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April 18, 2014

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POLITICS:

Stakes high for Nevadans if fiscal cliff deal isn’t reached

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ASSOCIATED PRESS

House Speaker John Boehner of Ohio gestures as he speaks to reporters on Capitol Hill in Washington, Thursday, Nov. 29, 2012, after private talks with Treasury Secretary Timothy Geithner on the fiscal cliff negotiations.

As Republicans and Democrats face off in a final round of fiscal cliff negotiations, their debate has boiled down to a familiar dispute about tax rates, and whether Congress will allow them to rise on the rich in order to extend an across-the-board rate cut for the middle class.

Predictions of economic doom and gloom if the parties can’t come to some agreement are rampant. The White House even started a campaign to drive home the point that the stakes were at least $2,000 for every household.

But in Nevada, there’s a lot more than just basic tax rates on the line.

Waiting in the wings of the tax rate debate are a bevy of other tax deductions that, if they aren’t passed, will result in an even heavier economic blow to Nevada families than the threatened fiscal cliff tax hikes.

Nevadans are waiting on an extension of the sales tax deduction, which alone is worth about $1,500 per household; the alternative minimum tax, which is worth tens of thousands to several upper-middle class filers; and mortgage forgiveness debt relief, which is worth several tens of thousands of dollars to any homeowners who have had their mortgages modified in the past year.

These deductions — some of which have already expired and would need to be extended to apply to this tax year — were lumped together with several other tax provisions in a bill known as the tax extenders package this past August.

The package, worth $205 billion, wasn’t particularly controversial: The product of the Senate Finance committee was fashioned by a bipartisan team of lawmakers, who hoped that passing it before the election would put the Senate on more solid footing to reach a compromise on the main fiscal cliff tax rate question in the lame duck session.

But a faction of Republicans concerned with the bill’s cost — and the fact that it preserves some write-offs with roots in the 2009 stimulus — prevented that vote from happening.

Now the tax extenders bill, and its Nevada-friendly components, are effectively hostage to the rest of the fiscal cliff process.

“We’ve been saying they had the opportunity to pass this, and not make it part of the fiscal cliff,” said Kristen Orthman, Sen. Harry Reid’s spokeswoman. “But because it didn’t pass, it is.”

That puts Nevada’s delegation in a bit of an uncertain spot. Both Republicans and Democrats have expressed their support for the extenders that appear in the Senate Finance bill — in fact, many have been calling for the extensions since long before the Senate committee concluded its process.

Outgoing Democratic Rep. Shelley Berkley had introduced bills this year to extend sales tax credits and investment tax credits for renewable energy. The sales tax credit puts Nevada on even footing with states that have an income tax that can be deducted from their federal returns. Nevada is one of seven states that does not impose an income tax.

Sen. Dean Heller, meanwhile, had filed legislation seeking an extension of mortgage debt relief.

That measure would ensure that any mortgage balance forgiven in a refinancing deal would not be taxed as regular income. The mortgage debt relief issue is particularly acute in Nevada, which often leads the nation in foreclosures.

In the past year, more underwater homeowners were able to access modifications that included mortgage forgiveness, thanks to a court settlement with Bank of America that directed billions toward the alleviation of such debt. Without an extension of the mortgage debt forgiveness, that debt reduction could be taxed.

But inter-party agreement among the Nevada delegation on these issues important to the home base will, for now, have to take a backseat to the greater partisan bickering on the fiscal cliff.

This month, Finance committee Republican Sen. Chuck Grassley of Iowa told reporters that discussions about the tax extender package would be on hold until congressional leaders could strike a deal on circumventing the fiscal cliff.

Congressional leaders have already met twice with President Barack Obama to hash out their now-familiar proposals: Democrats want to see current tax rates extended for income levels up to $250,000, while allowing them to increase on higher incomes; Republicans say they are open to raising revenues, but not increasing taxes, and would rather Congress make cuts to the budget than raise tax rates on wealthier wage earners.

Officially, Congress has until the end of the calendar year to come up with a compromise that will avoid a tax rate hike at all income levels and a simultaneous across-the-board cut to federal spending. Together, economists estimate, those changes will cause the national economy to constrict, perhaps by as much as 4 percent.

Lawmakers on both sides of the aisle have expressed the hope that they will come up with some mutually agreeable deal before Christmas. But as of today, the compromise process doesn’t seem to be advancing too swiftly.

