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
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Visitor Agreement | Privacy Statement
© 2013 The Atlanta Journal-Constitution
224 comments Add your comment
BW
January 2nd, 2013
2:27 pm
Kyle
Of course the Republican House would consult a Democratic President on such a bill. My point is that the policy coming out of the House is so diametrically opposed to Democratic interests that they have no recourse but to talk of veto or better simply vote it down in the Senate. As far as tax reform there’s been alot of bumper stickers but no substantive bill for tax reform. I still haven’t heard about any loopholes being named at any point during the election or immediately after. The greater point is that the House should not have to threaten the credit rating of the United States to pass a bill that lowers spending but does not go the Ryan way on entitlements. I do not believe one will sway people to their ideology by holding our creditworthiness at stake to make a point. Democrats are not as intransigent on entitlements at the end of the day as the current discourse suggests.
Kyle Wingfield
January 2nd, 2013
2:27 pm
Politico @ 2:14: Before WW2, revenues were relatively low and derived from relatively few people. If you take revenues as a percentage of GDP going back to 1930, which is as far back as the Office of Management and Budget reports that particular statistic, the historical average before the Bush tax cuts hit drops to 15.7% of GDP.
That better suits my argument, but it isn’t intellectually honest because the tax system was so different in the 1930s and early 1940s.
It is common practice, from my observations, for economists to look at post-WW2 averages for both revenues and spending (because spending as a share of GDP was so uncharacteristically high during the war). That’s all I’ve done here.
Cheesy Grits is gone but not forgotten
January 2nd, 2013
2:27 pm
Dow up 230 points today.
This economy is ready to explode if Congress will just get out of the way.
Politico
January 2nd, 2013
2:31 pm
Kyle
Understand what you are saying, but you posted the GDP percentage for the 1st seven years the cuts were in place, not the total time they were in place.
In terms of comparing the post WW2, I am in total agreement. It just seems self serving to not look at the average from the entire time the cuts were in place.
I understand Bush was not the President the entire time they cuts were in place, however I also understand that the rates were not changed until last night.
Kyle Wingfield
January 2nd, 2013
2:31 pm
Ray @ 2:18: You “conveniently” — to use Politico’s wrong-headed word (see my 2:27) — omit the years in which the facts don’t fit your preferred narrative.
More to the point: Are you suggesting Americans could expect the median income to rise again if everyone’s taxes had gone up yesterday as scheduled? Or do you think maybe taxes aren’t the only thing that matters? (And, yes, too many conservatives oversimplify the tax issue, too. But you will never see me saying taxes are the only thing that matters.)
Aesop's Fables and other Lib Economic Theories
January 2nd, 2013
2:32 pm
Median household income has more than kept up with inflation since Bush took control of fiscal policy during the 2001 near-recession, growing 1.6% higher in constant 2007 dollars to $50,233 in 2007 from $49,454 in 2001
So much for that lie.
Finn McCool (The System isn't Broken; It's Fixed)
January 2nd, 2013
2:33 pm
I am fine with the middle class paying a little more.
You have to remember – not EVERYONE is worse off than they were last year or the year before. Some of us in the middle are better off. We can chip in a little more to help get the economy rolling again.
Ray
January 2nd, 2013
2:34 pm
Yes, Kyle, I agree it makes more sense to look at total tax revenues as a percent iof GDP since WWII. But as I pointed out above, total tax revenues are now lower as a percent of GDP (in the 15% range) than they have been since 1949-50.
Finn McCool (The System isn't Broken; It's Fixed)
January 2nd, 2013
2:35 pm
Are you suggesting Americans could expect the median income to rise again if everyone’s taxes had gone up yesterday as scheduled?
David Ricardo would say “Uh yeah. Duh…”
Finn McCool (The System isn't Broken; It's Fixed)
January 2nd, 2013
2:35 pm
Great headline:
“The GOP Clown Car Crashes, Again”
Just Saying..
January 2nd, 2013
2:35 pm
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?”
We’ll see. It’s kinda like a Lab Practical…
Politico
January 2nd, 2013
2:36 pm
Kyle
My point is that it didn’t meet your narrative to provide the percentage for the entire time the cuts were in place, so you cut them off, which had a direct impact on keeping the average higher than the entire time they were in place.
