The Fecal Cliff
Izvestia: "Tentative Accord Reached to Raise Taxes on Wealthy". Pravda: "Obama, Republicans reach deal on fiscal cliff; Senate vote expected tonight". Man, I'm experiencing this tremendous body hit, a huge relief from tension. Not. And maybe I'm too cynical...
... but when you compare the Eisenhower top rate (91%) with the piddling 39.6% in this "tentative accord," it all seems less exciting.
Especially when you know that the next move is cuts. Ezra Klein lays out the next rounds of kabuki*:
It would be going too far to say White House officials are thrilled with this package. But it looks pretty good to them. As they see it, it sets up a three-part deficit reduction process. Part one came in 2011, when they agreed to the Budget Control Act, which included more than a trillion dollars in discretionary spending cuts. Part two will be this deal, which is $600 billion — and maybe a bit more — in revenue. And part three is still to come, but any entitlement cuts that Republicans want will have to be matched by revenues generated through tax reform. If Republicans want $700 billion in further spending cuts and the White House insists on $700 billion in tax reform, they’ll end up with more revenue than in Obama’s final offer to House Speaker John Boehner.
But again, entitlement cuts and tax increases (especially on the rich*) are not commensurate:
A "sacrifice" where some give up luxuries and others give up necessities is in no way "shared." A marginal sacrifice for the rich is not commensurate to core sacrifices for the rest of us. But the tropes of official Washington carefully brush this reality away.
In case you were wondering, I’ve been in Pittsburgh visiting relatives and doing things that I’ll fill you in on later. I’ve been staying with a favorite aunt who doesn’t have time for the Internet and whose neighbors have put passwords on all their modems since the last time I was here.
Anyway, the anecdotal evidence suggests that the urgency of the fiscal cliff is not resonating here. People are bored with it. It’s not like Iraq where the Bushies scared everyone into thinking Saddam Hussein had WMDs that he could drop on us in 40 minutes. No, it’s like they really want mute the next TV pundit who is hyperventilating about his taxes going up in January. ...
So, there you go, TV pundits. You have created a crisis that instantly triggers bathroom breaks.
So, anyhow.... What I've been wondering about, though, is why now? Surely Obama's would have gotten "a better deal" if he waited 'til the new Congress? It could be, of course, that Obama's just a lousy negotiator (another Narrative of Democratic Weakness). However, if your goal is to help the Republican Party, then one thing you might to is arrange for the previous crop of Republicans to get blamed, so next year's crop can point to them and say "It was the other guys!" I don't think this is an especially good theory, but it's the only one I've been able to come up with. Readers?
NOTE * Or "mini-cliffs" as the National Journal puts it.
NOTE Adding, the tax deal also -- and I know this will surprise you -- fucks the working class and the poor:
But Obama is wrong: Taxes will rise on the middle class even if this deal passes, because it doesn’t include an extension of the payroll tax holiday. That means that the paychecks for more than 160 million Americans will be 2 percent smaller starting in January, as the payroll tax will jump from 4.2 percent to 6.2 percent. And a huge number of those hit will be middle class or working poor (Two-thirds of those in the bottom 20 percent would be affected by a payroll tax hike.).
Oh well. So much for aggregate demand.
Again, again, again, one reason why Democrats suck so very badly is that they defend programs when they should be defending households. All that matters to a poor schlub like me is the money in the coffee can in the middle of the kitchen table. If the Democrats take a bill out of that can by cutting Medicare, so I have to pay more for medicine, or they take a bill out by shrinking my take-home pay, it doesn't matter to me. Money is fungible! The only thing that matters is how much money there is in the coffee can.