Fiscal cliff ‘deal’ represents everything wrong with Washington

Only in Washington, D.C., do people raise taxes and fail to cut spending from what they were just a day earlier and call it the “American Taxpayer Relief Act.”

That more or less summarizes what I think about the itsy bitsy deal struck in the Senate earlier this week to avoid the so-called fiscal cliff.

I’m not going to rehash all the details of the deal. Nor do I plan to argue about whether we should consider the deal a) a tax cut for most people, because income tax rates were scheduled to go up this year and now will not, possibly resulting in a lower tax bill than many Americans were set to face in 2013 even after payroll taxes rise by 2 percentage points; or b) a tax increase, because the deal does not mean anyone will actually pay less in taxes in 2013 than they did in 2012, and many people will pay more.

It’s a rather stupid debate to have — not least because some of the same people who argue it’s a tax cut because taxes would have gone up anyway are also trying somehow to claim it’s a spending cut, even though the far-larger automatic sequester cuts have been put on hold for at least two months. Either what was going to happen by law on Jan. 1 counts when we evaluate this deal, or it doesn’t.

We have the spectacle of Republicans’ voting to raise taxes for some people and calling it a “tax cut,” as well as President Obama’s spending weeks insisting on keeping taxes the same on the middle class and striking a “balance” between tax hikes and spending cuts, and then accepting the deal even though neither goal was actually accomplished.

In fact, this “deal” is emblematic of everything that’s wrong with Washington:

1. Congress and the president created the fiscal cliff in the first place. First, they passed laws (especially pertaining to taxes) that are temporary. Second, their other “solutions,” in this case the sequester, don’t kick in for months — before which time everyone will be re-elected and then scramble to undo what they previously did. All of this sets up arbitrary future “deadlines” to resolve “crises.” Washington is forever spending the present trying to turn future actions into history before they ever even happen.

2. Congress and the president spend more time worrying about the political fallout of their policies than anything else, crafting their policies with arbitrary inflection points designed to sound good rather than to accomplish good. After all, does Obama now think someone has “made enough money” or doesn’t need a tax break at $400,000 of income rather than $200,000 (for individuals)? Is anyone in America naive enough to believe that the $400,000 threshold was chosen because there’s some evidence-based reason to believe it maximizes revenue or minimizes economic damage? (Does anyone in America even care about such things anymore?)

3. After weeks or even months of haggling, the final legislation was passed in one chamber mere hours after the deal was reached in principle and in the other only a day later — meaning, as with such hasty monstrosities as Dodd-Frank and Obamacare, congressional aides and industry lobbyists probably know more about what’s in the legislation than do the elected officials who voted for (or against) it. All, of course, because of the arbitrary deadlines mentioned above.

4. After all the focus on individual taxes, which by definition affect the most people personally, the final legislation preserved numerous carve-outs for industry (banks, Hollywood, even NASCAR) that never made the headlines during the weeks and months of haggling. Meanwhile, big elements that were discussed at length — particularly regarding entitlements — remain untouched.

5. Worst of all, the “solution” is so far removed from actually solving the original problem at hand — in this case, reducing the deficit — and pushes so much of the action into the future that we will be treated to this whole charade again within months, if not weeks or even days. Until then, however, we will hear about “bipartisanship” and “compromise” in tones suggesting that incorporating the worst ideas and hypocrisies of each side is somehow a good thing for the country.

And, due to the results of last year’s election, the very same cast of characters will be “leading” us through the next series of crises they create in the name of putting out the fire in front of them. Wonderful.

– By Kyle Wingfield

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224 comments Add your comment

Lil' Barry Bailout - OBAMAPHONE!!!

January 2nd, 2013
1:01 pm

Perhaps the only redeeming feature of this whole episode is the payroll tax hike for the few Obozo voters who work for a living.

Lil' Barry Bailout - OBAMAPHONE!!!

January 2nd, 2013
1:05 pm

What lies will all involved tell us and each other in order to justify passing the NEXT debt limit increase?

Finn McCool (The System isn't Broken; It's Fixed)

January 2nd, 2013
1:10 pm

The animus toward government has more to do with the growing frustrations of many Americans that they’re not getting ahead no matter how hard they work. Government is an easy scapegoat, utilized by much of corporate America to convince average Americans to cut taxes, spending, and regulations.

The median wage continues to drop, adjusted for inflation, even though the economy is growing. And the share of the economy going to wages rather than to profits is the smallest on record.

