Throwing The Poorest Over The Fiscal Cliff

So here we go with that “bipartisan” thing again, and as usual it’s the poor folk who’ll be screwed.

Obama and his administration, along with Harry Reid, are currently trying to send a message that bipartisan co-operation on averting the so-called “fiscal cliff” will involve raising taxes on the rich as well as cuts to discretionary programs, including Social Security and Medicaid. Axelrod, the ass, undercut a whole lot of possible leverage when he said that talk of a mandate for tax raises on the richest was “foolish“, especially after Joe Biden said that’s exactly what the Obama second term has.

However, Boehner and the GOP are having none of it.

Speaking for Republicans after a conference call with his Congressional colleagues, Mr. Boehner said he was ready to accept a budget deal that raised federal revenues, but not the top rates on high incomes. And the deal, he said, also would have to overhaul both the tax code and programs like Medicare and Medicaid, whose growth as the population ages is driving projections of unsustainable future debt.

Instead of allowing the top rates to go up, which Republicans say would harm the economy, Mr. Boehner said Washington should end some deductions and loopholes to raise revenues. The economic growth that would result from a significant deficit reduction compromise would bring in additional revenues as well, he said.

Mr. Boehner entered the ornate Capitol room with none of his usual bonhomie, walked to a lectern and spoke in formal tones from two Teleprompters. He then hastened out of the room, ignoring shouted questions.

Now, the thing is that reform of the tax code and cuts to the safety net afforded the least fortunate Americans are already things both sides agree on – and no matter how you parse it the results aren’t going to be pretty.

It is widely expected – including by liberals- that Obama intends (again) to pursue a so-called “Grand Bargain” with the GOP: a deficit- and debt-cutting agreement whereby the GOP agrees to some very modest tax increases on the rich in exchange for substantial cuts to entitlement programs such as social security and Medicare, the crown legislative jewels of American liberalism.

Indeed, Obama already sought in his first term to implement sizable cuts to those programs, but liberals were saved only by GOP recalcitrance to compromise on taxes.

I’m honestly hoping that the GOP keeps to its recalcitrance and that the Obama White House refuses to deal under such circumstances again. At least that way we’ll all suffer any fallout together, instead of throwing the least able to bounce back from any “fiscal cliff” over that cliff to save the rest of us any pain.

Update: Bonus reads – Digby says they’re bipartisanly coming after Social security even though there’s no need to do so as it doesn’t really affect the deficit, so there must be another agenda. Paul Waldman tracks down who coined the highly misleading phrase “fiscal cliff” and, surprise, it was Federal Reserve Chair Ben Bernanke.

3 comments to Throwing The Poorest Over The Fiscal Cliff

  • adrena

    US Set to Restage Greek Tragedy

    Spiegel, By David Böcking, November 8

    The US has more in common with heavily indebted southern European countries than it might like to admit. And if the country doesn’t reach agreement on deficit reduction measures soon, the similarities could become impossible to ignore. The fiscal cliff looms in the near future, and its not just the US that is under threat.

    The US has finally voted and the dark visions of America’s future broadcast on television screens across the country –and most intensively in battleground states — have come to an end. Supporters of both Barack Obama and Mitt Romney had developed doomsday scenarios for what would happen if their candidate’s opponent were to win. Four more years of Obama, the ads warned, would result in pure socialism. A Romney presidency would see the middle and lower classes brutally exploited.

    But following Obama’s re-election, Americans are now facing a different, much more real horror scenario: In just a few weeks time, thousands of children could be denied vaccinations, federally funded school programs could screech to a halt, adults may be forced to forego HIV tests and subsidized housing vouchers would dry up. Even the work of air-traffic controllers, the FBI, border officials and the military could be drastically curtailed.

    That and more is looming just over the horizon according to the White House if the country is allowed to plunge off the “fiscal cliff” at the beginning of next year. Coined by Federal Reserve head Ben Bernanke, it refers to the vast array of cuts and tax increases which will automatically go into effect if Republicans and Democrats can’t agree on measures to slash the US budget deficit.

    In total, the cuts add up to $1.2 trillion over the next nine years, with half coming from the military and half from other government programs, and with $65 billion coming in the first year alone. They were enshrined in law with the Budget Control Act of 2011, which also increased the debt ceiling. And though a deadline of Jan. 2, 2013 was set, they were never meant to come into effect. The plan for deep across-the-board cuts was intended as a way to prod Democrats and Republicans into reaching agreement on a long-term plan to reduce America’s vast budget deficit.

    More at the link

    • From the Waldman link in the post:

      here is a case where a bad metaphor has caused everybody to think about the matter in exactly the wrong way. When you walk off a cliff, the first step is your last. There is no such thing as falling halfway down a cliff. But the “fiscal cliff” is not a cliff at all. The economic damage is cumulative. It is the opposite of the debt ceiling, when the doomsday clock ticked down to a moment of sudden calamity. A full year of inaction would do a lot of damage, but a week, a month, or even a couple of months would not. The president would have enough control over the mechanics of the budget to delay the effects of higher taxes and spending cuts in order to cushion the blow to the economy. Even if the tax hikes and spending cuts go into effect, any deal that gets signed later could be retroactive. Meanwhile, the Federal Reserve could also take emergency action to keep the recovery afloat.

      If you think about the immediate effects of a tax increase, it isn’t as though on January 1 IRS agents will show up at your door demanding all the higher taxes you’d pay throughout 2013. Most people would see a small decrease in their paychecks. If you got your check next week and saw it was $20 less than the week before, you wouldn’t be happy about it, and you might begin to rethink that iPad mini you’ve been contemplating, but it isn’t as though you’ll suddenly stop buying food. As Chait says, the effects will play out over time, yet the term “fiscal cliff” conveys the sense that if we don’t fix it, then January 1 is the date of our doom, three seconds of terror followed by a meeting at 32 feet per second with the rocks below, crunching of bones and massive internal bleeding, with only a moment of awareness remaining before we are sucked into the horrific oblivion of death. Fiscally speaking, that is.

  • adrena

    The Wide Poverty Gap Between Women and Men

    Atlantic, By Karen Kornbluh

    [...]

    The gap results from a host of factors including the fact that women earn less than men—resulting from fewer years in the workplace, industry and occupational segregation, wage discrimination, the glass ceiling, and the mommy track—as well as lower earned pensions and Social Security and longer lives.

    More at the link

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