Fiscal cliff roundup

Jim Tankersley writes in the Washington Post that the fiscal cliff deal doesn’t really address either Democrats’ or Republicans’ economic concerns.   The deal raises taxes, which Republicans (and Democrats, depending on who the tax hike is hitting) think hurts demand in the economy, and it cuts spending, which Democrats think hurts demand as well, but doesn’t cut enough spending to meet the GOP concerns that deficits supposedly hurt long-term growth.

The deal would not inject more consumer spending power into the economy this year compared with last year — in Keynesian terms, it does the opposite. It won’t reduce government spending, and it will boost the national debt by trillions of dollars compared with what would have happened if lawmakers had not reached a cliff deal. It resolves only a slice of the policy “uncertainty” that many business leaders say is chilling investment in America.

What the fiscal cliff deal saves, or costs, depends on how you look at it.

From Suzy Khimm at the Washington Post:

The nonpartisan Joint Committee on Taxation estimates that the entire package will increase the deficit by $3.9 trillion over 10 years, with a $280 billion increase in 2013 alone. That’s because the JCT is comparing the deal to what would happen if the entire fiscal cliff were allowed to take effect — about $4.5 trillion in deficit reduction over 10 years, according to the Congressional Budget Office. It looks worse if you include interest on the debt and the $30 billion in federal unemployment insurance, which is not offset.

The numbers look better if you compare the deal to a world in which we had kept the tax code the way it was in 2012: Then, the package raises more than $600 billion in additional revenue (and cuts interest payments by about $50 billion). But it comes from a far smaller portion of taxpayers than Obama had been hoping for. Letting the Bush tax cuts expire at the $450,000 family/$400,000 income threshold affects just 0.7 percent of all taxpayers, or a little over 1 million Americans, according to Tax Policy Center’s latest analysis.

Major conservative groups are opposed to the fiscal cliff deal.

Conservative Charles Krauthammer calls the fiscal cliff deal a GOP “surrender.”

Former Romney cheerleader, and Washington Post conservative blogger Jennifer Rubin suggests a way that House Republicans can make up for the fiscal cliff debacle – cut funding for Hurricane Sandy Relief!

 I fail to see how legislators prepared to pass a gargantuan Sandy relief bill can claim to be upset over the lack of fiscal discipline…..

There are a number of ways the House Republicans can save face. They can pass two measures (their own fiscal cliff measure and the Senate bill). They can reduce the spending in the Sandy relief bill.

Yeah, that whole “cut FEMA” thing worked really well for Romney in the middle of Hurricane Sandy.  Glad to see Team Romney still trumpeting their insane ideas from the political grave.  And as I noted last night, Republicans took Rubin up on her advice and killed the Sandy relief bill.

Reuters covers the President’s statement last night after the vote.


Follow me on Twitter: @aravosis | @americablog | @americabloggay | Facebook | Google+. John Aravosis is the editor of AMERICAblog, which he founded in 2004. He has a joint law degree (JD) and masters in Foreign Service from Georgetown (1989); and worked in the US Senate, World Bank, Children's Defense Fund, and as a stringer for the Economist. Frequent TV pundit: O'Reilly Factor, Hardball, World News Tonight, Nightline & Reliable Sources. Bio, .

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  • condew

    Yes, it would be so much better to keep the payroll tax cut and let Social Security go bankrupt from the lost revenue. NOT.

  • Kim_Kaufman

    It’s a really bad deal for progressives. And it’s only going to get worse in the next round.

  • benb

    Anything’s possible when the best thing to do is to rely on is one’s own stupidity…

    “Republican Senator Pat Toomey of Pennsylvania said his party had to be ready to do whatever it takes to get spending cuts.