House Speaker John Boehner criticized Democrats Wednesday morning, saying he was “disappointed” no “substantive progress” had been made in discussions to avoid fiscal calamity, and asserting Democrats had not made an offer he could take seriously.

“I continue to believe that any increase in the debt limit has to be accompanied by spending reductions that meet or exceed it,” he said.

Democrats were similarly resolute at midday, saying they had stepped up to the table where Boehner and Republicans had not.

“I don't understand his brain,” Reid said of Boehner. “The president’s made the offer.”

That offer is a bill passed by the Senate prior to the election that extends current tax rates for incomes below $250,000.

But determined as Democrats sounded Wednesday to stick to that offer, the fiscal cliff debate cannot end there.

For instance, the bill has no reference to any of the sequestration cuts.

“Really, the bigger impact from the current fiscal cliff, so to speak, is the sequestration cuts. And nobody’s talking about that,” said UNR economist Elliot Parker. “About 40 percent of the discretionary spending that the federal government would be cutting is money that goes to the states to cover existing programs. If that goes, it either means the state of Nevada will have to increase taxes or implement further cuts.”

And the Democrats’ bill doesn’t include any of the tax extenders package.

Reid’s office indicated Wednesday that should lawmakers strike a compromise on the fiscal cliff, the tax extenders package may be folded into the deal, and passed en masse before year’s end.

But the nagging possibility that Congress might fail to strike a compromise isn’t necessarily a death knell for the other expiring tax provisions. While the tax extenders package has been put off until after lawmakers address the fiscal cliff, it has enough bipartisan support to overcome a filibuster.

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  1. Tea/Republicans are bound and determined to destroy every single person's ability to manage their own finances. All because they want to protect the wealthy. In their world, the filthy rich MUST and WILL be protected. The corporate welfare MUST continue.

    Because if they are not protected, the very existence of the entire Tea/Republican Party is in jeopardy. If they have to resort to being on the wrong end of this deal, their dumb political party will end up in irrelevance for generations to come. If not utterly destroyed.

    We go off the cliff.

    And I'm dragging all of them with me.

    The Tea/Republicans seems to want everyone to forget that back in July 2011 they loaded this gun, practiced shooting with it, checked the heft of it, and now point it at all of our heads. All of a sudden, they are going back on this suicide pact.

    This tells me they weren't serious at all about anything in the first place. They are playing games. And we aren't their constituents. We're just pawns on a chess board. To do with what they want.

    The Tea/Republican Party seems to think they are not the ones at fault for this whole mess.

    They are at fault. Cannot push this off on anyone else.

    And I, for one, am going to MAKE sure they understand I'm sick and tired of them not doing their job. From everything in the past, especially with this 112th Congress, they act like it's a playground. Where they get to play around on the monkey bars. Now, because they don't like what they did, they all of a sudden want to dismantle the monkey bars and throw it at America.

    I'm voting every single Tea/Republican out of office wherever whenever whyever and whoever I can.

    I am committed to destroy this dumbness that don't get anyone anywhere. Except for only select people who they deem are more important than I am.

    Tea/Republicans don't look out for me.

    I refuse to look out for them.

    Destruction.

    That's all I want from the Tea/Republicans.

    Self-destruction.

    We go off the cliff.

  2. John Bohener will go in History as one the worse Speaker of House. His handling of his party is a disgrace.

    Normally, when there is disagreement in House, the Speaker is trying to get the opposite party to make a deal or compromise. With Bohener, he has no control or influence with his own party. One day Bohener say this, then the next day Bohener says that.

    The country is in a state of UNCERTAINTY because of the House Republicans and the lack of leadership from the Speaker of the House of Representatives. Uncertainty is what John Bohener and his party have given America the last 3 years. Look for a "no" deal from Bohener and House Republicans. They care not what happens to the US economy.

  3. You can tax or confiscate 100% from the "rich" of this country and it won't make a dent in the national debt because there are not enough "rich" people.

    The dirty little secret is Washington knows this and they also know to make any difference, the middle class must pay higher taxes because that is by far where the majority of the money is. They also know they will never get elected running a campaign on promising to raise taxes on the middle class. But, look at your first paycheck after Jan. 1st and you will see the beginning of middle class tax increases.

  4. There must be compromise on both sides, with a vision of the long term, not the short term. We have fiscal cliff primarily because our gov is managing the US budget like corporations do today--quarter to quarter. This is nonsense.

