The Disappointing Deal That Avoids the Fiscal Cliff
The formal name for it is the “American Taxpayer Relief Act of 2012,” but I don’t know anyone who feels all that relieved after what informally should be named “The Imperfect Compromise to Avoid the Fiscal Cliff of 2012.”
The president signed H.R.8 yesterday, but it could have been so much more.
While it was certainly more high drama than we really need, there was no cliff jumping, no X-Games daring. Instead, the deal is a bit like being thrown down a steep ski slope sliding down on your butt.
Not very satisfying.
The most positive thing you can say about the fiscal cliff deal is that we ended up with a much more progressive income tax system than we’ve had in 20 years. Everyone gets hit a bit, including the middle class, but not as much as the high earners, who get hit much more–especially if you’re at $400,000 to $1 million a year.
But in a progressive tax system, that’s the way it should be.
That’s more positive than not. Of course, it could have been worse for those making $250,000, which unfortunately is merely middle to upper-middle class by today’s skewed economic standards. Compared to a high-tech billionaire, $250,000 certainly isn’t rich. That’s where Obama wanted to start, but the big hits will now start with those making around $400,000.
Given that concession, you’d think the President and the Democrats would have been able to get more on the other key issues, namely on spending cuts and the debt ceiling. Sure, they got unemployment benefits extended and Medicare payments extended. And the Farm Bill made those getting subsidies happy. But there was no budging on spending cuts and the debt ceiling. The best they could do was merely extend the deadlines on those key fights by two months?
In Washington parlance, that’s just “kicking the can down the road.”
Once again, Congress has shown its inability to lead. Instead of going for a real deal, it punted.
In another two months, we’ll get more drama and brinksmanship. But Democrats could possibly have less leverage than they had on Dec. 31st, which means the best opportunity for the best deal for the American people may have been lost.
This week, the Democrats got way more votes than they needed for passage (257-167). With that many Republicans crossing over and running for cover under the guise of “American Taxpayer Relief,” you’d hope the Dems would be able to do more with their new coalition.
But it’s not much of a coalition.
In two months who knows where the economy or the nation’s long-term debt will be? Or what public opinion will be.
The President and the Democrats clearly had the upper-hand this time around. They could have used agreement on the tax increase to forge a decent compromise on all the other issues.
Instead, they deferred. The only thing everyone could agree on was to shut down, go home, and agree to fight another day.
Is this really any way to run a country?