Obama's Cliff Dive

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The New Year's "fiscal cliff" deal represents another Obama "victory." For whom? As pointed out in Holland's article below, the Bush tax cuts had already expired when this deal was done. This means that, after allowing the FICA tax cut to expire for all working people, Obama made a deal to give new, permanent tax cuts to the wealthy, and paved the way for Social Security and Medicare to be put on the chopping block.  As I've said a number of times before (here, here, here), "the next Obama administration, claiming to be standing on the high ground of principle, will be, and will be proud to be, the first administration to cut Social Security.  Guaranteed.  And they’ll sell it as a 'save.' Obama and the Democratic Party really think it’s the right thing to do."  

Anyone who's waiting to see whether Obama and the Democrats will finally take a stand when the Republicans hold the country hostage to the debt ceiling is showing a truly delirious capacity to ignore what has been said, done, and established before their eyes repeatedly. Obama and the Democrats will make sure this gets done. With very few, if any, principled exceptions from the left, all Democrats who need to -- including Pelosi, Reid, and, yes, Bernie Sanders, all of whom voted for this mess --  will vote to save reform undermine Social Security and Medicare, because, well, they just have to.

Can it be said, with a straight face, that there is anything left of Democratic-party welfare-state American liberalism than an ever more vacuous nostalgia?

 

President Roosevelt signs the Social Security Act in 1935

Gone, baby, gone.

Either they get everything they want, or they scream bloody murder.

By Joshua Holland

I thought that by this point, I was beyond the capacity to be shocked by the delusions held by the American Right. But my jaw dropped when I read that a number of high-profile conservatives are outraged  about the fiscal slope deal, and believe they have been “rolled” by Obama. The very notion is wildly delusional....{Read on}

 

An Ugly, Ugly, Ugly Deal

by Robert Borosage

On New Year's Day, the Senate and House passed a "fiscal cliff" deal by respective votes of 89-8 and 257-167.  The deal has some good parts.  It lets the Bush tax cuts expire on the wealthy, raises the estate tax marginally and increases taxes on capital gains and dividends a bit.  Unemployment benefits are extended for a year.  Tax boosts for the low paid workers – the child tax credit, expanded earned income credit, refundable tuition tax credits – are extended, if only for five years.  Social Security, Medicare and Medicaid are not touched.

But no one should be fooled.  This is an ugly deal, with foul implications for the coming months....{Read on}

 

Wall Street Pulls the Strings: Social Security Under Attack in February

Dave Lindorff

The president and the Democrats in House and Senate could have said there would be no deal on the artificial Fiscal Cliff that was created by Congress back in August 2011 unless Congressional Republicans agreed not to hold the nation hostage again this February over the issue of raising the national debt ceiling. Republicans were in a weak position, since if the “cliff” deadline were allowed to pass, the Bush tax cuts would have expired. They would have been put in the position of being unable to pass new legislation restoring tax cuts for the wealthy, while Democrats could have forced them to pass tax cuts for those in the middle and lower classes.

Instead of doing that, the president and his vice president ... offered a “compromise” that give tax breaks to the 1% of Americans who earn between $250,000 and $400,000 a year, protected up to $5 million in estate value from inheritance taxes, and left the GOP free to hold Congress and the Country hostage in February and March when Congress has to pass a new increase in the debt ceiling....

And with the government held hostage in February, and unable to borrow further without a rise in the debt ceiling, Democrats will have an excuse to go along with their demands, claiming that they had “no choice.”...{Read on}

 

Middle class the big loser in "fiscal cliff" deal?

Erik Sherman

(MoneyWatch) The "fiscal cliff" clash in Washington may leave middle- and lower-income Americans paying more in taxes while preserving a range of tax breaks for various industries and businesses.

After Congress opted to let a "holiday" on Social Security taxes lapse, under the bill signed into law on Wednesday working Americans will see a 2 percent increase in taxes on their gross salaries or wages. Make $50,000? That's another $1,000 in taxes withheld every year. Someone making $15,000 would pay an additional $300. But because payroll taxes are capped for incomes greater than $113,700, people whose income exceeds that threshold pay $2,274 more a year.

It's a regressive tax: The higher the income, the smaller percentage the increase represents. For everyone, meanwhile, it's a net increase... [Read on]

 

New York Times Article Tells Big Lies on Impact of Fiscal Cliff Deal on Rich v. Ordinary Americans

....fiscal cliff fix is only a small reversion of the Bush-era big breaks to the rich. Dividends are still taxed at capital gains rates (they were taxed at ordinary income rates before); estate taxes are vastly lower than they were in the 1980s and 1990. And even on the Federal income tax front, this chart gives you an idea of how little the pact does to change the distribution of income across income groups, and actually leaves a big chunk of the affluent but not rich better off. From Richard Green:


...[Read on}

From Green:

... this doesn't change the basic point of the picture, which is that it is not until income reaches around $560,000 that the change in effective tax rates at the high end of the distribution match the rate at the low end. [note: y-axis is the change in effective tax rates].