And even if you take the 17.4, which is lower than the post WW@ average, it took a housing bubble, which was a huge factor in the economy to keep it at a below average level for the time frame you presented.
But thanks for the exchange and basically saying there are more variables besides tax rates.
Kyle Wingfield
January 2nd, 2013
2:36 pm
Politico @ 2:31: What I was doing was noting that revenues as a share of GDP were dramatically different from 2002-2008 than from 2009 to present, which suggests the tax rates are not solely or even mostly responsible for the low levels of revenue in the more recent years. After all, if the rates were the same during that whole time, and if the rates are the problem, then shouldn’t revenues have been below 16% of GDP the whole time?
Politico
January 2nd, 2013
2:39 pm
*WW2
Ray
January 2nd, 2013
2:40 pm
Kyle at 2:31: No, I don’t think median incomes will necessarily rise if taxes a raised. That was the point of my original post at 1:42 — all this fussing about tweaking the tax rates (or the deficit!) doesn’t do anything to address the real problem of flat or falling median incomes.
Centrist
January 2nd, 2013
2:41 pm
I can’t get too worked up over resuming the third of Social Security payroll taxes after they were stupidly suspended for 2 years. I also am not worked up over a less than 5% added income tax bracket for taxable income above $450K (and slight increase on capital gains for “high income earners”), especially since it now removes most of the tax equation with spending coming under 3 March deadlines:
Debt ceiling, sequestration, another continuing budget resolution unless/until the Senate passes a budget.
Sure, the brinksmanship will probably only get a little with more in spending cuts and kicking the can further down the road, but spending (and maybe tax reform) will be the majority of the focus for the rest of 2013.
td
January 2nd, 2013
2:42 pm
Finn McCool (The System isn’t Broken; It’s Fixed)
January 2nd, 2013
2:33 pm
I am fine with the middle class paying a little more.
You have to remember – not EVERYONE is worse off than they were last year or the year before. Some of us in the middle are better off. We can chip in a little more to help get the economy rolling again.
Please tell us what in this bill is going to get the “economy rolling again”?
Politico
January 2nd, 2013
2:42 pm
Kyle
I didn’t state that you did. I was merely pointing out that if you took the average for the entire time it would be lower than just the 1st seven years.
Just seemed self serving that’s all. My apologies if that wasn’t your intent, but that is how it came across in my opinion
Thanks again for the exchagne.
Politico
January 2nd, 2013
2:44 pm
“Please tell us what in this bill is going to get the “economy rolling again”?”
Tell us what the intent of the bill was? While it is nothing special, you have a lot of Republicans in the House and Senate to contact to express your dissatisfaction.
td
January 2nd, 2013
2:49 pm
Politico
January 2nd, 2013
2:44 pm
“Please tell us what in this bill is going to get the “economy rolling again”?”
Tell us what the intent of the bill was? While it is nothing special, you have a lot of Republicans in the House and Senate to contact to express your dissatisfaction.
My Congressman (Tom Graves) did not buy into this farce of a bill and Saxby has already heard form me and probably many others about what we think of his vote.
The title of the bill is “Tax relief act”. Where is the tax relief and why did the bill not only increase taxes on 77% of the population but also added $4 trillion to the debt?
@@
January 2nd, 2013
2:50 pm
Dow up 230 points today.
I’m also amused by those who cheer on Wall Street when they’re not lambasting them.
I’m inclined to agree with Centrist. Only thing missing were the loopholes and credits. That’s how some get their foot in the door of OUR White House while we’re only allowed an obscured look through the keyhole.
Politico
January 2nd, 2013
2:54 pm
I’m sure Saxby answered the phone or replied to your email himself.
Saxby will win this state by a huge margin again.
Any man who doesn’t like trial lawyers, draft dodgers and “social programs”, yet hid out in law school during Vietnam and never met many farm subsidies he didn’t love can surely sell you to vote for him again.
Politico
January 2nd, 2013
2:55 pm
“That’s how some get their foot in the door of OUR White House while we’re only allowed an obscured look through the keyhole.”
Birther much?
Don't Tread
January 2nd, 2013
2:56 pm
Taxes raised, spending not cut. Again.
The perfect record remains perfect. (About $16T worth of perfection, to be exact.) They better not howl too loudly about China manipulating the value of its currency any more, or the Chinese might just oblige, and suddenly one yuang becomes worth about $100 overnight.