Robert Reich from his latest blog

Reich knows what the count is.

independent thinker

January 2nd, 2013
1:11 pm

Kyle- Are you referring to the Obama/Biden tax cuts approved by most of the Republicans in the Senate and by Boehner and Paul Ryan? They were also approved by one of the top Republican party spokespersons, Grover Norquist who appeared on CNN no less to approve the deal. Rather than proposing amendments and spending cuts yesterday, the House spent most of the day approving a federal pay hike for themselves and naming post offices. Quite impressive. Old Joe B. must have laughed himself to death seeing what he created. Better than any New Years fireworks after McConnell screamed Uncle.

Aesop's Fables and other Lib Economic Theories

January 2nd, 2013
1:13 pm

Excellent article, Kyle.

“American Taxpayer Relief Act.”

Orwellian, isn’t it?

It’s become quite obvious that these various crisis have but one purpose – to allow the democrats to belligerently force upon the opposition something they would never reasonably accept. While using their media/ propaganda outlets to gin up anxiety in favor of their desired result.

Kinda like your common marxist would.

Finn McCool (The System isn't Broken; It's Fixed)

January 2nd, 2013
1:16 pm

the sequester, don’t kick in for months — before which time everyone will be re-elected and then scramble to undo what they previously did

This is the exact reason we were ready to go over the cliff. You Cons lucked out. All Obama had to do was hold tight to his guns (I guess that is more of a Con thing, eh??) and go over the cliff and then put in a tax cut for <$250K earners. Instead, earnings up to $400K are spared.

Finn McCool (The System isn't Broken; It's Fixed)

January 2nd, 2013
1:17 pm

force upon the opposition

Kinda like “cram down our throats”, etc.
We know what you Cons have on your minds.

Wink wink, nudge nudge.

Aesop's Fables and other Lib Economic Theories

January 2nd, 2013
1:20 pm

Finn – No, in fact, I don’t know.

Could you please explain?

Finn McCool (The System isn't Broken; It's Fixed)

January 2nd, 2013
1:23 pm

Kyle, like Robert Reich says, this fight was never about the deficit. It’s about tea-party reps )and those reps who are skeered shirt-less by tea-partiers) and their obsession with the size of government.

Lil' Barry Bailout - OBAMAPHONE!!!

January 2nd, 2013
1:23 pm

Hey independent thinker, do those “Obozo/Biden” tax cuts do any more to help the middle class than the Bush tax cuts?

Bwahahaahaaahaaaa!

Finn McCool (The System isn't Broken; It's Fixed)

January 2nd, 2013
1:24 pm

No, in fact, I don’t know.

That’s exactly the answer I would expect to hear. Thanks for being honest for a change.

Finn McCool (The System isn't Broken; It's Fixed)

January 2nd, 2013
1:26 pm

What became of capital gains?

Mwuahahahahahahahaha. WIN for America!

MarkV

January 2nd, 2013
1:28 pm

One can count on Kyle to come up with a ridiculous sentence to start his first article of the year with:

“Only in Washington, D.C., do people raise taxes and fail to cut spending from what they were just a day earlier and call it the “American Taxpayer Relief Act.”

According to that kind of thinking, a tax relief for 98% of Americans is not a tax relief, because the remaining 2% will have to pay a little more. And a bill is not a “tax relief” because it does not contain spending cuts. Do words (and grammar) mean anything to Kyle?

Kyle Wingfield

January 2nd, 2013
1:31 pm

MarkV @ 1:28: I’m not sure what you think my grammatical problem was. But, given that the burden of spending falls on the taxpayer, I do not find it the least bit relieving not to have that burden reduced.

And if you think the top 2% are the only ones paying more after this deal, get back to me after your first paycheck of 2013 arrives.

Just Saying..

January 2nd, 2013
1:32 pm

“…big elements that were discussed at length — particularly regarding entitlements — remain untouched.”

I don’t disagree with your rant, but the expiration of the 2% SS payroll tax cut would seem to involve entitlements.

Just Saying..

January 2nd, 2013
1:36 pm

BTW, could we have a salute to the leadership shown by the Tea Party’s Inman, Senator Jim Dement?

Words chosen by John Boehner might apply…

@@

January 2nd, 2013
1:37 pm

Fiscal cliff deal leaves many in Atlanta angry

Taxes on salaries will increase 2 percent in 2013, even if other tax cuts eventually are restored for most people.

That amounts to a $1,000 increase on a person earning $50,000 per year

$50,000 per year are Obama’s new wealthy?

schnirt

What’s funniest to me is watching the left demean those whose money they so desperately need (in the form of taxes).