 

And, finally, from the Daily Mail:

Workers making $30,000 will take a bigger hit on their pay than those earning $500,000 under new fiscal deal

Hayley Peterson

 

(x axis = brackets in thousands of dollars)

 

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Tags: Deficit, Entitlements, Fiscal Cliff, Medicare, Social Security

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Comment by Jason Richardson-White on January 9, 2013 at 3:29pm

(Re:  My other post.  Don't go escalating from "provocative" to "incendiary" on my account, dude.  Not that you need assistance...)

As of now, I can't side with you.  Even if everything that you say is true, the differences between the Dems and Reps on social issues is hardly "marginal".  The position of the Reps on women's issues alone is a sufficient "tie-breaker", on my account, to vote in the Dems.  Unless you bring in global warming, or something similarly apocalyptic, I don't see even your worst case scenario for Obama as erasing the differences between the two parties.  Short of a kind of doomsday, I see it as important to keep the current system intact, until it can be replaced piecemeal.  Wholesale adoption of something different - a new "problematic" just doesn't seem to be in the cards.

But I'll be listening.

-Jason

Comment by Jim Kavanagh on January 9, 2013 at 2:38pm

Thanks, guys.

Jason:  Yes, I think Obama is that bad. He will be marginally better on some issues, but is a fully committed part of the problem.  I think it is more important to find a way out of the self-defeating two-party electoral game than it is to keep onesself mired in it for the sake of possible marginal differences.  It's not just a risk-reward calculus within a particular problematic; it's a matter of moving from one problematic to another, which we have to create.  I've said it all pretty comprehensively in my posts. 

(I've looked at the other post and comment, and will get back to you on it.  I'm trying to prepare another long-ish post that I'm sure you'll find ... let's say, provocative.)

 

Brian: Yup.  What you said, more or less.

 

Comment by Jim Kavanagh on January 9, 2013 at 2:25pm

I have not verified this guy's figures, so I did not include it in the body of my post, but check this out also: 

Corporate Welfare In “Fiscal Cliff” Deal More Than New Income Tax Revenue

By: DSWright Monday January 7, 2013 5:33 am

Well this is embarrassing.


While President Obama pretended raising taxes on those earning $250,000 $450,000 a year and making the rest of the Bush tax cuts permanent was some kind of achievement in fiscal discipline, he spent more than the revenue those taxes will bring in giving welfare to some of the richest corporations in the world.

 

... the deal is at best a wash if not a net loss due to the Corporate Welfare inserted into the deal.


The only significant increase in revenues from the “fiscal cliff” deal will come from raising the payroll tax on middle class workers.

Comment by Jason Richardson-White on January 9, 2013 at 10:21am

Jim,

You know, I have been waiting to address your "Boycott the Vote" posts because the arguments in those posts turn, importantly, on the evidence of whether or not Obama is a turn-coat centralist who is (at the least) willing to permit harm to Social Security or is (at worst) actually colluding in some kind of active protection of the very wealthy.

Generally speaking, I can't imagine boycotting the vote due to the strength of my views on women's issues.  The Republicans are just too damned scary on women's issues.

However, I might reconsider if there is compelling evidence that the economic impact of both parties is more-or-less (i) equally damaging and (ii) equally likely.  In other words, it's a risk assessment.  A risk is a loss times a probability.  If the risks of voting for either leading candidate for the Presidency -- or even any candidate for any major Congressional office -- are very substantial and roughly equal, then I might consider your idea on voting -- namely, to vote for neither side, as a way of expressing my disaffection for the entire system.

However, incorporating my own particular worries, I am wondering now whether the impact of the losses from both sides is distributed evenly.  In other words, I wonder whether you can address the likelihood that the fallout of Obama's decision will fall just as heavily on the "protected classes" (women, "minorities", etc) as under Republican schemes.  I understand that the case for age-based economic discrimination is already made if Social Security gets cut.  But I wonder about the other classes.

As always, your work is very provocative.  Wish I had more time to follow up the sources.

Thanks for cross posting from your blog!

Sincerely,

-Jason

Comment by Brian Wood on January 9, 2013 at 10:04am

Obama: joined Bush to bail the banks that they may continue their depredations upon the rest of us; expanded Afghanistan--immolating American thugs and Afghan patriots to be re-elected and show himself all manned-up for the Repubs; continues the occupation of Iraq; continues Gitmo; fails to prosecute the war criminals of the previous administration, making his own even more complicit in their crimes; dithers about foreclosures; expands Bagram, where Afghans and others may be tortured to death by the CIA without any oversight; expands drone attacks whereby American “heroes” annihilate the wedding parties of innocent ("terrorist") Afghans by flipping a switch at Nelson AFB; takes single payer off the table making sure meaningful health care reform will NOT occur and the insurance companies will continue to gouge us; bails companies who then coolly outsource more jobs; takes direction from BP; makes certain real banking reform will not get Citibank’s panties in a twist; assures the rich that they need not pay their fair share for the privileges they’ve derived from american society and law; agrees to budget cuts which hurt the powerless; fails to speak up for unions, although he vowed to march with them. In short, Obama joins the powerful in making sure this crisis reduces plain Americans to the peonage the powerful want. No more unions, no more living wages--just the workers in their place, happy to be wage slaves, happy to French the bums of the bosses just to HAVE a wage slave job.

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