The House approved a deal that Democrats claim will stave off the harshest and most immediate consequences of the fiscal cliff, even though the Senate bill delays the onset of the “sequester”—those swift, automatic spending cuts—for only two months.
Now is when the establishment media may turn their focus away from the real effects of the fiscal cliff negotiations, which would be a disservice, considering that House Speaker John Boehner, erroneously depicted by the left as hapless and bumbling during the talks, is now laying out the GOP’s vision for a post-fiscal cliff America.
“Now the focus turns to spending,” Boehner predictably said in a statement following the House vote, as though slashing programs likes Social Security and Medicare will, in any way, lead to a balanced America.
Boehner and Company didn’t surrender ground during the negotiations. The fiscal cliff deal leaves in lucrative loopholes enjoyed by hedge-fund and private-equity moguls, along with a whole host of other gifts to Midwestern ethanol producers and Puerto Rican rum merchants (seriously).
The research and lobbying organization Citizens for Tax Justice released a report showing that the tax deal approved by the Senate would save less than half as much revenue as President Obama’s original proposal.
The New Yorker’s John Cassidy dissects the report:
Taxpayers in the middle quintile of the income distribution will get an annual income tax cut of $880 relative to what would have happened if the expiration of the old law had been maintained. Taxpayers in the top one per cent, those poor benighted souls who will be forced to pay the higher top marginal rate, will still benefit from the Bush rate on the first $400,000 of their income; each will save $17,840 relative to a world in which the Bush tax cuts had been allowed to lapse.
“So much for Obama crushing the rich,” Cassidy writes before segueing into handwringing about deficits.
Economist Dean Baker writes that this entire debate has been part of a larger distraction “at a time when by far the country’s most important problem remains the economic downturn caused by the collapse of the housing bubble.”
“The obsession with budget deficits is especially absurd because the enormous deficits of recent years are entirely the result of the economic downturn,” he writes at CNN.
Furthermore, profits have returned to prerecession levels. Bakers points to the Campaign to Fix the Debt, an organization comprised of many of the country's richest and most powerful CEOs that pushes the case for cutting Social Security and Medicare as well as lowering the corporate income tax rate.
Boehner met with Fix the Debt in November and reminded the campaign’s leaders that entitlement reforms must be part of the solution to the fiscal cliff. The list of Fix the Debt members reads like a Justice League (or Injustice League?) of the world’s richest people and their cronies, including Chairman and New York City Mayor Michael Bloomberg, General Electric CEO Jeffrey Immelt, Honeywell CEO David Cote, Erskine Bowles, Alan “Greedy Geezers” Simpson, and Governor Ed Rendell, among others.
“CEOs from both political parties have openly come together to demand cuts in Social Security and Medicare, two programs that enjoy massive political support across the political spectrum,” Baker writes. “The wealthy are joining hands without regard to political affiliation to cut benefits that enjoy broad bipartisan support among everyone who is not rich.”
Baker reiterates that we dot not have a chronic deficit problem, and the big deficits are the results of a collapsed economy, which can only be fixed by the president and Congress supporting programs that will put people back to work and bring the economy back up to speed. The 99 percent having money to buy goods is the only way to get the economy rolling again, which won’t happen by Congress giving massive tax breaks to a handful of billionaires who don’t create jobs for anyone other than themselves when they create nefarious Fix the Debt committees.
In fact, Baker writes, it’s necessary for the government to run large deficits!
Ideally, the money would be spent in areas that will make us richer in the future: Education, infrastructure, research and development in clean energy, etc. There is just no way around a large role for the government given the economy’s current weakness.
Actually, that last point isn’t true. There is a way around that role, and that’s Boehner and Company’s plan: the anti-state—the resource vacuum that slashes earned benefits, worsens the recession and leads to infinitely more suffering for the 99 percent.
Boehner made his intentions clear following the fiscal cliff deal:
“The American people re-elected a Republican majority in the House, and we will use it in 2013 to hold the president accountable for the ‘balanced’ approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt.”
Was Congress' compromise a win or loss for progressive politics? Check out George Zornick on "The Good and Bad of the Fiscal Cliff Deal."