Senate members met, debated, negotiated, passed stopgap legislation, and largely delayed deficit cutting for later.
On Tuesday, the House followed suit. Obama will sign it into law or may already have done so.
Media reports announced it. The New York Times headlined “Senate Passes Legislation to Allow Taxes on Affluent to Rise.” Members voted 89-8.
The Washington Post said “Obama, Senate Republicans reach agreement on ‘fiscal cliff.’ ”
The Wall Street Journal headlined “US Budget Compromise Deal Reached.”
A New York Times editorial called it “A Tepid Fiscal Agreement.” As this is written, House up or down follow-through awaits. Expect House Republicans to back strong party-line Senate support.
Speaker Boehner said “The House will honor its commitment to consider the Senate agreement if it is passed.”
Doing so overwhelmingly assures support. Republicans know they have much to answer for if millions of constituents lose benefits.
Obama did what he does best. He lied. He said “this agreement is the right thing to do for our country, and the House should pass it without delay.”
It will “grow the economy and shrink our deficits in a balanced way,” he claimed.
It’s economic effect is negative. With or without cuts, deficits will grow exponentially. Addressing them was largely left for later. Whatever’s agreed will resolve nothing.
The Times called the agreement “a weak brew that remains far too generous to the rich, and fails to bring in enough revenue to deal with the nation’s deep need for public investments.”
Provisions include raising personal income taxes to Clinton-era levels. Doing so affects families earning over $450,000 and individuals making more than $400,000.
Obama didn’t surprise. He compromised on his $250,000 threshold. Repeatedly he pledges one thing and agrees to another. His word is duplicitous political bluster.
He’s a serial liar and shows it. He spurns ordinary people. He’s done it throughout his political career.
Unemployment benefits, low-income family tax credits, college tuition ones, and Medicare’s “doc fix” were extended. A permanent alternative minimum tax fix was enacted. Its impact on middle income families was reduced.
Capital gains and dividend taxes rise from 15% to 20%. Personal exemptions and itemized deductions are limited. They’ll affect families earning over $300,000 and individuals making more than $250,000. Payroll taxes revert to their Clinton-era 6.2% level.
Taxes are 40% on estates over $5 million. Currently those valued over $5.12 million are taxed at 35%. Most spending cuts are delayed for Q I discussions.
Congressional pay is frozen for 12 months. Other government workers aren’t affected. A provision prevents sharply rising milk prices. Current farm bill legislation continues for another year.
Hurricane Sandy relief was excluded. Last week, Senate members passed $60 billion in emergency aid separately. House legislation didn’t follow.
In the cold light of day, markets were assuaged. Little else was accomplished. Few expected more.
A Washington Post editorial headlined “Small politicians at the cliff’s edge,” saying:
“HAVE THE NATION’S LEADERS ever seemed smaller? It’s hard to remember when.” Bipartisan complicity reflects failure to do the right thing.
“Instead of crafting a bargain that could set the nation on a steadier fiscal course, (Senate members) jockeyed to ensure that their political opponents would bear the public ire when things went sour. That’s how small politicians behave.”
Print and broadcast editors and reporters betray readers and viewers. They support policies harming them. They conceal what they most need to know. They’re not told that fiscal cliff duplicity targets America’s social contract. Destroying it entirely is planned.
“Revenues have to rise,” said the Post, “and spending, especially on Medicare, Medicaid, Social Security, and military health care, has to be brought under control.”
At all times, social and domestic spending should be prioritized. During hard times, when millions need help, social and other domestic spending matter most. Increases, not decreases should follow.
Progressive taxes should hit high-income earners harder. Corporations should pay their fair share. Speculation should be taxed. Military spending should be drastically curbed. Funding for imperial wars should stop.
If congressional members governed responsibly, deficit and debt problems wouldn’t exist. America’s social contract would be strengthened and preserved. Prosperous economic growth would benefit everyone.
Instead, wealth, power, privilege, and dominance matter most. Media scoundrels don’t explain. They want ordinary Americans bearing the greatest burdens. Resolution always ends up that way.