There’s only one way to get us out of debt and few, among us, are willing to accept the challenge. It’s all about letting someone else carry the load.

Kicking the can down the road…delaying the inevitable.

Stoooooopid!

Cutty

January 2nd, 2013
1:39 pm

Kyle is boo hoping but I don’t see him blaming Boner for that ridiculous Plan B, or for the Cons for soundly rejecting it. Instead of hammering out a better alternative w the President, Boner went rogue in Republispeak. To think you Cons would get a better deal after that was a fairytale. And w the Sequester still looming in a couple months, you Cons will get rolled on the debt ceiling talks too. Cons voted to raise taxes and you lemmings blame Obama. He couldn’t have done it wo them.

Kyle Wingfield

January 2nd, 2013
1:41 pm

Just Saying @ 1:32: I should have been clearer, but I was referring to entitlement spending.

Ray

January 2nd, 2013
1:42 pm

Finn McCool at 1:10 quoting Robert Reich has it right: the primary problem facing our economy is that median income is flat or going backwards. So Americans are pissed that they can’t get ahead or move forward at all. The problem that this fiscal cliff situation was supposedly all about — taxes and the deficit – really has very little to do with the real problem of stagnant/falling median incomes. So all this drama and time and energy regarding the fiscal cliff is not addressing the real problem. Oh well.

MarkV

January 2nd, 2013
1:46 pm

Kyle Wingfield @ 1:31 pm

Kyle,
Perhaps I should have called it a problem of syntax, but apparently you still would not have seen anything wrong in the construction “raise taxes and fail to cut spending from what they were just a day earlier.” Cut spending from what they were …?

As for the argument that that burden of spending falls on the taxpayer, you criticism that I addressed was about the title of the bill. Would you still argue that any bill, such as one that would simply cut taxes for everybody, still should not have been called “tax relief,” if it did not cut spending? That is preposterous. And it I equally preposterous to argue that since that relief is not “complete,” it is not a relief.

Aesop's Fables and other Lib Economic Theories

January 2nd, 2013
1:47 pm

Finn McCool at 1:10 quoting Robert Reich has it right: the primary problem facing our economy is that median income is flat or going backwards. So Americans are pissed that they can’t get ahead or move forward at all.

Yeah, so let’s hit the employers with giant tax increases and make them feel like handing out a bunch of raises.

How much more faulty can the thinking get?

BW

January 2nd, 2013
1:48 pm

Kyle

With all respect, Congress specifically the House is responsible for originating spending bills so I’m not entirely sure why the President is even in that part of the conversation. The legislative branch is completely broken and has abdicated much of its governing responsibilities to the other two branches. Case A is this fiscal “cliff”: The Speaker of the House opting for a “Plan B” which he has to pull off the table for lack of party support. In the coming months I believe that if Republicans realize we are not undoing the Great Society and Dems realize that entitlement programs will have fundamental change to ensure their continuity for the next generations, then something can be done long term on spending without needlessly cratering the economy by not raising the debt ceiling on already incurred bills. On long term tax reform, I’m actually not sure what the Republicans are truly after in terms of an actual bill. Please enlighten us. The flat tax idea doesn’t seem to have much vocal support at this point so I assume this will be about loopholes and deductions. Finally on discretionary spending from portions of defense related spending to the farm bill to other sacred cows….that’s a battle that has to be fought but won’t be. Focus on mandatory spending and the tax code first as that is where the bulk of the money is spent and can be saved.

John

January 2nd, 2013
1:48 pm

The only reason the 2% SS payroll tax cut was not extended is due to Republican opposition. President Obama and the Democrats wanted to extend it. Republicans wanted it to expire (which helps the middle class) while at the same time was fighting tooth and nail to extend the tax cuts for the wealthy. Their reason, according to them…tax cuts to the wealthy creates jobs but payroll taxes cuts do not. Once again Republicans wanted to protect the wealthy while screwing the middle class.

Just Saying..

January 2nd, 2013
1:49 pm

“…but I was referring to entitlement spending.”

That’s ok. Only trolls nitpick when venting is so throughly needed…and deserved.

blackbird13

January 2nd, 2013
1:50 pm

As one who saw that the GOP had no place to go on this after losing the (fiscal cliff) bet that they could beat Obama in the election, I am still surprised that they ended up allowing tax hikes on upper income earners while getting essentially zero spending cuts in return. How did that happen?!