    “Our opportunity here is on the debt ceiling,” Toomey said on MSNBC. “We Republicans need to be willing to tolerate a temporary, partial government shutdown, which is what that could mean.””

    from:

    http://www.reuters.com/article/2013/01/02/us-usa-fiscal-idUSBRE8A80WV20130102

  • Ford Prefect

    Indeed. So let us pray: that Dear Leader finds Jeebus upon leaving office and sticks to the wingnut welfare circuit. (He’ll need a pentagon-sized allotment of forgiveness for being so damn unchristian in the first place, eh?) ;^)

  • FLL

    Fortunately, ingratiating himself with religious bigots isn’t lucrative for a former president since evangelical churches and the Vatican are notoriously cheap. Unfortunately, ingratiating himself with the corporate elite is very lucrative for a former president. The self-serving simply follow the money, hence the need to elect a candidate who is not self-serving. (By their track records, this might include Howard Dean, but certainly not Hillary.)

  • Ford Prefect

    Indeed. I don’t know why anyone talks about “legacy” anymore. Judging by appearances and favors done, that word seems to have a monetary meaning only.

    Obama seems well on track to outdo Clinton’s take. I mean, what kind of “rewards” will Obama accrue by dismantling Social Security and Medicare… much less privatizing everything under the sun? BO would make Clinton look like a total wanker in comparison.

    This is the problem with a second term for a self-serving politician: after his/her last election, the only constituents he/she has to pay attention to are those who will fill his/her bank accounts after leaving office. This is why it’s so easy for Obama (or anyone else of that ilk) to go down in history as a terrible president. It’s the valuable cash and prizes that matter, not some silly “legacy.”

    I’m hoping this Fiscal Grift wakes some people up. In terms of sheer dollars and cents, a lot of people can now see who is working for whom.

    “Let’s see, they say there’s this deficit problem from hell, so I have to pay more taxes. Okay, fair enough. So what’s all this shit about $205 Billion in corporate welfare that I’m paying for? That does not jibe with many years of propaganda!?”

  • Ford Prefect

    Absolutely! Especially this:

    There is no one left in Congress who takes their oath of office seriously.

    That seems to speak to the broader problem more than anything.

  • FLL

    Your assessment of Obama’s past behavior is on target, as usual, but I hope not too indicative of his future behavior. What creeps me out is the temptation of those $125,000 speaking engagements that the corporations might offer Obama once he is out of office—the same lucrative source of income that made Bill Clinton much richer after he left office. I hope Obama doesn’t consider that “legacy mode.”

    It’s odd what makes presidents feel ashamed after they’re out of office. Bill Clinton rakes in the money by entertaining the corporate elite with no sense of embarrassment. On the other hand, he publicly scourges himself for having signed DOMA. So the Clinton “legacy mode” apparently involves equality in civil rights matters, which is a good thing, but not fairness to the non-rich, non-corporatist middle class. I hope Obama doesn’t go the same route concerning fairness to the middle class. What a world, what a world.

  • Naja pallida

    As far as I’m concerned, anyone who went along with this “deal”, is not a Democrat. They’re a Republican wearing a name tag that says Democrat, nothing more. We joke about the Republican party ending, relegating itself to political obscurity but they’re not over, they’re alive and well, and getting exactly what they want. There is no one left in Congress who takes their oath of office seriously.

  • Ford Prefect

    Agreed, except this is very much Buy-Partisan hostage taking. The ruling elites are the only real winners in this. Everyone else loses.

    You don’t think Democrats will personally benefit from handing Goldman Sachs another mound of cash? GS is one of the Democratic Party’s biggest funders!

  • Ford Prefect

    Bingo! “Market Sentiment” is nothing more than sentiment belonging to the TBTF banks. HFT algos account for 70% of volume on any given day, so that’s who the “sentiment” belongs to.

    But I just love how the media reports market movements as if they indicate anything broader than those special interests.

    As for the Robin Hood tax, small investors like yourself wouldn’t even notice them. But the HFT algos that trade billions of shares a day would very much notice it. That’s why that tax is the most progressive and fiscally responsible thing to do!

  • Naja pallida

    It should make everyone mad. It’s a bad deal all around, and doesn’t even make any fiscal sense. Nothing but kicking the can down the road, and allowing Republicans to continue to hold the economy hostage for their own personal gain.

  • Ford Prefect

    FWIW, I’d just as soon be “wrong” than “right.” I’m just going by four years of his record thus far. His most toxic proposals are a ReThuglican’s wet dream, so he can “play tough” in demanding cuts to Social Security and manage to come off looking like a “leader” of some sort. This would have the perverse effect of allowing the GOP to somehow maintain some kind of relevance going forward. A better Frenemy the GOP could never hope for.