Be careful what you wish for…you might get it.
Aesop's Fables and other Lib Economic Theories
January 2nd, 2013
2:57 pm
Anybody with half of a brain knows that the Dow is up because there are obozobucks floating around everywhere and our currency is being devalued.
Politico
January 2nd, 2013
2:58 pm
Aesop
Sounds great, but markets were up world wide
But keep swinging little guy.
curious
January 2nd, 2013
3:00 pm
What cuts are the GOP proposing?
Bruno
January 2nd, 2013
3:01 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
The simple fact that no one seems to be mentioning is that federal revenues have never been high enough to support the current level of spending. Yet the Dems can’t bring themselves to admit that we have a spending problem. The rich just aren’t paying enough. Yeah, that’s the ticket.
@@
January 2nd, 2013
3:03 pm
Politico:
Birther much?
Only one…a daughter.
If you asking whether I believe Obama is American born, the answer is YES…I always have.
If you’re just being a smarta$$, you can kiss mine.
The Congressional Research Service said there are more than 200 tax expenditures, totaling $1.1 trillion in revenue that the government otherwise would have collected this year. That sum is larger than the projected deficit for the year.
Tax expenditures or squandered revenue? I’m of the opinion it’s the latter.
Centrist
January 2nd, 2013
3:03 pm
td posted “Please tell us what in this bill is going to get the ‘economy rolling again’?”
Obviously nothing. Government does very little to help the economy, but can and has done a lot to hurt it. Deficits and debt are the worst offenders, followed by too many and unnecessary regulations, rewarding cronies and special interests. The current domestic natural gas and oil finds are boosting the economy in spite of the Obama’s administration efforts to them back with more regulations, halting the Keystone Pipeline, and uneconomic subsidies for alternative energy. Coal use worldwide is increasing and the U.S. has vast reserves also being (temporarily) held back by the administration.
If government spending and regulations are reduced, the U.S. economy may not remain as stagnant as Europe and Japan.
Politico
January 2nd, 2013
3:04 pm
“If you’re just being a smarta$$, you can kiss mine.”
hahahahahahah, a church going Christian I presume
Aesop's Fables and other Lib Economic Theories
January 2nd, 2013
3:13 pm
Aesop
Sounds great, but markets were up world wide
But keep swinging little guy.
So obozo raised taxes on the world?
@@
January 2nd, 2013
3:13 pm
…a church going Christian I presume
One that’s not afraid to turn the tables on ‘ya.
As much as you’d like, I won’t get into a discussion of my faith with you or anyone. It’s a personal relationship between He and I.
Politico
January 2nd, 2013
3:18 pm
Aesop
Based on that uninformed post of yours, you tell me?
Politico
January 2nd, 2013
3:18 pm
@@
That’s what I thought. You were a great witness at that moment. “He” was smiling
Bruno
January 2nd, 2013
3:19 pm
If any of you Libs can move past your post-election gloating, here’s a nice chart which summarizes federal income vs. federal expenditures from 1940 to present.
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200
The bottom line is that spending has exploded the past 4 years while revenue has been in the tank. Yet you fish couldn’t wait to reelect the losers who got us into this predicament.
old timer
January 2nd, 2013
3:22 pm
Good article…..I think we all loose…
fair and balanced
January 2nd, 2013
3:24 pm
Kyle- Your are right . Mitt is now going to have almost a 25% capital gains rate on his investments and a cap on deductions.He probably is going to pack up and move all those jobs he and the vulture capitalists were planning to create off to China which he would never have done otherwise. Can he still deduct the expenses of the horse???????
Aesop's Fables and other Lib Economic Theories
January 2nd, 2013
3:24 pm
Nah, politico, I actually believe it has something to do with Japan, China and the others easing their monetary policies but, then again, I don’t believe in high tax fairies either.
Hillbilly D
January 2nd, 2013
3:27 pm
This deal is just the basic can kicking that I expected. Come March, we’ll be right back here, playing the same ol’ game again.
Numbers-R-US
January 2nd, 2013
3:37 pm
If only the Republicans had pushed through spending cuts to go along with their tax cuts in 01 and 03, Kyle wouldn’t have near as much to complain about.
