With Congress passing what is now officially called The American Taxpayer Relief Act of 2012, the fiscal cliff crisis has been averted, while providing tax relief to nearly 98% of Americans, and predictably bringing stability to the markets when the bell rings tomorrow morning. However, the Bill is not without its critics; both progressive and conservative alike. For progressives, the key issue seems to circulate around the fact that the President agreed to increase the income limit on the Bush tax cuts from $250,000 to $400,000-$450,000 for individuals and couples respectively. Despite the concession made by the President only three Democratic senators and sixteen Democratic congressional leaders voted against the measure. For conservatives, the predictable sticking point for them was a refrain we have all heard since their being swept into power during the 2010 mid-term election: The deal neglected to include spending cuts. In fact, immediately following the first Republican conference meeting of the day, House Majority Leader, Eric Cantor simply told reporters, “I do not support the bill.” Cantor was not the only one in his caucus who did not support the bill as five GOP senators and 151 GOP congressional leaders voted against the measure, demonstrating just how significant passage of this bill is, while further elucidating the woes of the GOP.
House Speaker, John Boehner followed up with his own assessment telling reporters that his caucus was deeply troubled over the bill’s lack of spending cuts, while neglecting to tell those reporters the reason for their absence. If each of you will recall though, it was Speaker Boehner who walked out of negotiations with the President, which at that time, and much to the chagrin of progressives included cuts to spending, punting the entire matter over to the Senate. His exact words made this past Sunday were as follows: “The House has passed legislation to avert the entire fiscal cliff, and the president has never called for the Senate to act on those bills in any way. He instead has simply allowed the Democratic-controlled Senate to sit on them and lead our economy to the edge of the fiscal cliff. I am pleased Senators from both parties are currently working to find a bipartisan solution that can finally pass that chamber. That is the type of leadership America needs, not what they saw from the president this morning.”
Apparently though, Boehner does not see how weak his own leadership is. That is, if I were the Speaker, I wouldn’t be throwing stones out of his proverbial glass house, when only mustered minimal support from his own caucus to provide 98% of this country’s citizens with “tax relief.” Please take note of those last two words in the previous sentence, because they are highly relevant. The legislation passed the previous night, was nothing more than providing Americans with ”tax relief”, versus the increasing of taxes, evidenced by the fact that the previous night, on New Year’s Eve, the country had already gone over the fiscal cliff. However, even in this instance, despite the GOP not having to worry about breaking their precious little pledge with Grover Norquist, swearing to never increase taxes, they were actually voting to decrease the tax burden Americans would have shouldered beginning this year, had the Senate not provided a compromise to the President’s proposal! Put bluntly, if Speaker Boehner cannot even lead his own caucus, how in the world does he plan on being elected Speaker of the entire House during the next session of Congress. Of course, THAT decision is not up to “We the People,” and hopefully the Speaker can retain his position of leadership, lest a representative of the more radical element of his party should end up in that position.
In addition, the day after Christmas GOP leadership issued the following statement imploring the Senate to take action: “The House has acted on two bills which collectively would avert the entire fiscal cliff if enacted. Those bills await action by the Senate. If the Senate will not approve and send them to the president to be signed into law in their current form, they must be amended and returned to the House. Once this has occurred, the House will then consider whether to accept the bills as amended, or to send them back to the Senate with additional amendments. The House will take this action on whatever the Senate can pass, but the Senate first must act. The lines of communication remain open, and we will continue to work with our colleagues to avert the largest tax hike in American history, and to address the underlying problem, which is spending.” Yet, when the largely bipartisan Senate provided an out for Boehner and the GOP led Congress, they nearly snubbed their noses at the Bill, endangering its very passage.
Once again, the GOP has demonstrated its fanatical obsession with cutting spending, specifically their persistent drive towards cutting spending only in those programs which they deem essential to cut, such as social security, medicare, and medicaid. Of course, most Americans have realized by now, that social security has absolutely nothing to do with the budget, yet the GOP persists. Why they continue on this quest to cut only those programs which benefit those less fortunate in our society, while insisting defense spending be left alone, despite leaders in our defense department stating they do not need additional resources, leaves the average American confused, angry, and wondering whether the GOP has lost all forms of compassion. But this is precisely what occurs when an embraced ideology plays out in political theater colliding with economic and electoral reality.
Furthermore, with the Tea Party hijacked GOP, led by none other than Speaker Boehner, this country was treated to nothing but “political theater.” Let’s review: First, the President placed a proposal squarely at the feet of John Boehner less than one week after his re-election. Second, the GOP, in response, countered with an offer that included “a promise to end undefined tax deductions at ‘some point in 2013.’” How is that for specificity Mr. President and fellow citizens who just re-elected Mr. Obama? And what did the GOP want in return for this? (1) Keep tax rates for the wealthy the exact same. (2) Keep the $1.6 trillion dollar spending cuts they as a party had already received as part of the debt-ceiling negotiations, (3) Cut spending from Medicare’s program, (4) Social Security reform (which is not even part of the budget), (5) Hundreds of Billions in cuts from what the GOP now refers to as “entitlement programs,” all benefiting the middle-class, such as the earned income tax credit, child deductions, ending the payroll tax holiday, ending deductions for mortgage interest, and (6) end unemployment insurance benefits for nearly 2 million people.