    Where Sandy relief fits in isn’t clear, but it seems obvious that’s in play, so that’s probably a bad thing for the Tri-State area and the knock-on effects to the national economy as well. The DC Buy-Partisan Consensus did a good job of turning NOLA into a corporatist wet dream and they’re probably looking to do the same thing to the NE as well. So they’ll probably take as long as possible to hash that out, so that when a bill does appear, the media can issue hosannas that a bill will get signed and, “Phew, glad that’s over!”

    The thing about taxes is that most people don’t mind paying them, if they think they’re actually getting something for it. Thus far, only the rich can enjoy that feeling. So I doubt people will be happy to learn their tax increases are going largely to subsidize corporations that are already posting record profits. The other thing is these rises will prove deflationary, which is bad economics.

    In any case, now that the Fiscal Grift is done, we will now get to enjoy three months of propaganda on the Debt Limit Kabuki. The beatings will continue until morale improves.

  • Asterix

    It seems to me that with the Dow up nearly 200 points over what amounts to negative news, we have at least a partial solution to the debt. I think there’s a consensus out in the financial world that the US stock market is being dominated by high-frequency trading programs. Those programs saw the word “deal” in the news feed and went into buy mode.

    I have to pay a broker’s fee when I trade a stock–let’s just level the field by putting a tax on stock trades, whether you’re JP Morgan or Fred Ziffel. When trades are no longer free and can’t be milked for pennies per trade, HFT should recede–and trades pump a bit more money into the Federal coffers.

  • http://www.rebeccamorn.com/mind BeccaM

    They ‘split the baby’ on capital gains:

    The tax on capital gains and dividends will be permanently set at 20 percent for those with income above the $450,000/$400,000 threshold. It will remain at 15 percent for everyone else. (Clinton-era rates were 20 percent for capital gains and taxed dividends as ordinary income, with a top rate of 39.6 percent.)

    Source: http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/31/your-fiscal-cliff-deal-cheat-sheet/

  • FLL

    This budget is bad, particularly the expiration of the payroll tax cut, which affects most of us. Only 1/3 of the Republicans voted for this, which means the majority of House Republicans don’t own this budget, they own the Romney-Ryan budget, which they didn’t get because Romney lost. The difference, then, is between bad and worse, and I think the oft-maligned “lesser of the two evils” is what your tax bill and my tax bill are all about.

    You have an interesting take on Obama’s announcement that he “won’t negotiate” on the debt ceiling later this month. Yes, you could interpret that to mean that he’s already decided to go with the Republican position, so it won’t be necessary for him to negotiate. That would be a nasty play on words, if that’s what Obama means, but I don’t discount any possibility. I’ll give you credit if that turns out to be the case this month, but I really hope I don’t have to. An equally awful possibility would be Obama repeatedly drawing lines in the sand and erasing them. What is the expression? “Hope for the best, expect the worst.”

  • MichaelS

    Am I mistaken, or – despite the tax hike on those earning over $450,000 – was NOTHING done to change tax rates on the uber-rich who make their billions on capital gains, dividends, and “carried interest”? Is Romney STILL going to go on to pay only an 11% tax rate or so?…

  • Ford Prefect

    It rather seems the purpose in posting these “the GOPers are mad” posts seems to be suggesting the Fiscal Grift Deal is somehow good if it makes certain sociopaths angry. The problem, of course, is that this is not a good “deal” for anyone who isn’t a corporation or rich. It’s great for those two concerns, of course!

    This deal raises taxes on those who make $20K-200K more than it does people who make $200K-500K. For the very rich, they won’t even notice the rise, it’s so small. The tax hike on the struggling will do a number on aggregate demand, for starters, so it’s bad economics. And since only 1/3 of Republicans voted on this POS, then it’s the Dems who own the policy, right?

