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Robert Reich
NationofChange / Op-Ed
Published: Monday 26 November 2012
“If the President’s strategy is to hold his ground and demand from Republicans tax increases on the wealthy, presumably his strongest bargaining position would be to allow the Bush tax cuts to expire on schedule come January.”

Why is the White House’s Council of Economic Advisers Helping the Republicans?

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Why is the White House trying to scare average people about the consequences of the “fiscal cliff?”

If the President’s strategy is to hold his ground and demand from Republicans tax increases on the wealthy, presumably his strongest bargaining position would be to allow the Bush tax cuts to expire on schedule come January – causing taxes to rise automatically, especially on the wealthy.

So you’d think part of that strategy would be reassure the rest of the public that the fiscal cliff isn’t so bad or so steep, and that at the start of January Democrats will introduce in Congress a middle-class tax cut whose effect is to prevent taxes from rising for most people (thereby forcing Republicans to vote for a tax cut for the middle class or hold it hostage to a tax cut for the wealthy as well).

But today (Monday) the White House’s Council of Economic Advisers issued a report today warning that if Congress allows the Bush tax cuts to expire January 1and the Alternative Minimum Tax to kick in, the middle class will face sharply-rising taxes.

The result, says the Council of Economic Advisers, could slow consumer spending by 1.7 percent next year, and slow overall economic growth by 1.4 percent. The loss of $200 billion in consumer spending is just about what American families spent on all the new cars and trucks sold in the U.S. in the last year, according to the report. About $36 billion less would be spent for housing and utilities, $32 billion less for healthcare, and $26 billion less for groceries and at restaurants.

This kind of fear-mongering plays into Republican hands.

This article was originally posted on Robert Reich's blog.

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ABOUT Robert Reich


ROBERT B. REICH, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, “Aftershock: The Next Economy and America’s Future;” “The Work of Nations,” which has been translated into 22 languages; and his newest, an e-book, “Beyond Outrage.” His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at Robert Reich's new film, "Inequality for All" is available on DVD
and blu-ray, and on Netflix in February.

Is that true: tax on

Is that true: tax on dividends would raise to 44.6% for everyone? This seems to me far too high if every share investor will have to pay such taxes. Every other country tax them to 35% flat and this is partially recovered if taxes are declared in any other country having a tax agreement with USA.
I would appreciate a response to Thanks so much.

I just read that Tim Geithner

I just read that Tim Geithner will be point man for the Obama team on the budget negotiations. He's one of the main players on bailing out Wall St. while allowing the rest of America to sink. His being brought in to lead these negotiations spells disaster for the working class. Obama is betraying us yet again.

As Ol' George would

As Ol' George would say:

"Bring 'em on!"

Let it crash.

It is a wonder that people who vote for the less of evils are surprised at the result.

more evil but not as fast.

We don't know the outcome of

We don't know the outcome of these negotiations, so it's a bit premature to start hurling brickbats at either the White House or Professor Reich.

It's still more grounded and pragmatic to vote for a lesser evil than to vote for Humpty Dumpty or Peter Cottontail and let the greater evil prevail.

And frankly, few things that Obama would do would surprise me, because I never had stars in my eyes. I just believe in dealing with reality, not sighing over fairy-tales about saintly candidates and utopian visions, or the hope that someone in Paradise will notice the wasted vote and do something about it.

One thing I think we can all agree on: this monumental "fiscal cliff" is just something manufactured by the Republicans in order to dilute or destroy FDR's Social Security and LBJ's Medicare. Time will tell whether this generation of Democrats will participate in their demise, for if they do they will have no future in this country. But I withhold my judgment until the facts become clear. I've written my messages, signed my petitions, and that's all I can do at this point.

DOCTOM2012 November 26, 2012


November 26, 2012 4:39pm new
Well hoorah that Robert Reich appears to finally begin to realize where the problems lie, maybe. His unbridled support for Obama in view of his actions and behaviors over the past four years have cast serious doubts over his observational abilities and his addiction to the Democratic Party. Perhaps he should listen to some other opinions on the Web on socioeconomics and political dynamics. Remember, Professor Reich, we all have two ears and two eyes and only one mouth! I am older than you and I still have not lost my senses of seeing, hearing and smell yet, but then a professor is not expected to maintain those, of course. Most of the comments above are too kind to the professor.

Robert, IMHO, we should not


IMHO, we should not use the term "Fiscal Cliff"!!! We lose before we start.

Use "Fiscal Bluff" or, better yet, "Budget Control" (the name of the legislation that brought us to this point is the "Budget Control Act of 2011").

What Republican can possibly come out against budget control?

Let the mandatory controls come into effect and then make the R's filibuster middle class tax cuts and watch the Dems sweep the House in 2014.

It's a no brainer!

Good Grief Robert Reich

Good Grief Robert Reich !!

Are you just now catching on Obama is no friend of Working Americans?

A sellout? A suckup to the Corporate Elites?

You write article after article telling the world what "Obama should do" .. but you steadfastly ignore his record of selling out again and again.

Like a battered wife trusting that the last beating was just a little mistake and he really does love you (and your populist ideals) you are once again sowing false hope.

Article 8 of Section 1 of the US Constitution gives Congress the power to "coin money" and "regulate the value thereof" .. there is NO NEED for the US govt to borrow a single penny to finance its projects.

The moneychangers should once again be thrown out of the temple.

For good, this time.

Amen, Mountainman23. My

Amen, Mountainman23. My opinion exactly. Robert Reich is not performing a service for those of us living in the real world outside of Washington and Berkeley.

Thomas Baldwin

We're just now catching on

We're just now catching on Robert Reich is no friend of working Americans.

Let it all happen... Then,

Let it all happen...

Then, reform the filibuster in the Senate on the first session in January -- on a MAJORITY vote -- so that it's a REAL filibuster a'la Mr. Smith Goes to Washington instead of an easy one-Senator veto...

Then deal with each item separately...

But, as long as the easy filibuster remains, there will be no progress...

"Why is the White House’s

"Why is the White House’s Council of Economic Advisers Helping the Republicans?"

Because the Democrats, like the Republicans, are financed by, and work for the 1%. Duh!

Indeed, this "fiscal cliff"

Indeed, this "fiscal cliff" was a manufactured out of whole cloth (or hole cloth) to appease the Republicans who refused to raise the debt ceiling in 2011. If Obama had held his ground then, none of this would be scheduled now. The government doesn't need to "borrow" money to pay its debts now or ever; it has the power to coin and print money. Take the money lenders out of the equation, let the Bush tax cuts expire, coin enough money to get the economy back on track, and let the Republicans be hoisted with their own petard.

The "Bush Tax Cuts" were set

The "Bush Tax Cuts" were set to expire originally in 2010. EVERY Republican and a number of DINO's had agreed, in writing, both in '01 and '03, that the cuts would "stimulate the economy" in that amount of time and that they should expire in 2010. This was simply another example of the failure of "trickle down" economics. This system of taxation has never worked anytime...anywhere. It does, however, make a handful of corporations and individuals extremely wealthy. President Obama should have, and could have, allowed them to expire as originally intended. If he fails to live up to this "campaign promise"again, we can can safely assume which side of the political spectrum he represents. Suggested reading; Naomi Klein's "Shock Doctrine" "The Rise and Fall of Disaster Capitalism." See for yourself just how effective "trickle down economics" have been wherever they've been implemented.

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