New year negotiations remain. They’ll continue in Q I. Sequester cuts and debt ceiling limits aren’t resolved. Agreed on tax increases provide $600 billion in added revenue.
Last year, both parties settled on $1.2 trillion initially. Minimally they want $4 trillion over 10 years. They barely scratched the surface. Major cuts remain.
Domestic spending will be hit hard. Social programs will bear the greatest burden. Defense will be largely untouched. Overall amounts appropriated will rise, not fall.
Expect current year’s spending to exceed 2012. Cutting annual amounts depends on prioritizing domestic needs over imperial ones. Political will prevents it.
Spending cuts will dominate upcoming negotiations. Expect Republicans to play hardball. They may reengineer the August 2011 debt ceiling debacle. Agreed on $1.2 trillion in sequestered cuts followed.
Before Q I ends, deficit crisis 2.0 may emerge. Another sequester may follow. Expect a larger one this time. Social spending cuts will be prioritized.
Obama’s strategy gave Republicans considerable bargaining leverage. They’ll take full advantage. They’ll play debt ceiling brinkmanship hardball.
They’ll extract unacceptable pounds of flesh. America’s middle income earners and least advantaged will be hardest hit. Corporate taxes will be cut. Defense spending will be protected. So will income and benefits for super-rich elites already with too much.
Expect America’s fragile economy to tip into recession. Some believe it’s there now and heading south. It’s been held hostage for months.
Bipartisan complicity assures fiscal squeezing. Instead of vitally needed stimulus, economic activity will be seriously curtailed.
In Part II of his “America’s Deceptive 2012 Fiscal Cliff” article, Michael Hudson discusses financial warfare. It’s more than about “acquir(ing) land, natural resources, and key infrastructure rents as in military” conflicts.
It’s to “centralize creditor control over society.” Financial oligarchs want ordinary people hit hardest. They want domestic government spending slashed.
Social Security, Medicare and Medicaid are prioritized. They want a tribute on the entire economy levied. “Tax favoritism for the wealthy deepens the budget deficit.” It forces governments to borrow more.
Interest paid on debt “diverts revenue from being spent on goods and services.” Fiscal austerity “shrinks markets.” Doing so “reduce(s) tax revenue to the brink of default.”
Bondholders treat governments like bankrupt families. They force them to sell prime assets. Banks treat households the same way. So does congressional fiscal cliff legislation.
Corporate and super-rich favoritism comes at the expense of destroying America’s social contract. Economic activity suffers.
In its November 2012 report, the Congressional Budget Office (CBO) said without fiscal tightening, “the economy would remain below its potential, and the unemployment rate would remain higher than usual for some time.”
Force-fed austerity when stimulus is needed assures much tougher times ahead. Resources directed for growth produce jobs. Workers with money spend it.
Economic pounds of flesh extracted are contractionary. The gap between rich and poor is greater than ever. Privileged segments of society are better off now than earlier. Middle income earners and America’s least advantaged are hardest hit.
Longstanding social programs are on the chopping block for elimination. Both parties agree. It’s baked in the cake. Obama and likeminded Democrats match Republican harshness.
Fiscal cliff hype is duplicitous scaremongering. It’s force-fed American austerity. It targets ordinary people needing help. It wants safety net protections eliminated.
It curtails economic growth. It assures federally mandated protracted hard times.
Imagine bipartisan complicity favoring policies this destructive. Imagine dismissing public need. Imagine the world’s richest nation spurning their own people.
Imagine most of them too out of touch to know how gravely they’re harmed. Imagine not standing up for their own rights. Imagine today’s unfit to live in America more intolerable than ever ahead.
Republicans and Democrats agree. Obama’s fully on board. Only America’s wealthy, powerful and privilege matter. Others are increasingly on their own.
Scheming politicians target them. Double-dealing reality assures harder than ever hard times. It won’t be pretty full-blown. It’s coming. Expect it. They’ll be no place to hide.
Stephen Lendman lives in Chicago and can be reached at email@example.com. His new book is titled “Banker Occupation: Waging Financial War on Humanity.” www.claritypress.com/LendmanII.html Visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening. www.progressiveradionetwork.com/the-progressive-news-hour