And yet, the GOP leadership called THIS a compromise, while having the audacity to criticize the very man who cut short his vacation to return to Washington to avert this very matter; The President! Next, the Speaker walked out of negotiations despite he and the President nearly coming to terms, due to tea party members rejecting that deal. And finally, Boehner, in what will be the most memorable moment in this session of Congress, along with tea party poster child, Eric Cantor planned to hold a vote in the House on Boehner’s infamous back up plan; Plan B, only for that plan to never make it to the floor due to the GOP’s overwhelming rejection. This, despite both Boehner and Cantor going before the camera telling the American people with utmost confidence that their plan would pass. It was at this point the Speaker then punted the negotiations to the Senate, removing himself from the negotiations. Yet, the Senate delivered, and in bipartisan fashion too! With a vote of 89-8, the political and electoral realities confronting Senator McConnell in the high chamber, left the Speaker and his least unproductive House since the forties in peril! So, how many of those GOP demands were met in this deal, and more importantly, how did President Obama do in this set of negotiations with the GOP? I’ll let you decide for yourself!
Ezra Klein, from The Washington Post provides some insight into the specifics of this legislation. First, while the President did indeed compromise on the ceiling for the Bush tax cuts to expire, these rates are now permanently returned to the Clinton-era rates. Second, capital gains tax rates have been permanently increased to 20% for those hitting that ceiling. Third, the estate tax has been increased to 40% with a 5 million dollar exemption. Fourth, the sequester, established by the GOP led congress, set to take place should the fiscal cliff not be averted, has been extended two months, with a “shared sacrifice” approach to offset the sequester. Specifically, one-half of the extension will be offset by discretionary cuts to BOTH defense and non-defense categories with the other half being offset by increased taxation for those moving funds from retirement accounts. Fifth, the following 2009 expansion of tax breaks benefiting the middle-class have now been extended by five years; The Earned Income Tax Credit, The Child Tax Credit, and the American Opportunity Tax Credit (college tuition credit). Sixth, what is known as the Alternative Minimum Tax has been provided a permanent “patch” protecting middle class taxpayers while ensuring wealthy taxpayers pay a minimum amount of federal income tax, regardless of deductions, credits, or exemptions. Seventh, limits on tax exemptions and deductions are now reimposed on those earning over $250,000. Ninth, the temporary tax breaks benefiting ALL businesses is extended by one year. Tenth, unemployment insurance has been extended for an additional year with no spending cut offset. Eleventh, according to Senator Debby Stabenow, a farm bill will be attached averting the “milk crisis,” which would have driven milk prices to a historical high. Twelfth, the current DocFix law, averting a 27% cut in reimbursements to physicians accepting Medicare, has been extended by one year. And finally, my favorite part of the bill: The pay freeze, which President Obama lifted earlier this week, for lawmakers has been reimposed!
While it is true that critics will abound on either side of the political spectrum, regarding the passage of this Bill, I contend the President did just fine! Yes, he compromised a bit by increasing the ceiling of those being taxed from $250,000 to $400,000 while neglecting to get an extension on the payroll tax holiday. But what he accomplished was the very thing he campaigned on: Raising taxes on the wealthiest versus balancing the entire budget on the backs of the middle class. While the media would like to frame the ending of this very sad indictment against the GOP in terms of who won or who lost, the reality is this: Middle-class Americans won this round! Yes, the pundits will spin the story every which way, in order to suit their political proclivities, but the truth of the matter is that for the first time in nearly 20 years, the GOP has finally, due to being out maneuvered by the very man they incessantly criticize and marginalize, raised taxes on the wealthiest in the land, creating some semblance of shared sacrifice.
No need to worry though because despite all of the “political theater” engaged in by the Speaker, he did manage to get two very influential GOP members to vote FOR the tax decrease last night: Himself, and none other than fiscal hawk conservative and former GOP Vice-Presidential candidate; Paul Ryan! Oh, and in case you didn’t know: The Speaker had no obligation whatsoever, as Speaker of the House to vote on that Bill. And what about that great bastion of fiscal conservatism, Paul Ryan? While Congress was debating the measure, Ezra Klein ran into Ryan sitting outside the chamber, attempting to get his comments about the legislation in question. Ryan’s response? “I’m only interested in the score!” Klein, confused over Ryan’s response, due to the Congressional Budget Office already scoring the Bill, proceeded to ask a follow up question only to be told that Ryan meant the score to the Rose Bowl game. Political theater indeed! Of course, the drama being played out by the GOP closely resembled a “Greek Tragedy,” but it was political theater indeed!