The fiscal cliff deal reached by the House late on the first day of the new year is a good one if only because no deal might have been catastrophic.
It’s a good deal if you’re elderly, or plan to be elderly anytime soon. The deal doesn’t touch your Social Security benefits or eligibility. This is your gift for turning out at the polls so heavily.
It’s a good deal for the 1.3 percent of America’s taxpayers who have been declared only sort-of rich. If you and your spouse have adjusted gross income between $250,000 and $450,000 a year, you’ll get to keep paying a top marginal income tax rate of 35 percent. President Barack Obama spent most of the last four years talking about returning the top marginal rate to 39.6 percent for couples with $250,000 or more of AGI, the famous “richest 2 percent.”
The final deal eliminates the so-called “Bush tax cuts” only for the not-so-famous top seven-tenths of 1 percent. Capital gains taxes went up from 15 percent to 20 percent for these taxpayers, too. The estate tax went up slightly, too. The rest of the tax cuts made in 2001-2003 were made permanent.
It’s a good deal if you’re an upper-middle class taxpayer, because the deal permanently eliminates the Alternative Minimum Tax. No longer will you have to worry about being taxed like a sort-of rich person.
It’s a good deal if you’re a doctor, because Medicare payments won’t be reduced by 26.5 percent for at least another year. It’s not such a good deal for hospitals, who’ll have to pay for half of the so-called “doc fix.”
It’s a good deal for banks — in this Congress, it’s always a good deal for banks — because they’ll get to keep $9 billion a year in “active financing exemptions.” It’s a good deal for Goldman Sachs and others erecting buildings in lower Manhattan, because special tax breaks for building near the former site of the World Trade Center will be continued. It’s even a good deal for people building NASCAR tracks, who keep their accelerated depreciation allowances. Even as the nation teetered on the brink, sweetheart deals abounded.
It’s a good deal for 2 million of the long-term unemployed, who will continue to get a check. It’s a good deal for those who qualify for others of the “Obama tax cuts” of 2009, including the expanded Child Tax Credit, Earned Income Tax Credit and college tuition tax credits.
The most expensive of the Obama tax cuts — the 2009 payroll tax holiday — did not survive. Not everyone can be a bank or a NASCAR track builder. But if Social Security is to survive, it’s a good thing the tax will go back up to 6.2 percent from 4.2 percent; whatever 2 percent of your earnings up to $112,000 is, that’s how much less you’ll have to spend this year. Presumably you’ll get it back when you retire.
Wall Street likes the deal; the Dow closed up 308 points on Wednesday, 2.35 percent higher. Investors are smart; they realize that given the nature of Congress today, the deal is probably the best that could have been hoped for. More’s the pity.
House Speaker John Boehner, R-Ohio, managed to round up 85 Republican votes for it, including that of House Budget Committee Chairman Paul Ryan, R-Wis. That there were 85 GOP House members rational enough not to want to see the nation plunged back into recession counts as encouraging; among them were Missouri Republicans Jo Ann Emerson and Blaine Luetkemeyer and Illinois’ John Shimkus.
On the other hand, 151 Republicans were willing to roll the bus off the cliff. Among them were Missouri’s Billy Long, Vicki Hartzler and — in his last vote in Congress — Todd Akin.
The phrase “fiscal cliff” first appeared on this page in April. Congress dithered through election day before it got to work on the problem. Americans deserved better than that.
They deserve better than this bill, too. They deserve a serious attempt to address long-term debt and spending issues and budget reform. They deserve a serious debate over fair taxation and income inequality. That the bus had to technically roll off the cliff before the House popped a kind of Wile E. Coyote parachute is a disgrace.
The big issue — the “sequestration” of some $1 trillion in spending over the next 10 years, divided evenly among domestic and military spending programs — was put off for 60 days. Sequestration was how Congress kicked the can down the road 16 months ago. What’s another two months?
Sixty days will be about the time the debt ceiling will expire, meaning not that the United States will have to borrow more money, but that it will need to pay for things it already has bought.
The nation will be forced to endure another showdown, another pageant of posturing, more politics in place of governance. Americans deserve better than that, too. They’re not likely to get it.
Copyright St. Louis Post-Dispatch. Reprinted with permission.