Friday, May 24, 2013
Some people on the right are saying that Congress' vote forestalling the fiscal cliff wasn't the epic disaster that most House Republicans (who voted against it 151-85) think it was.
Granted, the vote broke a party pledge not to raise taxes (and almost every working American's taxes got raised by it, as noted below). That's no way to help a staggering economy recover.
Still, The Washington Post's Jennifer Rubin said in a blog post, "How the left got taken to the cleaners" that "Conservatives are bemoaning an agreement that made permanent nearly all the Bush tax cuts, kept the vast majority of estates permanently sheltered from the death tax and maintained a large differential for capital gains even for the wealthy."
Indeed, the Democratic claim that the "Bush tax cuts" favored the rich has been shown to be the falsehood it always was.
Democrats have now agreed with the long-standing GOP argument that Bush-era tax rates for the middle class must be made permanent -- and they were.
So, while President Barack Obama heads back to Hawaii's sun, sand and surf, his demand for $1.4 trillion in "revenue enhancements" over the next decade got trimmed by 60 percent, ending up even lower than the $800 billion that House Speaker John Boehner offered and Obama rejected.
Rubin cites National Review's Yuval Levin as another conservative who thinks Democrats were ineffective.
Levin wrote on Jan. 2, "Many on the left have seemed convinced lately that the politics of taxes had changed dramatically in their favor, and that the opportunity presented by the cliff could result in the kind of surge in revenue that could put off the coming fiscal crunch for years (until, they seem to think, it will just magically go away at some point) and so could save our entitlement programs from the need for reform."
But that didn't happen: "This deal is projected to yield $620 billion in revenue over a decade -- increasing projected federal revenue by about 1.7 percent over that time. And that's about it. The Democrats have made the Bush tax rates permanent for 98 percent of the public, which Republicans couldn't even do when they controlled both houses of Congress and the presidency ..."
The $620 billion comes mostly by ending the 2-year-old payroll tax cut (which raises most wage-earners' taxes) and boosting high-end rates to 39.5 percent from 35 percent.
Levin says Democrats had everything going their way, "with a very liberal president just re-elected, Republicans in disarray, public opinion on taxes seemingly friendlier to them than it has been in decades and higher tax rates automatically taking effect ..."
And yet, they failed to get the revenue they demanded. So, "The idea that they will raise rates again in the Obama years when they don't have all these factors working in their favor is a fantasy ... Having discovered an effective political wedge in the tax debate, the Democrats have now basically used it up and gotten awfully little in return."
Particularly because there isn't enough money among "the rich," even at 100 percent tax rates, to pay for the annual trillion-dollar deficits Obama has racked up.
That could let the focus turn to spending when the nation's $16.4 trillion debt limit comes up for an increase in a few weeks.
As the Post's Rubin pointed out, "the Democrats' weakness" is "a total lack of credibility on spending cuts" while Republican leaders showed flexibility on rates.
Nick Gillespie, writing for the libertarian site Reason.com, says, "Now is exactly the moment to be discussing serious year-over-year cuts in spending. Obama is still pushing the line that he believes in a 'balanced approach' to budgeting. Late last year, he defined that as $2.50 in spending cuts for every $1 in new tax revenue. While that ratio is certainly too small (Canada reduced its debt-to-gross domestic product ratio and goosed its economy in the 1990s by cutting $6-7 for every $1 in revenue), it represents a starting bid in a process that could lead to a smaller government and a bigger economy."
Because we got a tax deal, not a spending deal (it raised $41 in taxes for every $1 in cuts, and boosted the 10-year debt by $4 trillion), it is indeed only a "starting bid."
Meanwhile, pending huge "sequester" cuts were put off for only two months, waiting for action by the new Congress that took office on Thursday.
And if social programs are on the table, as their huge looming shortfalls show they must be, so must be defense.
Heavy land units designed to fight the former Soviet Union can be trimmed both to save money and to boost badly needed special operations forces and air and sea capabilities.
One cliff is behind us, but the mountains of deficit spending ahead contain drop-offs, pitfalls and chasms galore.
M.D. Harmon, a retired journalist and military officer, is a freelance writer and speaker. He can be contacted at: firstname.lastname@example.org