The fiscal cliff deal that isn’t a solution at all

- January 1st, 2013

Think the sniping and deal making over America’s “fiscal cliff” is all over? Think again.

The “cliff” bill may have passed the House 257 to 167 with mostly Democratic support but this fight is far from over.

Despite headlines that claim this bill will avert certain doom and that taxes will go up on the rich, disaster still looms and taxes will go up for most households.

“The budget deal passed by the U.S. Senate today would raise taxes on 77.1 percent of U.S. households, mostly because of the expiration of a payroll tax cut, according to preliminary estimates from the nonpartisan Tax Policy Center in Washington.”

The deal also doesn’t cut spending but instead adds $4 trillion in spending over the next decade according to the non-partisan Congressional Budget Office.

Don’t worry though, everyone is doing their fair share. Hollywood is getting an extension on their tax breaks, so is NASCAR and algae growers, rum producers and electronic motorcycle manufacturers also get a break.

This deal also will see $41 in tax hikes for every $1 in spending cuts, and of course the spending cuts are outpaced by all that new spending in the bill, some $330 billion in new spending.

tax increase vs spending

If anyone doubts that America has a spending problem then they need to look at the image below which comes from the business website Zero Hedge. The red line is the annual deficit which currently stands at more than $1 trillion while the green line stands for the just over $62 billion in expected new tax revenue each year. Click through on the link to get the full perspective.

Over the next few weeks we will see more arguments about what more needs to be done. The automatic spending cuts known as “sequestration” have been put off for two months and so we will see a return to brinksmanship once the new Congress is sworn in.

John Boehner, the House Speaker, had offered President Barack Obama a deal that would have generated more tax income simply by closing loopholes and special tax deals. Obama rejected that insisting that tax rates had to go up.

Why would Obama say tax rates had to go up?

To Obama higher tax rates are a matter of fairness, even when increasing those rates might mean less money for the government. He has said it more than once including during a debate moderated by ABC’s Charlie Gibson. In questioning Obama, Gibson pointed out that the government has taken in more revenue from capital gains taxes when the tax rates have been cut as compared to when they were raised.

“Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness,” Obama said.

Obama is an ideologue who sees high taxes and high spending as morally sound, it is central to his agenda and his identity. If you listen to the rest of his answer to Gibson back in 2008, Obama said that you don’t increase spending without finding cuts elsewhere to pay for them.

He didn’t do that here and he won’t do that when the next deal comes.

America is in a sorry state today.

 

Categories: American politics

Subscribe to the post

5 comments

  1. ed says:

    once everything is said and done after his presidency, he’ll be judged as one of the worst presidents in US history despite winning a second term.

  2. Cameron M Shiell says:

    Sure wish I could run my home and business like this. It feels like the lawmakers have no sense of reality or responsibility.

  3. John says:

    America is famous for making the same mistakes more than once. Ex; George Bush. These tax cuts were to be temporary not permanent. Talk about being coddled by your country. America is now looked upon as lacking responsibility and weak. Romney would have been a much different story. America does deserved what it gets now. Four years of what they got before from a President who is qualified to sell used cars at best and even then I think he’d be in way over his head because they have brains too.

  4. Bruce Miller says:

    Failed U.S. Policy ?
    “It is imperative that no Eurasian challenger emerges, capable of dominating Eurasia and thus of also challenging America… In that context, how America ‘manages’ Eurasia is critical… the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep the barbarians from coming together.” – Zbigniew Brezinski, The Grand Chessboard
    Fact: Every Pan Eurasian Alliances advance hurts U.S. “Status Quo”. Advent of Thorium LFTR reactors there threaten to “Alter Global Energy Maps Forever” and fuel a whole new empire in China, Asia then Pan Eurasia. Be advised Chinese Bullet trains for the peons there, promise to replace oil intensive jet flights with Thorium/electric trains. China has Space Station(s) and their own rocketry to get there. China already involved in Africa, bridge to that whole contintent easy by modern day methods.Oil in far eastern Iran, the South Azadegan Oil field bought by China decades ago.
    “One of the most significant events in this recasting was the realization in the early 1980s that the average American consumed as many natural resources as 1000 average inhabitants of India. It was also realized that the average American produced as much waste (including the all important carbon footprint) as 2500 Indians! even today, the ratios are still approximately 1:300 (US compared to India) and 1:500 compared to China.” U.S. simply up against a wall where we consume far more than we produce, we waste far more than we can afford, and our cash in wages is long gone, our credit is floundering, and our domestic resources squandered away throught the exhaust pipes of SUV’s, short hop Jet flights, needless eating, impractical, unsustainable housing like McMansions, inappropriate distribution of wealth, gambling, even on the stock markets of the world, warring for oil, or as mercenaries to the Saudis, inappropriate influences like Israel’s American political power, unfortunate corporate screwings given good neighbours, North and South, East and West of borders.
    America: Once the land of the fair deal, honour in business, good, soilid, long lasting, high quality products that worked well, good clean meat and grains, corn and veggies, trusted name brands, safe medicines, honest dealings.
    America has wated the most valuable “Food Basket to the world, providnce ever gave mankind! America should be and example to the world of proper husbandry of a fair land, instead, 80% of Americnas live withinf fourty mile of a nuclear waste strage facility and an enriched Uranium reactor, with ddaily accumulation, storage facilities at three to four times their design capacities, Yucca mountain project stalled, no safe way to transport the waste, and onll a terrorists attempt away from mayhem. Meanwhile China thrusts towards safe, 99%+ efficient, Thorium fueled systems and are predicted to succeed by 2017…

  5. Constantin says:

    Whoa! The previous comment left me in awe! It is hard not to appreciate the talent of encapsulating in so few well chosen words the entire content of the American Public education curriculum. An A+ is a must. I won’t give an A++ simply because the insigtful commentator stopped short of providing an explicit solution to the sproblem, and the implied one (learn Chinese and catch an efficient train in Beijing) was less than convincing. Also, how safe is to live much closer to thorium?
    As to repeated American mistakes, the point is well taken, although the more recent Obama re-election strikes one as a clearer example.

Comments are closed.