by Jack Minor –
In a last minute fiscal cliff deal that will raise taxes on over 77 percent of Americans, the definition of compromise and balance in Washington means increasing revenue by significant amounts relative to spending cuts.
According to the Congressional Budget office, the last minute fiscal cliff deal reached by Barack Obama and members of Congress will increase revenue by $620 billion while only providing for a meager $15 billion in spending cuts. The CBO has also said the bill will add nearly $4 trillion to the deficit over a decade.
The spending increases translate to a ratio of 41:1 of tax increases compared to spending cuts.
During the negotiations, President Obama continued to insist his reelection was a mandate for tax increases despite Republicans retaining control of the House with many members winning their campaigns on a message to their constituents on no tax increases. The president also came out in favor of increased spending for a new stimulus package and demanded unilateral authority to raise the debt ceiling, despite such authority being clearly delegated to Congress by the Constitution.
In an attempt to forestall the so-called fiscal, cliff Republicans in the Senate and many in the house blinked and passed a budget that forced them to cave on their principles while the Democrats did not have to offer similar concessions, but instead were able to obtain massive new spending which will add to the deficit.
During the debate, Obama frequently cited presidents Reagan and H. W. Bush as examples of Republicans who were willing to raise taxes. However, in those instances the ratios were promised by Democrats to reduce spending for each dollar or revenue increases by ratios of 1:3 and 1:2. The cuts agreed to by Democrats never came.
While many middle class Americans have been led to believe the importance of the deal was to prevent their taxes from going up at the expense of the rich, they will be shocked when they receive their first paychecks after the new year. The deal includes the expiration of a payroll tax cut that was reducing the amount of money that individuals were paying in the social security trust fund. The expiration of the cut means that taxes will be raised on 77.1 percent of Americans according to the Tax Policy Center in Washington.
While the fiscal cliff deal passed overwhelmingly in the Senate its fate in the House was less certain. In the end the vote passed the House on a 257 to 167 vote with many conservative and tea party Republicans voting against it. In what could be a sign of division in the party, the number two House Republican, Eric Cantor voted against the bill while majority leader John Boehner voted in favor of the bill.
The bill also raises taxes on estate taxes which could affect family farms in the area. The bill also provided a variety of tax credits for groups such as Hollywood, NASCAR and algae producers.
Additionally, despite falling unemployment rates and the economy being in the midst of a “roaring recovery” according to first lady Michelle Obama, the bill extends unemployment benefits to individuals for another year.
Following passage of the bill, President Obama hopped back on Air Force One to return to his family in Hawaii for a vacation. The cost of his flight is estimated to be over $3 million. The amount is in addition to the $4 million already being spent on the Obamas’ Hawaiian vacation.
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