Everything is Terrible
Short-term relief, and little else
In short, the fiscal cliff was “averted” the way that Jay-Z “retired” in 2003.
Short-term relief, and little else
the ugly fiscal arithmetic and political dysfunction that produced the cliff in the first place will remain...... A deal nearing completion in the Senate would make permanent the tax cuts first enacted by George Bush in 2001 and 2003 and due to expire on December 31st, except for the wealthy. The marginal rate for individuals earning more than $400,000 and couples earning more than $450,000 would rise from 35% to its pre-2001 rate of 39.6%, while deductions would be curbed for some people earning as little as $250,000. Estate taxes would go up, but not to pre-2001 levels, while rates on capital gains and dividends, now 15%, would go up to 20%, still less than their pre-2001 levels. Tax credits for families, workers and college students first introduced in Mr Obama’s stimulus plan will be extended for five more years. ...... Republicans, because they are being asked to approve the first increase in tax rates in two decades while getting no spending cuts in return. (Update: the senate approved the agreement early Tuesday by a vote of 89 to 8. The house approved it late Tuesday 257 to 167, with 85 Republicans joining nearly all the Democrats.) ..... It leaves in place significant short-term austerity while doing nothing to change the long-term trajectory of debt. It doesn't reform taxes or entitlements. And it doesn't deal with several key components of the cliff. ...... For his part, Mr Boehner never seemed sure of what his own members could accept, which made for unproductive negotiating sessions ...... Higher taxes on the rich will reportedly raise about $600 billion over a decade, an “inconsequential” sum, noted Bob Corker, a Republican senator. Indeed, it is almost a rounding error against a ten-year projected deficit of $10 trillion on current policies, or 5% of GDP. “The fact that the president won’t challenge his party on spending cuts is disgusting,” said Steven LaTourette, a Republican congressman.
