            2. @Steiner,

              So tell me, the government should “promote” general welfare. So you have a good job and pay for insurance yourself. You get some slow cancer, and go out on disability because you can no longer work. Then you get your COBRA insurance which lasts for 18 months. You have no job and you pay all your money in COBRA payments.

              Now you start getting really sick but your 18 months has run out so COBRA drops you and of course no other insurance company will pick you up. Don’t forget, this is capitalism, and it is all about profit, and you are not profitable for an insurance company any longer.

              So now you have no insurance, have no money, and you need treatment. What should we do with you? Your house is being foreclosed because you spent all your money on medical, and now you and your family are living in a car. (Don’t think this doesn’t happen).

              But we are living in the YOUR world. The world YOU chose. There is no Social Security, nor Medicare.

              I think you should die. I don’t want my tax money to help you and your family. Those are not my kids, and besides I’m feeling pretty healthy right now and there is NO CHANCE I could end up like you right?

              I will say one thing. It sucks to be you, and living in the world you chose. You have to die a slow and painful death of your own making.

              Here is what I think, I think we should have two options, one for people like me and my “group” where we all pay into a fund with guarantees such as Social Security and Medicare, and a second non-fund for people like you and your “group” of people who would rather take their chances and if bad luck hits them, they could die on the street.

              Trust me, since we all need to take personal responsibility, (which is something you seem to believe in) then I would CHOOSE to pay the tax, and take responsibility for my Social Security and Medicare, and you can take personal responsibility and not pay into it.

              Trust me, if you were one of those who choses not to pay into the system, I would have no trouble stepping over your body and saying. “I don’t want him getting ONE CENT of my tax money to help him or his kids. Let them die”.

              Personal responsibility cuts two ways–and for the sake of my Myself, family, and kids, I WANT to pay taxes and have guarantees.

              This why we should have a public OPTION. I can pay the tax and get the benefits if I chose, and you cannot. If I believe government single payer gives me better service, I should chose, and if you believe Blue Cross is the way to go, help yourself. –but please don’t burden the rest of us when you get sick and your COBRA runs out.

            3. @Steiner

              Is the truth vindictive? I am talking about what I have seen happen in real life, yet you didn’t answer the question, just call me vindictive for telling the truth. I know what I say may be an “inconvenient truth” but I still would like to see how you reconcile the questions I asked you with what you said “thinking they should play god and provide for people what people should do for themselves” when in fact many people cannot provide for themselves, and that person may someday be you.

              Here is a fact whether you are pro Corporate or Government:

              Government has no profit motive, which means they will ALWAYS be too generous with somebody elses money. They will give billions to foreign governments, and give free medical to illegals, and be tempted to give welfare to anyone who asks for it and they will not fire dead wood even if they do next to nothing because, well, it’s government and it’s is not their money they are spending and yes that is a problem. You and I will always get less than we work harder and pay more in taxes than what we get back. It will not be fair because government will waste our money giving it away to people who may not deserve it.

              But what about Corporations? You will also work hard and get less than you deserve for a different reason. The reason is greed. Rather than the people at the top giving away too much, they will always try to take too much for themselves because that is what they do.

              You can make a great invention for a company, get paid peanuts while the execs and shareholders at the top rake it in and profit from our labor. This is also true.

              So now we have to ask ourselves given these two choices. Which is the bad choice and which is the worse choice?

              Do I want to have less because I work hard with little return because the greed at the top has become a well oiled machine at figuring out how to get as much as possible and give as little in return, or to I want to have less because I work hard, and the people at the top give too much of money away to people who don’t deserve it (but to a large percentage of people who really need it as well)?

              So in the end, who do you want to rob your house. Do you want the King to rob your house and keep your jewels, or would you rather be robbed by Robin Hood?

              This is life, and this is the way it really is. I’d rather be robbed by Robin Hood. At the end of the day, I can look in the mirror and say that the government stole $100 from me, but $50 went to somebody who really needed it.

              I don’t want to say my Corporation under paid me by $100 and all that money went to the “King”.

              I am not vindictive at all. I am very real, and I can live with myself, and I can accept that the government WILL waste my money, but really help those in need.

              If that is a price too big for you to pay, for somebody elses well being, then why in the end should I not step over your body on the sidewalk as you would be willing to do to others? There is no perfect world, but I would rather err on the side of charity than greed.

          3. @steiner: Actually, the spending has worked out well. Without it, we’d be where Europe is – which followed the GOP favored “severe austerity without a balancing stimulus” model. Europe is officially in a double dip recession, with unemployment in the high teens to mid 20 percent range and growing, and with shrinking economies. Even Germany is now in recession again.
            So yes. The stimulus package worked very well indeed. Despite the GOP’s best efforts.

      2. Let the taxes go up. I’m working, I can pay it, and let the money be spent to create jobs for those who are not working. Isn’t it the Republicans that want us to be a a “Christian Nation?”, or is there some kind of hypocritical disconnect going on here? What am I missing?

        1. Most “Christians” only act like Christians when the feel like it – the other 99% of the time they’re just greedy hypocrites who think they are taxed too much, and that too much of those tax dollars go to keep somebody else alive.

