Chillin' out till it needs to be funded
Including the McConnell plan asking for four instalments of debt ceiling increase, the US now has 3 public options or more depending on who you are listening to, thus implying quick acting pressure on the White House and the GOP to come to terms and sign on the dotted line with due compromises for the other side. As Boehner, Speaker of the House of Representatives (Congress) and Obama discussed among party members, the Whitehouse mentioned yesterday, it would be shocking if all 400 representatives /voices came close to agreeing with each other on the various components of the deal.
The most promising as of yesterday night is a $3 tln deficit reduction deal as it involves postponing tax reforms for more than a year lets the existing Bush era deductions expire and yet allow up to $1.5 tln in Tax cuts allowing Republicans to compromise on Social Security Reform
The plan seeks to reduce the marginal income tax rate to between 23 percent and 29 percent and abolish the $1.7 trillion Alternative Minimum Tax (AMT), which is confusing even to most economists, but suffice it to say, it takes more out of the middle income taxpayers pocket than it should. The top individual tax rate is currently 35 percent.
The White house was quick to disclaim any agreements with the plan when discussions started yesterday afternoon. The original Gang of Six plans melted into nothingness but the team of Durbin, Coburn, Warner, Chambliss, Crapo(Id) and Conrad are among the senior most and recognized champions of the thorny compromises to be fought on taxes and Social Security (Medicare) Both are now likely to be scheduled for the second phase post 2012 with the Democrats in charge of tax reform and Republicans taking control of the House and Social Security repform and entitlements
The most promising part of all the Gang of Six options has been creating $1 tln in savings out of expiring deductions and postponing reform which is the most palatable to likely population of the voting houses (House/Senate) The earlier plan passed in the House was slated to be rejected by the Senate yesterday/today
The other good part of the plan with basic cross-party discussions and agreement in the Gang of Six is the increase in limit being substantial at $2 tln yet not too high. A $2 tln limit upgrade will likely move the discussion to a far back-burner
However, late night reports suggest that the Compromise is unlikely to be struck by July 22 and thus a default situation on Aug 4 is more than likely
House Minority Leader Nancy Pelosi (D-Calif.) said in a briefing Thursday, “We have many [options]. We have Simpson/Bowles, we have Domenici/Rivlin, we have the Center for American Progress, we have the Center on Budget and Policy Priorities.”
U.S. debt deal advances but pact by Friday deadline unlikely, Thomson Reuters: Reuters Insider http://insider.thomsonreuters.com/link.html?cn=uid32884&cid=243795&shareToken=MzowYzhiOTMxZS05NjRiLTQyM2ItYjYwYy0zOTFhMTY2ZTMyZDE%3D&start=13&end=24
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