    Both parties need to get locked in session and not allowed to leave until they get this fixed, and fixed right in a manner that we are not addressing this again next year. I dont care if they miss Christmas with their families--get this fixed ASAP!!

    Plenty of blame on both parties, but at the end of the day, its us citizens that are paying for this ugly scenario. A scenario created by our elected officials on both sides of the aisle.

    Write your reps and tell them to get to work, and dont stop until they have this fixed. Enough party politics--its time for them to work together for US! Its not about any one party--its about us citizens! Hello?!?!?

  5. Can I believe what I'm reading?

    During the campaign Romney gave no details and Democrats called for them to no avail. He lost!

    Obama won the election! And now, the Republicans are calling for details!

    The details are in the Budget Control Act of 2011, also called the "fiscal cliff".

  6. Doesn't look like the administration or Senator Harry have any interest in resolving this. Let's just plan on the cliff happening. We need the payroll tax cuts to end--to keep SS and Medicare funded. We need serious spending cuts to Defense, social welfare, foreign aid....so Sequestration is in our best interests. Let the tax cuts expire, I guess, 'cause we can't count on anyone to deal with the real issues. Ending those cuts also means ending SOME of the refundable tax credits for those who pay no income tax--so it's really not all that bad. Now that I'm OK with it, they'll probably just kick the cans down the roads and prolong the anxiety.

  7. Noindex 8:49. Your first paragraph is a quote, perhaps through intermediaries, from me. So clearly we agree some. I also agree with your second paragraph, VERY much. Neither Congress nor the administration has the spine to legislate tax increases so we can anticipate the cliff to do it for them. There has even been recent media hype that Congress wants to tweak the Sequestration details--to limit defense cuts. I hope they don't--we can close many bases in Europe, Guam, and Japan without ANY impact on our security--even heard a Senator sort of quote that too, this week. Inaction will continue until we fall over some cliff, maybe several cliffs. We must insist that they do NOT re-enact endless spending where it is not needed. And, after the cliff, our markets can normalize. We might even see an improvement in the value of the American dollar despite federal reserve interference with interest rates.

  8. RefNV; Do ya really think O., Harry, and company have ANY plans on cutting any spending? Even if, say, Republicans make the proposals so O. can blame the GOP for cuts?

  9. azsk8fan says, "Wish they'd remove his picture - just looking at his deviant, smug, tight-lipped mug makes me cringe."

    I agree. Speaker Boehner is a creepy dude.

    One thing I'll add is that you can always tell when he is prepared to tell a lie or has just told one.

    Watch his mannerisms...

    When the corners of his mouth move upwards in a sort of a momentary grimace between sentences, that is a good "tell" that he lied. Or is getting ready to tell a lie.

    It's like a nervous tic that he clearly signals all the time.

    Believe it or not, watch his speeches.

    I'm pretty sure I'm right....

  10. ColinFromLasVegas,

    DOUBLE STANDARDS: Congress vs American Citizens

    The mannerisms your seeing are the results from years of consumption. Do your homework and watch past and present videos, you will see the difference, going from before, and after, to the present. Especially with the crying. However, he is not the only one in Washington that that has this problem.

    DOUBLE STANDARDS:
    Early this year the House Republicans got the Democrats to agree to drug testing applicants for unemployment compensation. In return, the Democrats got the Republicans to sign off on an extension of unemployment benefits. Why aren't we testing all members of congress?

    Like most important jobs in American, one has to submit to a drug or alcohol test as part of the hiring process. This is true mostly in the private sector. However, there is no law that requires an candidate or elected official to take a drug or alcohol test.

    Again, John Bohener will go down in History are the worse Speaker of the House of Representative in a time of crisis. In addition to having other problems that are obvious but no one in congress dare say it, because others in congress have the same problem, if not worse!

  11. I thought this is a NEWSpaper. How can an article datelined November 30 be released as NEWS on December 17, especially on Vegas INC.com? Has nothing NEWSworthy regarding the fiscal cliff happened in the past two weeks? Or is the Sun simply unaware of what has happened? Have you no respect for the time of business readership? This rehashing under the guise of NEWS is especially serious as it relates to the Sun, because the paper apparently can't afford the internet space occupied by 40% of the letter-writers, whose "untrusted" comments are often insightful and certainly a part of the story. Please don't republish dated and/or incomplete stories or, at least, place a note up front to warn us: "Editor's Note: 'The following story was originally published November 30, 2012 and does not include untrusted comments.'"