Fiscal Cliff Talks Underway Between Obama, House Speaker Boehner; Market Rallies on Talk of "Fluff" Compromise

The SP&P staged a mild (and meaningless) 19-point flagpole rally on news of a possible compromise between House Speaker John Boehner and president Obama as shown by the following chart of S&P Futures.



Market participants hope that Obama and Boehner agree to kick the can down the road. Most likely they will, the question is by how much.

Please consider Obama Opens Fiscal Cliff Talks as Boehner Open to Revenue
House Speaker John Boehner said he offered a “framework” including new revenue to reduce the U.S. budget deficit in his first face-to-face talks today with President Barack Obama and top Congress leaders since the Nov. 6 election.

As both sides expressed optimism that a deal is possible, U.S. equity markets rose.

Boehner also said he is serious about including revenue in an agreement if accompanied by significant spending cuts. The framework is “consistent with the president’s call for a fair and balanced approach,” he said after what he called a “constructive” meeting with the president and other congressional leaders in the Roosevelt Room at the White House.

“We’re prepared to put revenue on the table, provided we fix the real problems,” including entitlement costs, said Senate Republican leader Mitch McConnell of Kentucky.

Despite the optimism, the starting points for both sides -- Obama’s insistence on higher taxes for top earners and Republicans’ refusal to raise rates -- leaves negotiators with arithmetically complex and politically fraught choices.

While insisting on taxes, Obama has shown some openness in recent days. He and Geithner said rates must increase without specifying that the top rate must return to the 39.6 percent level in effect when President Bill Clinton left office.

Democrats and some Republicans are also beginning to talk publicly about another alternative: a more modest increase in upper-income tax rates.

One idea would be to raise Obama’s $250,000 income threshold for a tax increase to $500,000 or $1 million and increase the current 35 percent top rate to 37 percent, Peter Orszag, Obama’s former director of the Office of Management and Budget, said today on Bloomberg Television.

“Will John Boehner really blow up a deal for a 1 percent point increase above $1 million?” Orszag said. “The administration has made it clear there has to be at least some increase in marginal tax rates.”

Several congressional aides have suggested that in the event talks fail, both parties in Congress are discussing fallback plans for $60 billion to $100 billion in deficit reduction to replace automatic spending cuts set to take effect in January.
Why the Country is Broke

Read that last paragraph above carefully. No one in either party has the guts to stand up and say "we cannot afford this".

I talked about this earlier today in Ron Paul, American Hero; His Farewell Speech to Congress; Mish Reflections On Why the Country is Broke
Question of the Day

If Republicans are not in favor of deficit spending and Democrats are not either, then how the Hell do we have trillion dollar deficits?

The answer is vast majority of politicians are liars, with no backbone to stand up and tell the truth to US citizens: "the country is broke".

We cannot afford wars. We cannot afford to keep troops in 140 countries. We cannot afford to be the world's policeman.

We also cannot afford Davis-Bacon and prevailing wage laws. We cannot afford the pension promises we have made. We cannot afford collective bargaining of public unions. We cannot afford all kinds of entitlements that have been promised.

How Does It Happen?

We have all of these things because corrupt politicians buy votes of constituents who want to hear the lie that we can afford those things. In the end, that's what it's really all about.

The unions, the warmongers,  the banks, and all the other special interest groups buy votes of  corrupt politicians every step of the way. The "compromise" in Congress is Republican get their wars and Democrats get fiscally unsound social programs.
Expect Fluff Compromise

Look for a compromise to do as little as possible to fix the structural problems in the US. Instead look for Republicans to scale back cuts in military spending and Democrats to scale back revenue increases.

The non-leaders in both parties will stand up and proclaim "we saved the US from the fiscal cliff" or some other self-congratulatory nonsense.

Once again, I am not in favor of tax hikes (unless they come at a steep price such as scrapping Davis-Bacon, ending collective bargaining of public unions, etc., things that will actually fix some structural problems).

