Here at TheLeftyWolfe, we are getting REALLY tired of the never-ending talk in the media concerning the approaching fiscal cliff. All the reporters and political instigators are speaking of this coming moment as if it will be the end of the U.S. as we know it (should the fiscal cliff measures go into full force). This would-be journalist just wants it to all end! Please, end!!!
In an attempt to shed some rare light on the specifics involved in both the Democratic and Republican plans for our economy, TheLeftyWolfe has dedicated this post to laying bare the intricacies of each proposal for your enjoyment. Read on!
–>–>P.S…Before I start, one disclaimer. The Democratic plan has already been passed by the Senate and the Republican plan has already been passed by the House. Either chamber could send the President complete legislation to sign into law by simply approving the bills that lay before them. The holdup??? Neither party wants to pass into law the economic plan of the competing party, thus the stalemate. Isn’t politics and power-wrangling so much fun?!?!
SENATE PLAN (passed by Democratic votes, awaiting action in the House):
Quite obviously, this is the plan preferred by President Obama and House/Senate Democrats. It passed the Senate waaaaaay back in July and was basically dead-upon-arrival in the House, where Speaker John Boehner (R – Ohio) has refused to even allow this bill to come to a vote. Oddly enough, there are growing calls from a few staunch House/Senate conservatives to allow this bill to at least be voted on. Although most conservatives contend this Democratic-sponsored bill to be horribly inept, there are some who have publicly said that it deserves at least a vote AND that they would be inclined to approve it. Don’t expect Boehner to cave on this issue unless his hand is forced (in other words, unless we are about to jump off the fiscal cliff at the end of the year). Here are some specifics of the Seante Democrats’ plan…
1.) Taxes – This plan will allow all of the Bush-era tax cuts to remain in place, except for the top 2% of earners in America. In other words, tax rates for all will stay the same UNLESS you are a single earner making $200,000 or more OR a family earning $250,000 or more. For those who qualify as the top 2%, your tax rates will revert back to the rates in place during the Bill Clinton administration.
I find this last bit quite compelling. Conservative voices across the nation have decried that raising the tax rates of the top 2% will severely curtail economic growth. However…wasn’t the American economy moving along rather well during Clinton’s two terms???? As I recall, we had a $1 TRILLION budget surplus when Bush Jr. walked into the Oval Office. I guess those Clinton-era tax rates weren’t so destructive after all.
2.) Investment Income – The Democratic plan in this arena is quite simple: the tax rate for income earned through capital gains or dividends (investment income) will rise from 15% to 20%. Why is this significant? It’s VERY significant because this 15% rate is the tax rate that people like Mitt Romney pay on their income (since his income is derived only from investments, he pays no income taxes). Thus, people like Mitt Romney, Bill Gates and Warren Buffet pay a lower % of income tax than regular folks like you and me. I’ll give you an example–>I earned right at $50,000 last year as a teacher/coach in Illinois. My overall income tax rate??? About 25%. Thus a Joe Schmo like myself pays a significantly higher tax rate than someone like Mitt Romney (who is worth about $250 million).
On the face of it, this idea seems like a no-brainer…but the Republican party disagrees and believes Mitt Romney and his fellow millionaires/billionaires should still pay lower tax rates than the rest of us. Doh!
–>–>A note concerning the Democratic plan…Overall, it includes a total of $1.6 trillion in increased revenue (coming primarily from the expiration of the Bush tax cuts for the wealthy) and $400 billion in spending cuts from various domestic programs (small cuts to Defense spending and other programs over a ten year period)…for a total bill size of approximately $2 trillion. It may not solve all of our budget and economic problems, but it does begin to chip away at the underlying structural problems with the government’s spending/revenue issue by putting them more in balance with each other. Although this is not the plan that Obama campaigned on during the election, I can easily put my support behind this bill from the Senate. Let’s get something done, guys!!!
HOUSE PLAN (passed by Republicans, awaiting action in the Senate):
This is the bill that most House and Senate Republicans are hoping will win approval. Just like the Democratic plan, however, this one is dead-upon-arrival in the Senate, where Senate Leader Harry Reid (D – Nevada) has said it will not even be put up for a vote (sound familiar??). Unlike the situation in the House, though (where the Democratic bill WOULD pass if put to a vote), there simply aren’t enough supporters in the Senate for the House bill to pass. Seeing as how Senate Republicans have filibustered some 200 bills in the past two years (the most in the entire history of American government), don’t expect a lot of sympathy from Reid concerning allowing conservative-sponsored bills a shot at a vote in the Senate.
1.) Taxes – Unlike the Democratic plan, most conservatives in the House and Senate want the Bush-era tax cuts to remain in place for ALL EARNERS, regardless of income. This is one of the primary reasons why the GOP lost so badly in Election 2012. They are willing to hold hostage tax cuts for the lower/middle classes in order to implement tax cuts for the wealthy. Obama, Congressional Democrats AND some notable conservatives in the House and Senate are fully behind the Senate plan and support letting the tax cuts expire for the top 2% of earners. Only Speaker Boehner and his loyal followers have prevented such bipartisan support from becoming law. Unfortunately for the GOP, though, public polling has consistently shown that voters will lay the brunt of the blame on the GOP if the U.S. falls off the so-called Fiscal Cliff. Republicans need to realize this little fact quickly or they face losing even more public support to the Democrats. Also, don’t forget that Obama campaigned on these ideas (raising taxes on the wealthy and keeping rates low for the rest of us) and won an Electoral College and Popular Vote landslide. The voters have spoken as to which plan they prefer. It’s time conservative leaders step up and deliver what America wants.
**UPDATE: A couple of hours after writing this post, Speaker Boehner announced that he is now open to the idea of raising the tax rates of the rich in some way (he didn’t say what income level he considered to be rich). Although he gave no specifics about how this might work (will they simply allow the Bush tax cuts on the top 2% to expire next year or find some other ways to cull more money from this wealthy crowd?), it is encouraging that he now appears willing to go along with one of Obama’s biggest campaign pledges: keep taxes low for the middle/lower income earners and raise rates for the top 2%. In this one brief moment, it appears our national leaders have actually listened to the will of the people. Wow. This feels kinda strange. I’m all tingly inside. But I digress… Click HERE to read the source for this update.
2.) Investment Income – Conservatives in both the House and Senate support keeping tax rates on investment income at their current level of 15%, while liberals want to raise this rate to 20%. Just read my description of the Senate plan on investment income (see above) to learn why this is such an idiotic move on the part of Congressional Republicans.
–>–>A note concerning the Republican plan…overall it includes $800 billion in increased revenue (by closing various tax loopholes that primarily benefit the lower/middle classes, such as the ones on charitable deductions and home loan interest) and $1.6 trillion in spending cuts (coming primarily from HUGE cuts to Social Security, Medicare and Medicaid spending)…for a total bill size of approximately $2.2 trillion. Seniors, Low/Middle Income Earners and the Disabled BEWARE!!! Congressional Republicans are looking to make the rich richer and leave the rest of us with less money in our pockets!!!
So…there you have it, folks! An honest look (from my admittedly biased point of view) at the competing plans now awaiting action in Washington, D.C. If our elected Representatives and Senators in the nation’s capital were mature adults, as our past Congressional leaders were, we would see Democrats and Republicans come together to work out a plan that BOTH SIDES could agree upon. What a novel idea! However, we all know that will never happen. Let’s just hope that both liberals and conservatives in our national government will at least prevent the terrifically hyped Fiscal Cliff from becoming reality. If that does not happen, the American public should revolt and kick all of those asses out of office (Dems and Repubs alike)!!!!