Uh Huh

January 2nd, 2013
1:50 pm

Dear God,

In 2013, do we have to read hate rantings of

Lil’ Barry Bailout – OBAMAPHONE!!! for our president who has

4 MORE YEARS?

How long can he beat that dead horse?

BTW, we put up with many white REPUBLICAN PRESIDENTS

and we dealt with it and accepted our fate.

Let Lil’ Barry Bailout – OBAMAPHONE!!! know that his hate

WILL NOT AND CANNOT change REALITY.

OBAMA TIL 2016 :)

Ray

January 2nd, 2013
1:53 pm

Yes, Aesop, I would expect the usual trickle down economics response from the hard right. Bush’s tax cuts, lowering taxes and federal revenue to the lowest it has been as a percent of GDP since 1950, have been in place 10 years now and median income has remained flat or gone backward a little. I’d say that pretty much refutes the notion that lowering taxes on the rich, which is where most of the Bush tax cuts went, has the effect of improving incomes from workers earning the median income. But keep on saying it over and over if you think that will make the trickle down fairy make it magically come true.

independent thinker

January 2nd, 2013
1:55 pm

Oh so Kyle at 1:12 is now a champion of the little folks and complaining that the payroll tax cut was not renewed so as to bankrupt social security?

I hear Joe Biden brought some bolt cutters up to Congress to remove the chains the Republicans were about to put around the middle class by letting the Bush tax cuts run out-smiling the whole way.

Kyle Wingfield

January 2nd, 2013
1:56 pm

MarkV @ 1:46: Taxes + spending = they. I was talking about both relative to what they were before. And as for the relief, I noted that neither element of relief — lower taxes or lower spending — was present. So, as usual, you’re choosing to ignore some things I wrote and to be pedantic about the rest.

Kyle Wingfield

January 2nd, 2013
1:56 pm

All of which reminds me why I once stopped responding to MarkV at all. Maybe I’ll resume that habit.

Thomas heyward Jr

January 2nd, 2013
1:58 pm

“Fiscal cliff ‘deal’ represents everything wrong with Washington”
.
Yea……….but merely mentioning peacefully parting ways with the DC Cesspool(seccession) causes the chronic Republican-voting Wingfield-types to whine.
.
weird.

Kyle Wingfield

January 2nd, 2013
2:00 pm

BW @ 1:48: Oh, come on. Do you really think the House was going to produce this kind of bill and send it off through the legislative process without consulting with the president? When Boehner did try that, Obama immediately issued a veto threat. Should Obama have stayed quiet until and unless the bill made it through the Senate?

As for the rest: Which Republicans do you hear talking about “undoing the Great Society”? Almost all the talk, and all the talk from the leadership, involves modifying those programs. And for long-term tax reform, the GOP mantra has been pretty consistent: Broaden the base and lower rates. That was Romney’s line, that was Boehner’s line and, fwiw, that was the Bowles-Simpson line, too.

Cheesy Grits is gone but not forgotten

January 2nd, 2013
2:01 pm

I would have been in favor of just returning to Clinton era tax rates.

Seemed to work just fine back then.

Uh Huh

January 2nd, 2013
2:03 pm

@blackbird13

January 2nd, 2013
1:50 pm
As one who saw that the GOP had no place to go on this after losing the (fiscal cliff) bet that they could beat Obama in the election, I am still surprised that they ended up allowing tax hikes on upper income earners while getting essentially zero spending cuts in return. How did that happen?!
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

“How did that happen?!”

If you stand up and be counted, from time to time you may get yourself

knocked down.

But remember this: A man flattened by an opponent can

get up again.

A man flattened by conformity stays down for good.

The CONS are “down for good.”

Kyle Wingfield

January 2nd, 2013
2:03 pm

independent thinker @ 1:55: I have said all along that a temporary payroll tax cut was a bad idea because it didn’t appreciably change incentives to hire or work, and it wasn’t large enough to stimulate the economy. What I am saying today is that we ought to be honest about what’s happening with taxes. They’re going up for most people, because of the payroll tax expiration.

Cheesy Grits is gone but not forgotten

January 2nd, 2013
2:08 pm

Which Republicans do you hear talking about “undoing the Great Society”?

Anyone in the Tea Party which de facto controls the Republican party.

Broaden the base and lower rates.

This is the same trickle down BS that has failed and only benefits the wealthy

Pass, It just never trickles.

@@

January 2nd, 2013
2:08 pm

The only reason the 2% SS payroll tax cut was not extended is due to Republican opposition.

