Further Context on the Fiscal Cliff Deal


And so you see that Obama's re-election has meant the biggest increase in revenues to the federal government since 1968. That would not have happened under Romney.

$600 billion in tax hikes, while protecting the tax cuts for the lowest brackets. In fact, according to Krugman, if the president had been able to stick to the $250,000 income threshold, it would've only generated an additional $200 billion in revenue -- “not crucial” in Krugman's words.

And Medicare and Social Security are untouched, except for perhaps gaining additional revenue due to the expiration of the payroll tax holiday.

Please someone explain to me how this is bad news for Democrats and liberals.

  • bphoon

    Given the sequence of events on the GOP side–especially in the House–I chalk this up, politically at least, as a clear victory for Obama and Congressional Democrats. Any negotiation involves giving up bits and pieces of each side’s wish list; the objective is to give up as little as possible and protect the core issues like, in this case, Social Security, Medicare and Medicaid. For the country, I make this a net win economically since it goes a way toward reducing, over time, our operating deficit, starts the process of returning to some semblance of income equity and helps set up the economy for more robust growth moving forward.

    The Democratic leadership in both the White House and Congress took full advantage of the corner the GOP painted themselves into and forced them to implode within the context of the negotiation. The result, as predicted, was the House passing the bill with all but three Democrats and enough Republicans voting for it to pass it with some cushion. This effectively leaves the Tea Party Caucus out in the cold where it belongs: as an extreme, loudly petulant and ultimately ineffective rump caucus that, as time goes on, is destined to recede into irrelevance as people get used to the idea that they are less and less able to back up their threats of primary challenges and crashing the economy if they don’t get their way.

    The House GOP/Tea Party Caucus loudmouths are making a lot of noise moving into the debt ceiling debate but they’re still in that corner. The difference this time is that there is precedent for assembling a voting coalition of Democrats and halfway rational Republicans in the House strong enough to pass a debt ceiling increase without tying it to woefully egregious spending cuts. In so doing, they can start bringing the short “era” of holding our economy hostage to that small minority’s demands to a close.

    The fiscal cliff negotiation, also, enhances Obama’s credibility with the public and makes it easier for him to paint the Tea Partiers in the House as the ridiculous, irresponsible lunatics they are. It also exposed Eric Cantor as the overly ambitious political mercenary he is. Whatever stature he had with the public is diminished and that’s always a good thing to see.

  • zirgar

    But we were promised jetpacks :-(

  • SlapFat

    Please someone explain to me how this is bad news for Democrats and liberals.

    Here’s how this deal is bad news:

    I voted for President Obama in 2008 and 2012. I worked steadfastly to assist with getting the ACA passed and successfully helped to reform how healthcare insurance works in the U.S. Now I get to watch while it’s chipped away piecemeal because of bills like this getting passed? Ridiculous. This is how useful measures like Obamacare get hamstrung- via strange and looming bills that have all kinds of poison pills in them.

    I’m not going to call this a failure of the President. That would be asinine. It’s more a failure to collectively make a tough decision. We went over the so-called fiscal cliff. We could have fallen a little more before agreeing to unnecessary spending cuts like slashing funding from Obamacare.

    There was much better possible than this. But what else can I say? There always is.

    • IrishGrrrl

      I see your point but I disagree with your characterization. It doesn’t so much as “chip away” at Obamacare as it temporarily suspends growth. But here’s the cold, hard truth of the matter that many complaining liberals refuse to acknowledge–if the Dems had just done nothing, the Sequestration would have affected everyone unilaterally, including entitlements that affect Obamacare and the pain would have been much, much worse. Not mention the fact that the Economy probably would have stalled and that could have killed Obamacare.

      If the extension of UI does actually work as a stimulus and revenue does increase, the economy will improve. If the economy improves the likelihood of Obamacare getting more funding and surviving is that much more likely. It will expand in this case. Be patient.

      I depend on Obamacare more than most people and I know how you feel. But in the long run, this deal was as good as it gets for all of us, regardless of our particular pet issues.

      • SlapFat

        You’ve given me quite a bit to respond to.

        It doesn’t so much as “chip away” at Obamacare as it temporarily suspends growth.

        If this program is getting funding taken away from it then that’s less funding that is being allocated to it. I don’t see how it can in any way be seen as anything else, and saying that it “suspends growth” seems more like a euphemism than anything else. The 2011 budget battle of last year saw Obamacare getting more of its funding cut and I continually noticed such cuts happening consistently since the law was passed. This is how you you kill a law slowly- something the GOP has perfected as a tactic, second only to their ability to frame a debate.

        But here’s the cold, hard truth of the matter that many complaining liberals….

        I’m going to assume that you were not suggesting that I am a “complaining liberal” since that’s an archetype I don’t fit. Complainers whine without doing anything to affect change, and as someone that worked from 2009-2010 to help rally support for the PPACA I’m far from that. What is bothersome is to see legislation that you’ve put time and effort into be gutted because of spinelessness and a lack of foresight by the very people you were assisting- in this case the Democrats.

