It is disheartening to see Obama and Biden supporters applauding this bad fiscal deal being made by Congress. Granted, there are some provisions that will be helpful such as providing another extension of unemployment benefits and other tax credits for low income families. Aside from these provisions, which taken together have a negligible impact on the fiscal situation, the compromise is a turd.
Part of what makes this deal so bad is the disingenuous way it was sold in the media. For example, on New Year’s Eve, Obama said that this deal will not raise taxes for 98 percent of America’s working people. That’s just not true. As most of are seeing, or soon will see in our next paycheck, the Social Security payroll tax has increased, which for this new year is a 2 percent tax increase on incomes up to about $113,000. Some have argued that this 2 percent was just a temporary stimulus measure enacted when the Great Recession hit anyway and was never intended to be permanent. True. But that is exactly the same thing the Bush tax cuts were supposed to be.
By compromising with the Republicans and allowing the Bush tax cuts to remain intact for households earning between $250,000 and $450,000, the revenue gain will be half that if the whole Bush tax cut program were allowed to expire according to current law. Recall also that the original Bush tax cuts amounted to pocket change for most of us earning less than $250,000 because the cuts were specifically designed to help the already wealthy in the first place. And the provision to keep the estate tax protection for inheritances up to $5 million remains as a public assistance program for the wealthy.
By putting off dealing with the debt ceiling issue for a couple of months, this will only lead to more trouble down the road. The word “sequestration,” by the way, is just dodgy language for program cuts. Republicans will have a much easier time demanding popular program cuts when all the “fiscal cliff” drama is dropped from the media, and the Democrats will have an easier time caving in as they tend to do. This will be an even bigger issue when the federal government starts picking up the tab for pricey insurance premiums as a result of the 2009 health care bill that will begin next year.
Finally this deal made no effort at reclaiming the Fortune 500 corporate profits that are being stashed away in offshore accounts. Companies like Apple, Inc. are the most profitable on the planet, though with accounting sleight of hand those profits are hiding in pockets all around the world and made untouchable by the IRS. According to Citizens For Tax Justice data (www.ctj.org), the unrepatriated profits of major corporations amounted to $1.1 trillion in 2009, $1.3 trillion in 2010, and $1.6 trillion in 2011.
As the Democrats continue with this compromising approach and ignoring the concerns of their working class supporters, they really need to rename their political party because this is not democracy.