    This deal is nothing more than the standard redistribution of national wealth upward. Robin Hood in reverse. NASCAR gets millions in subisidies? Goldman Sachs gets millions in subsidies? Corporate welfare makes up $205 BILLION of this package… and they’re already posting record profits, so does anyone think this is anything BUT deflationary policy?

    Never mind the deficit. No one… repeat: NO ONE… gets a rat’s patootie about deficits. I don’t either, for that matter. I just want them spent on things that do some good, instead of just blowing shit up in other countries for fun and profit.

    And all this sets us up for the final act of socio-economic rape for this quarter: the Debt Limit deal, in which Obama will bend over backwards to make his GOP soul mates happy. He’s already announced he won’t be “negotiating,” and translated into plain english, that means he’s already given up doing anything decent for those who aren’t incorporated. Corporations, of course, will make out like bandits!

    Lastly, keep an eye on Sandy relief. The only people visibly angry at the House GOP’s decision to delay the vote on that are GOPers from the Tri-State area. The damage is estimated at $100 Billion. The Senate wants a $60 Billion package and the House wants a $27 Billion bill. If current trends hold, then the final bill will be closer to the House version, which will also do a huge number on that region’s economy. The Debt Limit kabuki will enable our glorious leaders to say they can only afford tough love of a Hobbesian fashion. Basic decency and sound economic policy are too expensive! Do I need to point out how crucial that region is to the national economy?

    But hey, if Eric Cantor is having a sad, then it’s all worth it, right?

  • MichaelS

    It’s the Progressives who should be up in arms. Check it out:

    http://finance.yahoo.com/blogs/daily-ticker/fiscal-cliff-deal-redefines-means-rich-154657208.html
    “So ignore what you’re hearing out of Washington…The Republicans may not have gotten everything they wanted out of the Fiscal Cliff deal, but they got almost everything.”

    and: http://politi.co/TG2CiU
    “Obama pushed forward despite strong reservations expressed by top congressional Democrats — especially Reid — who privately described it as a “bad deal” that would increase Republican leverage in future budget fights.”

    The Republicans played the long game and won a long victory. The Dems only got a temporary victory in exchange.

  • silas1898

    No Millionaire Left Behind. Same as it ever was.,,,,,

  • David Quilty

    It should make progressives mad as well. It includes a $205 billion corporate giveaway while making everyone else pay 2% more in payroll taxes. It’s all a farce.

  • FLL

    I love the unwittingly insightful slogan on your new avatar. I will quote it, I promise you.

  • Bill_Perdue

    Nothing at all changed. The cuts are still on the table.

    They’ll be coming as soon as Democrats and Republicans, who both remain committed to imposing austerity on workers especially retired workers, can work out the details.

    Yesterdays bill were just an attempt to insure funding for US efforts to kill civilians and insurgents in Afghanistan and the efforts of the IDF thugs to murder Palestinians.

  • FLL

    Complaints from Romney boosters? Voters who would have preferred a Romney victory (via whichever method) have amnesia after only two months. They lost. The Romney-Ryan budget is dead. T-h-e-y l-o-s-t.

  • ezpz

    The huge corporations, both foreign and domestic, are lovin’ it

    5) Subsidies for Goldman Sachs Headquarters – Sec. 328 extends “tax exempt financing for York Liberty Zone,”

    ….“little more than a subsidy for fancy Manhattan apartments and office towers for Goldman Sachs and Bank of America Corp.” Michael Bloomberg himself actually thought the program was excessive, so that’s saying something….

    6) $9B Off-shore financing loophole for banks

    7) Tax credits for foreign subsidiaries –…

    http://truth-out.org/news/item/13648-eight-corporate-subsidies-in-the-fiscal-cliff-bill-from-goldman-sachs-to-disney-to-nascar

  • Dave of the Jungle

    I call on the Republican Party to disband.

  • LosGatosCA

    Nihilists must destroy, grifters must grift. It’s good to see them in an uproar. The more they profess the strength of their nihilism the greater the possibility they will be broken with the next debt ceiling round.

    A wounded flailing animal can be dangerous but this is very good news overall. Even if it becomes a a severe headache in the short run.

  • Dave of the Jungle

    That which raises Republican blood pressure is a good thing.

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