        If the economy improves the likelihood of Obamacare getting more funding and surviving is that much more likely.

        That is very optimistic thinking on your part. The new Republican credo is “No funding for anything. Ever. For any reason.” The status of the economy is not going to change that, but the political party in control of our bicameral federal legislature is. For as long as the GOP has anything to do with either chamber nothing is going to see much of an increase in funding. This is why the so-called fiscal cliff was an opportunity since it allowed for a chance to put the Republicans against a wall using the Bush tax cuts for the middle class.

        Instead it was blown and a chance to rectify a mistake was rendered worse by making some of those tax cuts permanent. We’re spoiling ourselves into thinking that tax cuts can give us everything (including ones for the middle class) and not letting us mature on the idea that taxes are necessary to pay for things.

        In short, I guess I’m saying that Americans seem to be more obsessed with hoarding their money and opposed to letting a minor amount of it be used for public programs. It’s kind of sad. And this “fiscal cliff” deal doesn’t help.

        Be patient.

        I’ve shown considerable patience. But it gets thinned pretty quickly watching these cheesy giveaways to the GOP. Enough is enough and it’s time to stop placating them.

        ….regardless of our particular pet issues.

        This “pet issue” is something millions upon millions of people are going to depend on for access to health insurance. You can very well die or go broke in this country unless you’ve got that little plastic card to show to the doctor’s receptionist, and I’m not particularly keen on how non-chalant people are being about the Obamacare getting slowly downsized. What’s the purpose of making the law so grand in scale if it can’t survive to see its advent? We deserve better than a decayed husk of the original law.

        President Obama has remarkable accomplishments under his belt from his first term in office. If he wants to keep making those he’s going to have to do better than this. Much better. I’ll be there to assist him along the way. But if he’s signing crappy bills into law then it’s necessary to criticize him and his party.

        Making compromises that no one is happy with is a bad way to move forward.

  • GrafZeppelin127

    Please someone explain to me how this is bad news for Democrats and liberals.

    I’ve said it many times before and I’ll say it again: Liberals are never, ever satisfied with what Democratic officeholders accomplish. GOP fans get off on feeling oppressed, targeted and victimized by Democrats; Dem fans get off on feeling betrayed, taken-for-granted and sold-out by Democrats. Both believe that the best way to achieve the policies they want is to elect Republicans. Both are wrong.

    • Scopedog

      “Both believe that the best way to achieve the policies they want is to elect Republicans. Both are wrong.”

      Yep. And as we’ve seen in, say, 2000 and 2010…it really does not work. It makes things a helluva lot worse.

    • kccommunist

      Bashing liberal. So very, very Republican.

      • GrafZeppelin127

        Oh, peel me a grape. Bad behavior deserves to be “bashed” no matter what the political ideology of those who are guilty of the behavior.

        • kccommunist

          Your grape was peeled years ago. I miss it.

          And is the definition of “bad behavior” up to you? If it’s not approved by GrafZeppelin127, is it’s bad? Do we “sieg heils” teh Grafeppeline127?

          Stop bashing others…just because you can. Bully.

          • IrishGrrrl

            Look who is being the bully, bringing up “sieg heils”?! Really? There is nothing in Graf’s post to warrant that kind of bullshit response.

          • bphoon

            Seems to me he was just expressing his opinion rather than trying to exert any type of control of what others think. I believe we’re all free to do that.

          • kccommunist

            He wrote…Bad behavior deserves to be “bashed”. It’s a way of saying that only he is right – as he is obviously the judge, jury and punisher on this site.

            Sorry gals, you are just baubles and accouterments. The great GrafZeppelin127 has spoken.

  • Draxiar

    It’s bad news because….because…but…I didn’t get my baby elephant! Why wasn’t my baby elephant included in the deal? I was robbed! Obama is worse than Bush because at least Bush IS a baby elephant! Neener!

    I’m kidding of course.

  • IrishGrrrl

    So am I correct in understanding that the expiration of the payroll tax holiday will mean that we will all pay more in taxes? If that’s correct I will owe about $1,500 more for 2012. Or does it go into effect in 2013 (which for me would be much better)?

    • GrafZeppelin127

      I would expect that the latter is the case. Income is taxed contemporaneously with the Tax Code; income you made in 2012 is taxed according to the 2012 Tax Code. Unless there’s a provision that makes the tax rates retroactive, which in this case I don’t believe there is. It’s not really a “tax holiday” if the taxes that would have been paid under the higher rate are merely deferred and collected later.

      • IrishGrrrl

        Ok, thanks. I’m not complaining just trying to figure out how to budget for it in 2013.

  • Mike Sallese

    My untouched tax break remains un-budgeted which means we borrow money with interest to pay it back. Multiply by everyone except super rich

    • peter_principle

      Actually, with real interest rates where they are now — and where the Fed plans to keep them for at least the next two years — investors are paying the Treasury to borrow money fom them to pay for your tax cuts.

      What’s not to like?