In Part 2 of today’s mini-series on the Fiscal Cliff brouhaha, TheLeftyWolfe is here to explain the deal that was just agreed to late last night on Capitol Hill. In a somewhat surprising turn of events (given the last two years of partisan bickering), both the Senate and House were able to pass a measure designed to avert the dreaded tax increases and spending cuts that were set to go into full effect today, Jan 2, 2013. While it is great news that our lawmakers were actually able to agree on something (anything!), the deal reached yesterday is far from impressive and only serves to kick the proverbial bucket down the road for two more months. Episode 387 of the Fiscal Cliff fiasco is now set to commence. Read on, troopers!
Part 1: What is the Fiscal Cliff? In case you didn’t read my Part 1 post earlier this morning, take a look at it! It explains, as clearly as possible, the situations that led to the creation of the Fiscal Cliff in the first place. Now, onto Part 2…
Part 2: What Deal Was Struck to Avoid the Fiscal Cliff? – In the final hours of 2012, the U.S. Senate, by a vote of 89-8, was able to pass a measure designed to temporarily avoid the Fiscal Cliff measures set to take place today. One day later, the U.S. House of Representatives also passed the same bill, by a vote of 257-167. Interestingly enough, although this bill saw near unanimous support from both Republicans AND Democrats in the Senate, the picture was vastly different in the House. Even though House Speaker John Boehner (R-OH) reluctantly supported the legislation, the vast majority of his fellow Republicans did not. In the end, Democrats in the House voted 172-16 in favor and Republicans voted only 85-151 in support.
So, what exactly does this new deal entail?…
1.) The Bush-era tax cuts of 2001 and 2003 now become permanent for nearly all U.S. earners. Single earners making at least $400,000 per year and couples making at least $450,000 per year will, however, see their tax rates revert back to the rates in place during Bill Clinton’s turn in the White House. In other words, their rates will increase from 35% to 39.6%. Everyone else’s rates will stay the same for the most part (I will explain this little tidbit later in the post).
Although President Obama campaigned on a platform that would have seen tax increases for earners making at least $200,000 (single earners) or $250,000 (couples), he compromised with Republicans and rose this limit to the current $400,000 and $450,000 described above. See, our lawmakers actually can work together…but only to avoid catastrophe, it seems! But I digress…
2.) The Alternative Minimum Tax, usually patched up year by year in Congress, is now permanently fixed. The threat of middle-class families facing higher-than-normal tax bills for the year is now a thing of the past. We should all thank Congress for FINALLY getting rid of this poorly planned piece of legislation.
3.) High-income earners will see their tax rates on capital gains and dividends go up from 15% to 20%. This is a major coup for Democrats. In case you don’t know, these two taxes are usually the only type of “income” tax that the mega-rich ever pay. Since people like Mitt Romney derive the vast majority of their income through the stock market, they never paid the state and federal income taxes that we all are subject to. Instead, they only paid a small 15% tax on such income. Thus, you had a situation where people like me, who resides in the 25% income tax bracket, paid a higher % of their income in taxes than millionaires and billionaires like Romney, Warren Buffett, the late Steve Jobs and Microsoft founder Bill Gates. Although I would have preferred a much bigger increase on income such as this, at least it is moving in the right direction. Sadly, though, people like me ,and millions of other middle-class earners, will still pay more in taxes than the ultra-rich.
4.) Taxes paid on inherited estates is also slated to increase, but only on those estates worth more than $5 million.
5.) Jobless benefits for more than two million people still seeking employment has been extended for another year. This much-needed part of the deal was vital to insure that millions of families would not have to face the expiration of the government aid they still so desperately require to stay afloat.
6.) An expected 27% cut in Medicare payments to doctors was also delayed. Though such a cut might seem smart in down economic times, it would have left millions of senior citizens without the medical care they need…after all, what doctor in the country would have continued to accept Medicare patients after having his income from them drop by so much?
While we should all be pleased that deals of this magnitude were actually able to pass a severely partisan Congress, there are a couple of items in the bill likely to rankle a few feathers…mine included!
7.) Remember all of those ridiculous budget cuts that were set to take effect today???…$600 billion in defense cuts and $600 billion in cuts to various domestic programs…all in ONE YEAR?!?!?! Recall that spending cuts of such magnitude, all cut in just one year, would have decimated our national security and plunged the fragile economy back into recession??? Well, those have now been put on hold…for exactly two months. Yep, you read that correctly.
