Opinion: Fiscal cliff was 10 years in the making
January 4, 2013
If it’s true that a successful mediation results in both sides being unhappy, this week’s fiscal cliff deal should take the prize of the century. In the wake of passage by the Senate and the House of Representatives, liberals and conservatives were effusive in condemning the new law, albeit for entirely different reasons. Newt Gingrich tweeted “The GOP has been engaged in a two month dance of defeat and surrender!” Congressman Jim Moran, D-Va., called the compromise “wholly inadequate.”
Nevertheless, the cliff deal washed away President Barack Obama’s firmly-stated campaign commitment to raise tax rates on incomes over $250,000, kicking the threshold up to $450,000 for joint filers. Here’s the deal’s travesty: while rates are not raised for families with incomes substantial enough to fall between $250,000 and $450,000, if you’re an ordinary employee earning less than $113,700, you lose. That’s because whether you’re a Democrat or Republican, a liberal or a Tea Party enthusiast, your Social Security taxes are going back up. This means that people earning constant salaries will have lower take-home pay in 2013. Can’t afford it? Too bad, you’ll be subsidizing retained cuts for higher earners and wealthy people’s estate taxes.
You’d hardly know that Obama, who campaigned on a slight tax rate increase on family incomes over $250,000, won re-election two months ago. Mitt Romney, who campaigned on cutting government spending even more than it had already been cut and pledged to not raise taxes at all, lost. The issue was clear-cut. A majority of the voters wanted Obama’s clearly-stated plan. The widespread support for Obama and his campaign promises assured his becoming the only Democrat since Franklin Roosevelt to twice win the presidency by vote majorities. The public’s support for his fiscal campaign promises have been consistently confirmed in post-election opinion polling.
November’s Democratic sweep included gaining seats in both congressional chambers. More significant, votes cast for Democrats in congressional races across the country exceeded those cast for Republicans. Yet the American people’s electoral will is shortchanged because of irregular drawing of intrastate Congressional districts by Republican legislatures and governors. The gerrymandering has produced more Republican- than Democratic-leaning districts, enabling Republicans in the new House to retain their partisan institutional majority. Many of these gerrymandered winners are fringe Tea Party people whose influence far exceeds their percentage of American society. The politically designed districting subverts what most Americans want.
Our fiscal crisis was ordained 10 years ago when George Bush, Dick Cheney and their neocon cronies conned and manipulated the country into an extravagant military venture under false pretenses against an enemy that did not threaten us. The Iraq War, which cost tens of thousands of American casualties, removed a check on Iran and left the Middle East considerably less stable. The ultimate cost to the U. S. economy will reach $4 trillion, according to a Wall Street Journal MarketWatch report. That war, and the Bush tax cuts, which squandered the fiscal surplus of the Clinton years, were a direct cause of the 2008-09 recession and today’s budget crisis. This salient point receives too little attention in the ongoing debate. Many who supported that ill-founded war are the same guys who don’t want to pay for it by slightly raising high-income people’s taxes, preferring instead to raise yours and to cut your government services.
On Thursday, the first day of the new Congress, Sen. Mitch McConnell, R-Ky., and other Republican obstructionists clearly indicated their intention to force another fiscal crisis in early March when the national debt ceiling must be raised. They threaten to hold the increase hostage to getting spending cuts in entitlement programs. They are spreading the lies that a debt ceiling increase opens new spending avenues for the president. It doesn’t. The debt ceiling must be raised in order to cover the country’s existing obligations. Without the increase, the faith and credit of the United States is damaged and global financial stability will be threatened.
This rich country has resources to cover the extravagance of the Bush years, but they’re accumulated in estates of the very rich and powerful corporate interests who neither create jobs nor stimulate a national economy. Instead of threating to break entitlement contracts with the working middle class and defaulting on existing obligations, we should be adding higher rate brackets to the federal income tax code as we did in the mid-20th century when the nation experienced one of its most dynamic economic expansions ever. By the way, the top bracket then was over 90 percent.
– Michael Zucker is a resident of South Lake Tahoe and a stockbroker with Regal Securities. The views expressed in this column are his alone and do not represent those of Regal.