The Fiscal Cliff | National Catholic Reporter

The Fiscal Cliff | National Catholic Reporter by MSW. MGB: Actually, the tech boom was in large part due to capital gains tax cuts agreed to by Bill Clinton in 1997, which set up a bull market for IPOs to take advantage of low rates for making money on these deals, many of which were worthless.

Raising taxes on the wealthy is actually good for growth because the wealthy are likely to save or speculate with the money rather than increase employee salaries or hire new staff. The more you pay people to do less, the less they will do. That is why the Bush tax cuts had the opposite effect and saw labor cost cutting run rampant. This is why higher taxes on the wealthy, especially in the dividend and capital gains areas, are so vital. These rates are where the real money is. For some who get most of their income from dividends, taxes will double, while capital gains rates will go up by two thirds under the fiscal cliff.

The people reacting to the uncertainty right now are not real firms, who are more concerned about economic growth before hiring, has are speculators, who want to know if it is best to sell now or hold for future gains.

As for Medicare, it is too early for reform here, since the Affordable Care Act's effects are not entirely known. If they lead to an upward spiral in insurance rates then health industry stock will take a downward spiral to bankruptcy, leading to either single payer or a public option - both of which will require new revenues. Alternatively, if the ACA does work, then the cost savings under it will make further cuts unnecessary. Irregardless, the whole issue of the Doc Fix needs to be taken care of, as letting it go in without some basic reform is untenable. The lesson of past reforms is that if cost cuts don't work, the only thing to be done is higher revenues - and this should be an across the board increase - maybe with a consumption tax.

Whether Obama needs to use the bully pulpit or quiet negotiation is a matter of tactics. He should only resort to it if it helps Republicans sign up to the deal. If it makes them dig in, than its time for no drama Obama.