I spent the past month dutifully reading the Times' stories about the fiscal cliff and am exhausted. After weeks of negotiating, bickering, failed votes, and trying to understand the finer points about how the Congressional Budget Office calculates tax policy, I know that my taxes will be higher starting this year, even though my household earns less than $250,000, because of a slight increase to the payroll tax rate; the federal government will raise more tax revenue than it would have if it had kept the Bush tax cuts in place, but the bill that ultimately passed Congress will add to the deficit, compared to if they'd simply done nothing; and the House's Republican caucus is truly unsound and totally incapable of governing, professing to want to lower the deficit but not interested in approving any legislation that would actually do this. At least Senator Joe Manchin of West Virginia, who's one of that chamber's most conservative Democrats (in one campaign ad, he used a rifle to shoot down Obamacare), had the insight to say, "Something has gone terribly wrong when the biggest threat to our American economy is the American Congress."
The entire "fiscal cliff" debacle was full of irony. Its name, coined by who-knows, is misleading. It suggests that if Congress hadn't acted, the federal deficit would've ballooned, when in reality, doing nothing would've closed the deficit by the greatest amount in the past 12 years. There was no cliff, either, but rather a gradual press on the federal budget and individual wallets. The former would've been subjected to budget cuts and the latter to tax increases, which affect behavior over time, not on the first day. And after four years of Republicans screaming for austerity, they wanted to do all they could to avoid it once the chance to impose austerity presented itself. Then, after despairing about the effect of large cuts to military spending, they were OK with them once Democrats also wanted to avert those cuts. All of it was in the name of protecting historically low tax rates on those earning at least $1 million.
Most ironically, if any politician emerged a winner from the past month, it was former President George W. Bush, whose tax policy was largely made permanent. Sure, the marginal rate on households earning more than $450,000 increased from what it was under his administration, as did the rate on capital gains and the country's largest estates. But the large majority of his rates are now in place for good (or at least until Congress can pass another bill that raises taxes, which seems quite unlikely in the near future), as is his misguided belief that lower tax rates raise more revenue and boost the national economy. His policy was meant to expire after 10 years, but was designed to be tricky to undo -- a smart political move. At a time when the Republican Party claims to have rejected the Bush decade for its unfunded mandates, deficit spending and "compassionate conservatism," the party actually embraced it.
At least we only have another six months, if not 10 years, of such political and fiscal battles facing us. I can't wait to be beaten down by the Times on the subway in the morning.
The entire "fiscal cliff" debacle was full of irony. Its name, coined by who-knows, is misleading. It suggests that if Congress hadn't acted, the federal deficit would've ballooned, when in reality, doing nothing would've closed the deficit by the greatest amount in the past 12 years. There was no cliff, either, but rather a gradual press on the federal budget and individual wallets. The former would've been subjected to budget cuts and the latter to tax increases, which affect behavior over time, not on the first day. And after four years of Republicans screaming for austerity, they wanted to do all they could to avoid it once the chance to impose austerity presented itself. Then, after despairing about the effect of large cuts to military spending, they were OK with them once Democrats also wanted to avert those cuts. All of it was in the name of protecting historically low tax rates on those earning at least $1 million.
Most ironically, if any politician emerged a winner from the past month, it was former President George W. Bush, whose tax policy was largely made permanent. Sure, the marginal rate on households earning more than $450,000 increased from what it was under his administration, as did the rate on capital gains and the country's largest estates. But the large majority of his rates are now in place for good (or at least until Congress can pass another bill that raises taxes, which seems quite unlikely in the near future), as is his misguided belief that lower tax rates raise more revenue and boost the national economy. His policy was meant to expire after 10 years, but was designed to be tricky to undo -- a smart political move. At a time when the Republican Party claims to have rejected the Bush decade for its unfunded mandates, deficit spending and "compassionate conservatism," the party actually embraced it.
At least we only have another six months, if not 10 years, of such political and fiscal battles facing us. I can't wait to be beaten down by the Times on the subway in the morning.
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