However, I don't expect anything but fluff compromises because neither Obama nor Boehner has the courage to tell the truth.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Blogroll

News for factory,Allied Cash Advance,Photography,Beach Water Park,Educational Leadership,Vacation And Travel,Wedding Dress,Family Vacation Packages,Casino and Gambling,Health Insurance,Best Auto Insurance ( BAF ),Web Hosting Professional,Home Design And Remodeling,Information Property For Home,Wireless TV Networking,Business Plan Guide,Educational Guide,Custom Essay Writing Service,Plumber Service And Repair,Property House,Architectural House Plans,Car Auto Services,Computer service and repair,Computer Networking,Business Planning Strategies,Womens Giving,Healthcare and Medical Jobs,Retail Inkjet Solutions,Online Casino Games,Alcohol Drug Treatment,Web Designers,Apollo Amatuer Night,Public School Performance,Kanza Museum,Cap Inter Entereprises Emploi,Culinary Tourism,Business Traveller,Bridal Expo,Container Atlas Architecture,Culinary Tours - Packages and Travel,Dancing Ink Productions,Defend Automotive Group,Real Finance Group,Business Consulting Services,Home Design Audio,Health Projects International,Health Resources,Health Effects of Alcohol,History of education,Vietnam travel guide,Westland Foundation,Lighting Business,Networking Business Professionals,Housing Decoration,Future Business,Health and Beauty Tips,Hotel Cafe and Restaurant,Enhancing Education,Home Improvement Projects,Political Philosophy,Healthy Grieving Process ,Unique Weddings in New Orleans,Art Plus Science ,Advantage Business Media,Mutual Financial Services,Adventure Travel and Holidays,Alternative Medicine Treatments,Web Design and Marketing,Electronic Payment Solutions,Life Success in Business,Devium Car Interiors,Easy Divers Academy,Water Treatment Process,Software Development Company,MSDS Translation Language,Orion International Technologies,Refreshing Summer Wine Guide,Learn Technical Writing,Health Spa and Resort,Creative Book Publishing,Positive Business Mentality,Charter Healthcare,Discount Hotel Rates,United Industries,Warrior Insurance,County Tourism and Vacations,Wedding Ring Jewelry,Studio Design Decorative,Journalism Careers,Gaming Accessories Computing,Business Strategy Consultant,Cefori Technologies Information,Physics and Astronomy,News Fashion,Business Online,Michigan Apartments,Legal Information Institute,Guide Fashion Shipping,Home Insurance Quotes,Web Design Trends,Musical Instruments and Gear,Travel and Leisure,Importance of Education,Auto Financing Loans,Contractor Business Systems,Business Travel,Importance of Sex Education,Education Classroom,Creative Idea Laboratory,Luxury Paradise Vacations,Healthiest Alcoholic Drinks,Sports Betting,Business Environment,Business Directory,Internet Services,Top Styles,Architecture and Design,Discovery Travel and Tourism,Drug Abuse Treatment,Cheap Auto Financing,Business and Technology,Online Trading,Casino Gambling,Easy Online Shopping,Education Games,Social Media Networks,Online Dating,Luxury Honeymoons,Media and Entertainment,Home Decorating Ideas,Insurance Services,Payday Loans Online,Beechwood Travel Guide,Paradise Garden,Business Trends Consulting,Expert School Consulting,Latest Fashion Trends,Alternative Health Care,Technology Trends In Society,Health Technologies Resources,Island Wedding Services,Network Society,Gambling Experts,Medical Insurance Expert,Home Repair and Remodeling,Sexual Health Services,Education Resources,Automotive Solutions,Michigan Trade Associations,Luxury Fashion and Accessories,Theoretical Physics,Financial Advice,Adult Online Dating (Escorts),Pets Health Insurance,Better Homes and Gardens,Avastone Technologies,Discover Student Loans,Sports Authority,Vitamins and Supplements,Business Systems Online,Food Network Recipes,Business and Government,Smart Legal Strategy,Occupational Health Care,Music Education,Online Dating Tips (Expert),Online Marketing Lexikon,Citizens Council Network,Economics and Finance,Fashion Entertainment News,Luxury Travel Destinations,Online Auto Insurance,Home Improvement Loans,Building Business Foundation,Human Resource Consulting,Educational Media pay day loans
life insurance quotes
Credit Loans (finance)
Foreign Auto Parts