        2. What you’re missing is that taxes, or any other monies taken by threat of force, given to the poor, do not qualify as “charity.” Charity is what I give voluntarily. The Constitution does not authorize the Federal government to be in the charity business. I’m with Daniel Webster – I will give from my own pocket to the limits of my ability, but I will not tolerate one cent of government money being spent on so-called charitable causes, which is actually just another way of saying “buying votes.”

          1. As someone who is married to someone who raises money for charities all I can say is, you need to send some more. Too many donors are turning into the needful. Too many people need jobs, food, and shelter and charities are struggling to meet that demand. This is usually where the government becomes the spender of last resort.

          2. When you talk about Charities, I am assuming that you are talking about hiring the poor to build roads and infrastructure that we all use?

            I think if more people were like you, then we wouldn’t need taxes. How much money have you donated to your town for Roads and Schools and all these other Charities that we all depend on?

            I have to admit I didn’t donate anything, and if not for taxes people like me would get a free ride with people like you “donating” all the taxes for our schools.

            You do your part I am sure. Taxes are for free loaders like me. You should be grateful they are forcing me to pay! The world would fall apart if we depended only on people like you who donate to all the government charities to keep our schools and roads running.

            Most people aren’t as righteous as you. For the rest of us, we need taxes.

          1. Except the wealth was not re-distributed. The truth is tax cuts did nothing and government programs did nothing because we failed to pay for two wars that somehow supposed to pay for themselves. Hence our current position.

            1. @MacMan

              Yup! It’s the trillions we spent on the wars killing people and what did we get for it? Wouldn’t giving that money away to ANYBODY for ANY reason, be better than using it to kill people?

              How about a few of the right wing Christian Republicans weigh in on this ? Come-on, here’s your chance, practice what you preach.

              I expect a heard of Right-Wing comments following my thread saying: We should cut military, tax more, and give as much as possible to the poor to spur the economy. What would Jesus do?

              Hmm, maybe not. I bet this thread becomes a dead end. No Republicans to follow my lead?

            2. I love how progressives bring up the war and tax cuts as if those two things are somehow entirely responsible for the sorry financial state of the country. The reality is that even using a generous number for the wars (and pretending that the military doesn’t cost a lot of money even during peace time), the wars have cost, for all ten years, “only” about what the ENTIRE budget is up to now EVERY SINGLE YEAR. Even the tax cuts and the wars pale in comparison to what has become a gigantic, bloated, super-size federal budget.

              So, even if there never had been the wars, and even if there would have been no tax cuts, there would still be a large deficit, the debt would still be huge, and the “fiscal cliff” would still loom.

  2. Both Houses of Congress need to cut the DAMN SPENDING! Until that happens, it is just going to get worse and worse. And face it people, we will never get $16.2T Dollars paid off. Not in my lifetime.

    Everybody Have a Merry Christmas and a Happy New Year.

    1. No it will probably take forever to pay it off. However, we were on our way when Clinton was president. Hmm… Something changed after that – tax cuts, war, … a republican agenda?

    2. Under Reagan the USA went from being the worlds biggest lender into the worlds biggest debtor. He tripled our nations debt – the largest percentage increase ever. How did this happen? A wild increase in military spending, and a giant tax cut for everyone. Sound familiar? Also, fyi – government spending under republicans has ALWAYS been more than that of democrats. Also, Government spending under Boehner is larger than Government spending under Pelosi. Why is the tea party trying to oust Boehner? think about it. we have a 3 party system now, and until the “republicans” figure out who they are, perhaps it’s time we go back to something we know worked – Clinton era economic policy – a policy that saw the least amount of government spending in the last 30 years. And the best stock market.

      1. Actually you remember selectively about President Reagan, what he and congressional Republicans failed to do was rein in domestic spending AND defense spending building a huge Navy that couldn’t be maintained for more than a decade. The deal with Tip O’Neal was to raise taxes in exchange for domestic spending cuts that that never happened.

        TEFRA was SUPPOSED to lower taxes (the House version did) but by the time the Senate got through with it raised taxes and spending never went down in either category.

        As a result, the debt went from 1 trillion to 2 trillion (a feat our current resident managed to accomplish every single year of his first term.) Now instead of a trillion dollar naional debt we have trillion-dollar annual deficits

  3. “Obama wants Boehner, 63, to allow a House vote on a Senate- passed bill that would extend tax cuts on income up to $250,000.”

    And Boehner won’t do it. Republicans will then be blamed for increased taxes on everyone making less than $250K per year. I love it. The Republicans have put themselves in the position of either raising taxes on the poor, or giving tax breaks to the rich. They can’t win. Idiots!

    1. I beg to differ, Zeke.

      Blame all you want and certainly indulge in political tactics. But the fact is, if it happens, the Obama administration raised taxes on everyone in the U.S.

      Get real.

      1. The Republican party has painted itself into a corner. They have held everyone making under $250K per year hostage to tax cuts for the rich. They have refused to cooperate with anything the Democrats propose until benefits for Social Security, Veterans, Medicare, and Welfare are cut. They somehow think that the American people won’t notice. They somehow think they can blame this on Obama. That may work with radio talk show audiences, but I was on a town hall conference call with Congressman Blumenaur the other day, and the breadth and depth of anger at the Republicans was amazing. If going over the cliff is what it takes to educate the Republicans, then go ahead, make my day.

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