You don’t say…

href=”http://www.rollcall.com/news/democrats_divided_over_payroll_tax_cut_extension-219705-1.html”>Democrats Divided Over Payroll Tax Cut Extension

Kyle Wingfield

January 2nd, 2013
2:08 pm

Ray @ 1:53: “Bush’s tax cuts” did not lower “federal revenue to the lowest it has been as a percent[age] of GOP since 1950.” As you noted immediately afterward, they’ve been in place for 10 years; for the first seven fiscal years, revenues averaged 17.4% of GDP, compared to a 17.9% average from 1946 to 2001.

The reason revenues have been at historic lows as a share of the economy since then is that so many people have been out of work. It is entirely unclear to me how raising taxes is going to change that.

Cheesy Grits is gone but not forgotten

January 2nd, 2013
2:13 pm

The problem wasn’t the Bush tax cuts.

It was cutting taxes during war time. Unprecedented in US History.

Cutting taxes along side a spending spree are disastrous.

Just like W’s presidency.

Politico

January 2nd, 2013
2:14 pm

Kyle

Why are you being so selective @ 2:08? What has been the average since they have been in place? Seems many want to slice and dice the data to meet their narrative and cut off what doesn’t

independent thinker

January 2nd, 2013
2:15 pm

Kyle – I thought your mentor, Mr.Romney , said the little folks do not pay any taxes and are worthless scum. Are you admitting some of them are paying payroll taxes and we should worry about their income? What about the suffering and oppressed rich folks who will no longer buy up American Companies and have the workers train their Chinese replacements? Aren’t you concerned?

I just can’t figure out why a solid upright conservative and deficit hawk and champion of the richlike Paul Ryan would vote for the Biden compromise bill with no amendments? Could it be the same reason he voted for unfunded Medicare part D in 2004?
(ie. closet liberal who has been beaten down by Joe B. once too many)???

Cheesy Grits is gone but not forgotten

January 2nd, 2013
2:15 pm

Again I think we should have just let tax rates go back to Clinton era rates.

Somebody has to pay for all the debt Republican administrations have run up over the years.

Those bombs we drop aren’t free people.

Glenn

January 2nd, 2013
2:16 pm

Everyone with a pay check is going to take home less . Funny that people have talked about the rich getting soaked by Obama & the Dems . If he wanted to go after the rich he would raise capital gains tax and close many a tax shelter . How many of the very wealthy even get a pay check ? The increase on the above 250k crowd is nothing but window dressing .

Cheesy Grits is gone but not forgotten

January 2nd, 2013
2:17 pm

Are you admitting some of them are paying payroll taxes and we should worry about their income?

But I thought poor people dont pay any taxes.

Ray

January 2nd, 2013
2:18 pm

Kyle:

Since the Bush tax cuts have been in place, total federal tax revenue as a perecent of GDP has dropped from 20.6% in 2000, or 19.5% in 2001, down to down to 15.1% (2009), 15.1% (2010), 15.4% (2011), and 15.8% (2012). The last time the total federal tax revenue as a percent of GDP was in the 15% or lower range was 1949-50.

So tax revenue would appeasr to be at an all-time low for the last 60+ years, and has been dropping down to that for the last 10 years of the Bush tax cuts, and at the same time median income for average Americans has been flat or going backwards a little. I think you can conclude from that that tax cuts don’t lead to rising incomes for average working Americans.

Politico

January 2nd, 2013
2:20 pm

Well Ray, it was 17.4 if you conveniently look at the data that meets the depicted narrative.

Karl Rove

January 2nd, 2013
2:24 pm

Those Dems think they pulled one over on us. Just wait we are going to shut this whole thing down when it comes time for a vote on the debt ceiling. Them Rich folks will pay us well to show who is boss.
After all most Americans now get to enjoy the Bush tax cuts even longer while the country goes further in the red and the rich stop trickling down all those jobs.. If ole Dick Cheney got the call to mediate this mess, the rich would have gotten zero tax liability like Romney wanted. Then there would be millions of new jobs (Maybe not in this country).
Remember if you pass gas, blame the Democrats in the room.

Cheesy Grits is gone but not forgotten

January 2nd, 2013
2:27 pm

he would raise capital gains tax and close many a tax shelter

They did get raised.

From 15 percent to 20

Did I miss something ?

joe

January 2nd, 2013
2:27 pm

Seems anyone regardless of party who voted yes for this bill which raises taxes $41 for every $1 is spending cuts needs to be voted out next election and replaced by reps/sens who will actually cut spending by at least 15% across the board (as a starting place). That is the only road to recovery for our nation.