In lieu of piecing together some sort of grand bargain that would have permanently erased these drastic measures from taking place, the deal just reached by Congress only delays these cuts from becoming reality for the next two months. The reason for this????? The new agreement expected to be signed by Obama today contains ONLY TAX CUTS…there is not one single piece of it that REDUCES SPENDING. I guess our lawmakers on Capitol Hill are just too in love with arguing, destroying their own credibility and seeing just how close they can get to literally destroying the American economy. Why not pass a law that PERMANENTLY got rid of these ill-conceived actions???? Ugh.
8.) Lastly, there is another bit of this legislation that almost no one is talking about. Remember when Obama asked for and received from Congress a 2% decrease in the Social Security tax that we all pay (which put an extra $1,000 in the wallets of typical families earning $50,000 a year)? Unfortunately for us, extending that deal was not a part of this settlement. Thus, every single income earner in America, whether rich or poor, will see their Social Security taxes go back to their pre-recession level once more. Why no politician cared enough to include extending this cut is beyond belief. Compound that with the fact that I have yet to hear even one lawmaker talk about this little-known fact and we are bordering on the deceptive.
So…there you have it! Part 1 of this series explained the history of the Fiscal Cliff, while Part 2 explained the recently struck deal to avoid, at least temporarily, the effects of rolling over that proverbial cliff. I would like to end this series with a few snippets of my own, both focusing on the much-reviled Speaker of the House:
**John Boehner strikes! Last Friday, as Senate leader Harry Reid (Democrat) and John Boehner (the conservative House Speaker) headed into the Oval Office for a meeting with the President, Boehner blurted out “Go Fuck Yourself!” as he got closer to Reid (yes, this is true…just look it up online if you don’t believe!). “When Reid asked him what he was talking about, Boehner simply repeated his curse and moved on.” HAHAHAHAHA!!!! I’m guessing Boehner is still touchy from Republican losses in the 2012 election and REALLY upset over the agreement that Senate Democrats and Republicans were about to agree on…leaving Boehner with no other choice but to support a bill he despised…or risk being seen by the American public as responsible for tossing us all over the terrifically-hyped Fiscal Cliff. Poor ‘ole Boehner sure hates to lose!
**John Boeher strikes again! Evidently, Republicans in the House have not yet tired of shitting on those in need, all in order to save a few bucks. There was one additional piece of legislation that the Senate passed on Friday , with bipartisan support. The bill would have allocated $60.4 billion to be spent on efforts to support the people and communities recently devastated by Hurricane Sandy. Remember that “little” event? It left more than 100 people dead, destroyed more than 72,000 homes in New Jersey and damaged or destroyed more than 500,000 homes and businesses in New York. Apparently the Republican leadership in the House wasn’t too concerned with helping these folks out in their most darkest hour, as they refused to allow a vote on this bill that surely would have passed. Even his fellow House Republicans were baffled by Boehner’s decision, with Michael Grimm (R-NY) going so far as to say, “I’m here tonight saying to myself for the first time that I’m not proud of the decision my team has made. It is the wrong decision, and I’ m going to be respectful and ask that the speaker reconsider his decision. Because it’s not about politics, it’s about human lives.”
–>–>UPDATE Jan 3rd, 7:11am Central…It seems that some of the more intelligent, common sense Republicans have actually convinced embattled House Speaker John Boehner to allow a House vote on the Hurricane Sandy aid bill. Just yesterday Boehner and his lieutenant, Eric Cantor (R-VA), had refused to even consider voting on the bill that passed the Senate with bi-partisan support. Almost immediately, though, there was a MASSIVE backlash from both sides of the aisle. In fact, the Republican Governor of New Jersey, Chris Christie, blasted Boehner and his style of politics for being the primary reason why “America hates Congress” and that Boehner and the House GOP’s governing methods are both “disturbing and disgusting”. If you haven’t yet watched that spitfire on video, click HERE. After watching it, you will know exactly just how poor a state the current Republican party finds itself in at the moment. Conservatives are, quite literally, in a civil war with one another.
Well, that’s all from TheLeftyWolfe for today. However, for those of you who just can’t get enough of this mess (like me!), click HERE for a list of winners and losers from the Fiscal Cliff deal. Enjoy!