Counterparties: We know what the fiscal deal will look like
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The fiscal cliff has already found at least one victim, the WSJ reports: â€śhalf of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or nextâ€ť.
Investors and small business owners, the NYT reports, are worried about about things like higher capital gains taxes — one lawyer says heâ€™s never seen such a â€śflood of desire and action to transfer a business and cash outâ€ť. For big companies, meanwhile, thereâ€™s $150 billion worth of corporate tax breaks to fret about.
Tim Geithner, on the other hand, apparently isnâ€™t terribly concernedÂ about the fiscal cliff (or any of austerityâ€™s other â€śthousand tortured metaphorsâ€ť): he says a deal is â€śdoable within several weeksâ€ť. Politicoâ€™s Ben White surveys the negotiations and finds reason to agree with Geithner:
There seems little chance the cliff battle will go near or past the December 31 deadline. Nearly every signal from Republicans suggests they understand they have lost the war over taxes going up on the wealthiest Americans and are just trying to figure out how to get the least objectionable deal that includes real spending cuts and a trigger for tax and entitlement reform.
The President made calls to business leaders (including Jamie Dimon) to build support for a resolution to the issue. While the two havenâ€™t exactly seen eye-to-eye of late, Dimon supports the central item of the administrationâ€™s negotiation position — tax increases on the wealthiest Americans.
So donâ€™t listen to Alan Greenspan, who says another recession would be a small price to pay for fiscal reform. As Tim Duy says, Greenspan is obsessed with the idea that â€ślarge deficits [will] bring economically ruinous high interest rates and, unless held at bay by the Federal Reserve, runaway inflationâ€ť. That just hasnâ€™t happened.
Thankfully for the American economy, the President isnâ€™t listening to Greenspan. Much more likely, as Felix highlights, is incremental policy change: tinkering with something as complex as the US tax code is almost always preferable to â€śdismantling the machine entirely and rebuilding something brand newâ€ť. — Ben Walsh
On to todayâ€™s links: