Fiscal Cliff Postmortems
by Stephen Lendman
Congressional profiles in courage are sorely lacking. Pretenders usually vote party line when asked or pressured.
No House or Senate member explained what constituents most need to know. Fiscal cliff hype reflects doublespeak duplicity. Previous articles explained.
America’s social contract is targeted. Bipartisan complicity wants it eroded and destroyed. Heavy lifting comes later. Eleventh hour legislation ducked tough issues. The battle of 2013 awaits.
Expect something greater than August 2011’s debt ceiling crisis. Version 2.0 will demand more pounds of flesh.
Republicans have Obama where they want him. They conceded on extending most expiring benefits. They settled for half the mandated $1.2 trillion sequester.
Get even time approaches. Expect post-inaugural hardball. Middle income and disadvantaged Americans will suffer most. Congressional takeaways will way exceed benefits given.
They’ll come incrementally. Obama and most Democrats support them. Eroding Social Security, Medicare, Medicaid and public pensions are prioritized. Privatizing and/or ending them altogether is planned longterm.
America’s social contract will be downsized. Plans are to destroy it altogether. By 2023 or earlier, it may be entirely gone, or too little to matter will remain.
No one in Congress explains. Media scoundrels are silent. What most people need to know, they’re not told. A rude awakening awaits. It’s not the America this writer grew up in.
Post-WW II, anyone wanting work found it. High pay/good benefit jobs were plentiful. Economic growth provided them. America was unchallenged economically. Its manufacturing base hadn’t moved offshore.
Union representation was high. New Deal/Great Society programs hadn’t eroded.
Real inflation was low. Today it’s around 9% based on how calculated decades earlier. New homes, cars, and other major purchases were affordable.
So was college. Student loan debt entrapment didn’t exist. Nor did post-9/11 police state repression. America was never beautiful. Compared to now, it almost seemed that way.
Millions were marginalized and left out earlier. Everyone except America’s super-rich is vulnerable today. Bipartisan complicity has big plans.
Both parties want America transformed. Third-worldizing is planned. So is institutionalizing police state harshness. Wealth, power, privilege, and dominance are prioritized. Nothing else matters.
Popular needs are targeted for elimination. A race to the bottom is planned. Repressive crackdowns await nonbelievers. Today’s hard times reflect much tougher times ahead.
It’s hard imagining the kind of nation they plan. Much is already in place. Worse ahead is coming. Both sides agree.
Postmortem commentaries followed fiscal cliff legislation enactment. Michael Hudson added Part III to his two-part article. He discussed “Why Today’s Fiscal Squeeze Imposes Needless Austerity.”
“Public borrowing creates a dependency that shifts economic planning to Wall Street and other financial centers,” he said. “When voters resist, it is time to replace democracy with oligarchy.”
Prioritizing debt repayment imposes “austerity, depression, unemployment, emigration and bankruptcy.”
Popular opposition is quelled any way it takes. Financialized economies are destructive. They’re falsely “depicted as a natural way to gain wealth.”
Taking on more debt is prioritized. Tax rules favor bankers and other corporate giants. America’s sacrosanct military spending goes untouched.
Increasing amounts assure permanent wars. Unconscionable annual budgets aren’t debated. They’re rubber-stamped and enacted.
Something has to give to maintain them. America’s social contract is targeted. It’s on the chopping block for elimination.
Austerity is policy. Popular needs don’t matter. Debt reduction hypocrisy masks exponentially higher levels annually.
Quantitative easing creates “free money.” Trillions subsidize Wall Street. Open-checking amounts are readily available.
At the same time, destroying America’s social contract is planned. Washington spurns doing the right thing.
Political priorities “encourage financial and rent extraction that has become the major economic problem of our epoch. Industrial productivity continues to rise, but debt is growing even more inexorably.”
“Instead of fueling economic growth, this credit/debt threatens to absorb the economic surplus, plunging the economy into austerity, debt deflation and negative equity.”
America’s “financial system is broken.” Wall Street bosses control government policies. Public debt rises exponentially. Money printing madness sustains it.
Imperial and corporate priorities punish ordinary Americans most. The worst is yet to come. Bipartisan complicity plans it.
On January 1, London Guardian contributor Heidi Moore headlined “Congress’ manufactured non-solution to its manufactured fiscal cliff crisis,” saying:
“The fiscal cliff deal doesn’t stop tax hikes, doesn’t reduce the deficit, (and) doesn’t avoid spending cuts….and it’s not even a deal.”
Winston Churchill once said America eventually does the right thing after exhausting all other alternatives. He didn’t know how Washington operates today.
It manufactured a fake fiscal cliff crisis. Duplicitous fear-mongering hype substitutes for doing the right thing.
“The much-praised deal is as thoughtless and hasty as you would expect from anything cobbled together at the last minute.”
Instead of resolving debt problems responsibly, enactment and planned legislation assures “an even bigger cliff, a fiscal mountain.”
It grows annually. Expect 2013 legislation to fall woefully short of addressing it responsibly. Both parties share blame. So does Obama. Self-congratulatory postmortems conceal dark policies planned.
Moore quoted Professor Emanuel Derman’s reaction to Senate passage. “This is all theater,” he said. It’s “full of sound and fury, signifying nothing.”
Following House passage, Moore added it’s only “the first act.” It’s a pathetic tepid one. It conceals planned hardball 2013 legislation.
Dean Baker contributed his own Guardian article. He headlined “Obama’s tax threshold concession bodes ill for debt ceiling talks,” saying:
Congress and Obama ignored Congressional Budget Office (CBO) and other forecasts. They predict higher tax rates and large spending cuts risk tipping America’s fragile economy into recession.
John Williams and other responsible economists say America’s already in one. Its economy is in worse shape than acknowledged. Deeper recession is likely. Protracted Main Street Depression already affects most ordinary households.
Fed policy doesn’t stimulate economic growth. Tax increases, planned budget cuts, and force-fed austerity assure much tougher times ahead.
Financial Times (FT) contributor Martin Sandbu said “Small deal will deliver more subpar growth.”
“More economic damage” was caused by Washington’s inability “to decide and stick to policy. This uncertainty, which leaves businesses preferring to hoard cash rather than invest, is the chief cause of the disappointing US performance in the past two years.”
“The folks in Washington” legislated more of the same.
Separately, the FT said “Fresh stand-off looms after US cliff deal.”
“Far from ending (America’s) budget battles,” congressional action “simply sets the stage for fresh confrontations (ahead) over the deficit and economic policy.”
Tough decisions were delayed. Congress always operates this way. Hold the champagne, said Foreign Policy’s David Rothkopf. House passage yesterday starts “the countdown to the next crisis.”
A much greater one awaits. Congressional legislation and what’s planned assure more debt and taxes.
All working Americans face tax hikes. It’s the first time in 20 years. Their impact is economically negative. Average increases are as follows:
For $50,001 – $75,000 income earners: $822 annually.
For workers making $100,001 – $200,000: $1,784.
For people earning $200,001 – $500,000: $2,711.
For $500,001 – $1 million income earners: $14,812.
Super-rich elites making over $2.7 million will pay on average $443,910 more.
House and Senate provisions raise over $600 billion in new taxes over the next decade. Every worker is affected.
Tax code provisions got more complicated.
Fifty-two tax credits were extended. Most are for one year. New battles loom for further extensions.
Section 206 provides capital gains tax exemption for property contributed for conservation.
Section 312 offers faster tax deductions for motor sports and entertainment complexes.
Section 317 permits expensing film and television productions. Hollywood got what it wanted.
Corporate research tax credits were extended. So were others for government-approved energy initiatives. Energy-efficient new homes are subsidized. So are some existing ones, cellulosic biofuel, and Indian coal facilities.
The alternative minimum tax (AMT) became permanent. For the first time, it’s automatically indexed to scandalously manipulated low inflation.
Government ends up bigger than ever. Negotiations await on spending cuts. Whatever’s agreed on won’t stop deficits rising exponentially.
House and Senate legislation raised taxes more than reported. Top rates go from 35 – 41%, not 39.6%. The higher figure includes phased out deductions.
The personal payroll tax rises from 4.2 – 6.2%. Doing so represents a 50% tax increase for most Americans.
The estate tax goes from 35 – 40%. Amounts under $5 million are exempted.
Capital gains and dividends taxes increase from 15 – 23.8%, not 20%. The higher figure includes a 3.8% Obamacare investment income surtax.
Five new taxes help pay for Obama’s Affordable Care Act. Higher income workers now pay more for Medicare. So do people using flexible spending accounts to defray health expenses.
Their contributions are capped at $2,500 annually. Most employer provided ones are $5,000.
Medical deductions are more limited. Obamacare raised the threshold from 7.5% to amounts over 10%. Seniors and spouses are exempt until 2016.
Medicare Part A tax rates rise from 1.45 – 2.35%. Doing so affects individuals earning over $200,000 and families above $250,000. Married couples filing separately and earning over $125,000 pay more.
Medical device manufacturers face a 2.3% excise tax. It’ll be priced into products they sell. Buyers will bear the burden. So will consumers in higher medical bills.
Longtime Chicago financial adviser, Terry Savage, reports the “Savage Truth.” She wished followers a happy new year. She said “good riddance to a bad Congress.”
She called congressional toing and froing a “Mad Hatter’s Tea Party.” She told CNN viewers their legislation represented an “Alice in Wonderland” moment.
They accomplished nothing. They extended benefits that should have been agreed on months earlier. They left exponentially rising deficits unaddressed.
Much ado about nothing reflects policy. “Will the next Congress be more sensible,” she asked? Don’t bet on it. Fiscal discipline are four-letter words.
Bipartisan irresponsibility assures worse times ahead. Better ones are distant memories.
Stephen Lendman lives in Chicago and can be reached at firstname.lastname@example.org.
His new book is titled “Banker Occupation: Waging Financial War on Humanity.”
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.