Finn McCool (The System isn't Broken; It's Fixed)
January 2nd, 2013
3:49 pm
Please, Obama, quit bringing this pain on us:
The Dow Jones Industrial Average climbed 7.3 percent in 2012, the fourth straight year in which the leading index maked gains. The Wall Street Journal (subscription required) reports that the index is up an impressive 100.15 percent since its great recession low in March 2009.
ohohohohohohohoh whoa is me.
Finn McCool (The System isn't Broken; It's Fixed)
January 2nd, 2013
3:52 pm
If only the Republicans had pushed through spending cuts to go along with their tax cuts in 01 and 03
Cons like that “let’s spend money and NOT collect taxes to pay for it” and then turn around to the Libs who like to “spend money AND collect taxes to pay for it” and call us out on it as irresponsible. LOL. Sheeples
East Cobb RINO, Inc (LLC)
January 2nd, 2013
3:58 pm
A few thoughts:
1) The temporary SS payroll reduction from 6.2% to 4.2% was a bad idea. The difference was made up with money from the general fund which in turn was borrowed thus adding to the debt. It should have never been reduced in the first place.
2) I had a friend when I lived in Florida who was a judge. He always knew he made a correct ruling in a highly contested matter when both lawyers were unhappy with the ruling. So when I hear both parties griping about the fiscal cliff deal, it tells me it was a good compromise. The revenue bill passed is as good a bi-partisan compromise as could be expected given the dis-function of House GOP leadership. It used to be said that trying to lead Dems was like herding cats, but it seems that applies to Republicans now.
3) While entitlements should be on the table for spending cuts, so too should defense.
4) John Boehner needs to be replaced as Speaker, but I fear any replacement would come from the Tea party extreme fringe and only make matters worse. Boehner’s leadership position is considerably weaker now than it has ever been.
Aesop's Fables and other Lib Economic Theories
January 2nd, 2013
4:03 pm
Man, these libs, they make it easy -
The all time high on the Dow Jones Industrial Average (DJIA) was 14,164 on October 9, 2007.
They’re such fools.
And, because I know they are furiously blinking away at their computer screens as they read this, I will endeavor to help them out. Yep, the highest Dow eva was under evil Bushie!?!?! How can this be?!?!? He must have been doing really, really, really good, according to your logic.
Thanks, duh.
Lil' Barry Bailout - OBAMAPHONE!!!
January 2nd, 2013
4:04 pm
Yep, Obozo almost has the Dow back where it was prior to the Dodd-Frank-CRA recession. And he only had to triple the money supply to do it.
@@
January 2nd, 2013
4:06 pm
Among the many things I did not know…
John Maynard Keynes was a eugenicist of the highest order!!??!!
Makes sense given the left’s love of his economic policies.
Men have been taught that their first concern is to relieve the suffering of others. But suffering is a disease. Should one come upon it, one tries to give relief and assistance. To make that the highest test of virtue is to make suffering the most important part of life. Then man must wish to see others suffer — in order that he may be virtuous. – Ayn Rand, The Fountainhead
I’ve never read “The Fountainhead” but, since navigating right, believe it to be true.
Every knight in shining armor NEEDS their damsels in distress. An unhealthy symbiotic relationship of sorts or sorting, if preferred.
sick…sick…sick
Hillbilly D
January 2nd, 2013
4:12 pm
Every knight in shining armor NEEDS their damsels in distress.
I don’t claim to be a knight, in shining armor or otherwise, but those damsels in distress can become a pain in the butt, fairly quick. (IW&SH)
Dunwoody Granny
January 2nd, 2013
4:13 pm
One difference between $400K and $200K is that $200K is uncomfortably close to the $174K salary of representatives and senators, while $400K is … exactly the base salary for the president.
Irishmafia116
January 2nd, 2013
4:17 pm
@independent thinker 2:15 -As usual liberals ignore the facts and make up their own versions of what was said -As Romney accurately stated and been verified countless times by the CBO -the 47% pay zero FEDERAL INCOME TAXES -not SS, not state, not medicaid, not local, not city, property or any of the hundreds of other taxes -the FEDERAL INCOME TAXES that are paid by those who actually work not like the EIC people who not only don’t pay federal income tax but get a check back from the government -essentially for not having to pay