Health and Fitness
Drug abuse effects
Destination hotels and resorts
Professional Financial Marketing
Personal Finance
Computers and Technology
Auto Insurance
Real Estate Property
Computer Graphics Technology
Home Improvement
Arts music schools
Online Education Classes
Hotel and Travel
Security development program
Business auto loans
Medical And Public Health Organizations
Land and Homes
Better Health Kids
Engineered Heating
Trade Finance Services
Switzerland Tourism
Casa Travel
Clothing Accessories
University of Technology
Best Law Schools
Marketing Technology
Vacation Tour and Travel
Insurance Agents and Insurance Brokers
Construction Engineering
Healthy Home Economist
Masters Home Improvement
Michigan Web Design
Personal Online Banking
Health Education Foundation
Travel Pack
Real Estate and Home Ideas
Museum Vacations Travel
Free Statistical Software
Blog Free Statistical
Buying and Selling Real Estate
Educational Play
Big Top Business
Alternative Health
smooth skin
Products and Services
Construction Project Management
Northside Car Service
Online Essay Writing
France Health
Europe Program Modernization
European Travel Destinations
Science and Technology Project
Online Store Marketing
Law Society Consulting
Business Networking Company
Motivation to Study
Metropolitan Hotel
Technological Innovation
EAP Business
Travel Guide and Virtual Tours
The Business Partnership
Accessible Accommodation
Entertainment News
Medicines Agency
Carpet Cleaning
International House
VIP Shop
Online Clothing Shop
Institute Education Religion
Ford Escort Team
Shop Engine Part
Computer Hardware
Medical Career
Paris Construction
Professional Translation
Streaming Wizard
Alcoholism and Drug
Medical Laboratory
Commerce Business
Educational Kids Play
Space Education
Home Repair Volunteer
Fashion Talent
Health and Safety Executive
Play Web Games
Travel and Surfing
Property and Estate Agents
Technology Group Solutions
Student Service Center
Construction Industry
Media Center Computer
Teny Fashion
Home Remodeling Services
Inspector Network
Car Rentals
Leader Dogs
Rise Health Systems
Business Strategy Consultant
Personal Life Coaching
Company Business Coaching
Entertainment News
Physics and Astronomy
Science and Technology
Cheap Vacation Packages
World Business Academy
Planets Project
Travel and Leisure
Prevent Drug Abuse
Education Certified
Play Kids Games
Legal Defense Fund
Real Estate Strategies
Isolation Globale
Insurance Coverage Law
Rock Hotel and Resorts
Medical Insurance
Healthy Mind and Body
Marjahaan Autokatsastus
Free Sports Authority
Auto Insurance Coverage
Global Technics
Advitium Manufacturing
Professional Core Education
Special Finance Services
Bergen County Contractors
Great Children's Art
Health Supply Company
Social Media Power
Texas House Restaurant
Carbon Consultant
Carbon Expert
Low Carbon
Reset Carbon
Healthcare Commissioning
Virtual Job Tryouts
Ethos Academy (Education)
Intrinsic Schools
Attorney General
Technology Software
Business Plans
Digital Media
High School Resources
Adult Resources
Gamblers Anonymous
Ecuador Real Estate
Software Development
Festival Fashion
Drugs And Alcohol
Business Intelligence
Food Network Recipes
Journal Human Resources
Games and Technology
Technology Development
Web Resources Express
Payday Loans Bad Credit
Art and Craft
Business and Finance News
Ecological Sciences
Education Resources
Web Design
Music Education
World Resources Institute
Business Health Guide
azplanningforwildlife.com m2tvchannel.com bapedaldaprovjambi.com kreis-dl.net news-1212.com landratsamt-doebeln.net landkreis-doebeln.net canadiangoldreserves.net chicagohearse.com tattooremovalessex.com braziltrade-uae.com 333asia.com calliemacdesigns.com gemdoc.net simplefoodjuiceplus.com postabortionstresssyndrome.com descendingpath.com casadopinhole.net myspeechandlanguage.net sezambook.com rerecognition.info bebetsy.info carsoncitybraces.info summitcardiology.info sanfojiangsi.info trailheadgeararchery.info immigrationconnect.info nhhomeless.info tundradialogues.info ibexretail.com kreis-dl.com agiles-eam.com bestbcgolfcourse.com niittyneito.com yenikapimevlevihanesi.com hnr100.com eplogin.com richard-wagner-festival.com landratsamt-doebeln.com lra-doebeln.com terrecatalane.com thesmarterhybrids.com