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.
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.
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.