In an action that already feels like ancient history, Congress voted earlier this month to avoid the “fiscal cliff.” While much remains to be settled, the revenue side of the issue got resolved because 84 House Republicans joined 172 Democrats to support the solution negotiated between the President and the Senate. In some ways, such bipartisanship was a moment of déjà vu from a time, nearly 50 years ago, when two pivotal civil rights bills were being considered. Then, Lyndon Johnson was President and both houses of Congress were in the hands of Democrats. Martin Luther King was in the streets. The Student Nonviolent Coordinating Committee was registering voters. The 1964 Civil Rights Act and the 1965 Voting Rights Act were passed by Republicans joining Democrats to move the President’s legislation into law.
In both circumstances – today, as then – it was one party’s Southern flank that refused to go along with its leadership.
How much do the newly enacted tax hikes on the wealthiest Americans actually affect them? Hardly at all.
Almost all of the debate that convulsed Capitol Hill in December concerned the reinstatement of the highest marginal tax rate on earned income — that is, on wages and salaries. But as Fitzgerald said, the rich are different from you and me, and one of the primary ways they’re different is that they don’t get their income from wages and salaries.
In 2006, the bottom four-fifths of U.S. tax filers got 82 percent of their income from wages and salaries, a Congressional Research Office study found. The richest 1 percent, however, got just 26 percent of their income that way; for the richest one-tenth of 1 percent, the figure is just 18.6 percent.
The study also looked at dividends and capital gains. The bottom four-fifths got just 0.7 percent of their income from those sources.
The agreement passed last night is a breakthrough in beginning to restore tax fairness and achieves some key goals of working families. It does not cut Social Security, Medicare or Medicaid benefits. It raises more than $700 billion over 10 years, including interest savings, by ending the Bush income tax cuts for families making more than $450,000 a year. And in recognition of the continuing jobs crisis, it extends unemployment benefits for a year. A strong message from voters and a relentless echo from grassroots activists over the last six weeks helped get us this far.
But lawmakers should have listened even better. The deal extends the Bush tax cuts for families earning between $250,000 and $450,000 a year and makes permanent Bush estate tax cuts exempting estates valued up to $5 million from any tax. These concessions amount to over $200 billion in additional tax cuts for the 2 percent.
We begin 2013 awaiting the House of Representatives vote on tax legislation passed by the Senate early this morning. So we’re technically off the fiscal cliff but not really about to hit the ground – yet. Below are some initial perceptions of what the legislation means, beginning with the conservative American Spectator.
The New York Times should be embarrassed. On December 24 it gave a Christmas present to the corporate-backed lobby group Fix the Debt with its front-page Business section puff piece about the organization, which is pushing to balance the federal budget by slashing social programs while cutting taxes for the rich.
The 1149-word piece, “One Woman’s War on Debt Gains Steam,” by reporter Annie Lowrey, is a fawning profile of the group’s public face, Maya MacGuineas. The article makes it appear that the Fix the Debt group was hatched last year at a dinner party at Senator Mark Warner’s house, when in fact it is simply the latest incarnation of Pete Peterson, the billionaire Wall Street financier who over many years has invested tens of millions of his money in his long-term crusade to reduce the federal debt on the backs of the poor and middle class, including the Committee for a Responsible Federal Budget,
Speaker Boehner’s debacle in failing to get his own caucus to support his “Plan B” is not only his failure, it shows the complete disarray of the congressional Republican Party. They are simply incapable of a coherent response to a problem that calls upon them to go beyond campaign talking points.
This gives the President and Democrats in the House and Senate an opportunity to set fiscal cliff policy, in two stages. First, before the end of 2012, they should pass a bill in the Senate that would end the Bush tax cuts for those earning over $250,000 per year, as the President promised during the campaign. The bill should also extend unemployment coverage for the long-term unemployed, extend the debt limit for at least a year, and adjust the Alternative Minimum Tax to inflation. It should suspend (not cancel) the mandatory across-the-board spending cuts in the Fiscal Cliff law.
The 52-47 Democratic majority in the Senate is ample to pass the bill;
That’s what Americans care about—jobs with good wages.
And that’s part of why Obama and the Democrats were victorious on Election Day.
It seems forever ago, but it’s worth recalling that President Obama won re-election by more than four million votes, a million more than George W. Bush when he was re-elected—and an Electoral College majority of 332 to Romney’s 206, again larger than Bush’s electoral majority over Kerry in 2004 (286 to 251). The Democratic caucus in the Senate now has 55 members (up from 53), and Republicans have eight fewer seats in the House than before.
So why, exactly, is Washington back to obsessing about budget deficits? Why is almost all the news coming out of our nation’s capital about whether the Democrats or Republicans have the best plan to reduce the budget deficit?
I want to vote for a comprehensive bipartisan plan to address the fiscal cliff. I’m willing to take a tough vote. I’m willing to make sacrifices. I’m willing to feel the heat. But I’m not willing to solve the fiscal cliff by throwing seniors over the cliff. I draw the line at cutting benefits in Medicare and Social Security.
This week, House Republicans unveiled their fiscal cliff counterproposal. While they continue to call for an extension of the Bush tax cuts for millionaires and billionaires, they propose offsetting this cost by gutting Medicare benefits, including raising the age of Medicare eligibility to 67. I won’t go there. As California’s Insurance Commissioner for eight years, I know this would be horrible policy, throwing millions of seniors into the rapacious hands of an insurance industry interested only in profits for its shareholders.
Medicare is a promise we made to seniors more than four decades ago.
On Robert Reich’s website the economist and U.C. Berkeley public policy prof has eight simple principles for Congressional progressives to follow as they tangle with conservatives over that contentious piece of topography called the Fiscal Cliff:
The very next day after the election, congressional leaders held dueling press conferences in Washington to start the stampede to the fiscal cliff. But December 31 is not a cliff; it’s a slope. Actually, the better metaphor is a showdown between two different visions for the country – a showdown that will not only take place over the next four months, but will dominate debate about the economy for the next four years.
It is true that if Congress allows the tax hikes and spending cuts to be fully implemented, the economy will go into a tailspin, with four million people forced out of their jobs. But that won’t happen on January 1. The impact of both tax hikes and spending cuts take time to accumulate. If Congress acts on taxes early in the year, it can make lower tax rates retroactive to the beginning of the year. Between federal contracts already in place and the time it takes to implement program cuts,