Did We Avoid a Cliff?

The agreement between Obama and the Senate still has to make it through the House, which is far from certain. But, as it doing so, now is a good time to ask whether it’s a good deal or not. There’s a theme developing among some pundits, including conservatives, that this was a pretty good win for Republicans, given the weak hand they were playing. The logic here is that taxes were rising for everyone on Jan 1 anyway and the only spending cuts would come by sequestration. No serious person believes that any politician of any stripe would let those cuts hit. Therefore, Obama could just let taxes go up (his political wet dream), pocket the increases, then force Republicans to negotiate away the sequestration cuts, which they surely would. Obama would end up with massive tax increases and no spending cuts. Ba-da-bing. I was actually betting this is what would happen. It still might. So, the Republican glass half full view on yesterday’s Obama-Senate deal is that Republicans took a certain tax increase and muted its effect while having it impact fewer people. Bullshit.

I completely agree that the Republicans had little or no leverage. And, if their objective was to play small ball, they just laid down a nice bunt on the 3rd baseline. The problem is that there was nobody on base to move over so it made little sense to drop down a bunt in the first place. I think their (Republicans) and our (Americans) only hope on the economy is for Republicans, painful as it may be in the short run, to offer another path. A path of lower taxes, pro-growth policies, and massive cuts in government spending (like abolishing numerous federal agencies and programs outright). In other words, they need to play for the long ball. I understand they don’t have any power to do any of that right now, but caving to higher taxes, while getting $1 in spending cuts for every $41 in new taxes is hardly another path. It’s the same path with a twist, but from the other party. We now have the party of higher taxes and the party of much higher taxes. And, the economy will suffer and the jobless will remain jobless as they have for the entirety of Obama’s presidency.

I read a quote in the paper today by some idiot Republican senator bragging that he prevented tax increases for 98% of his constituents. That’s a really messed up way to look at it. The top 2% (who would bear the brunt of the tax increases in yesterday’s deal) currently pay about 43% of all federal income taxes.  Please pause and re-read that sentence – 2% of the population pay 43% of the taxes; and they’re now being asked, in the name of fairness, to pay even more. Positively breathtaking. Thus, it is not only specious, but terribly misleading to say 98% of Americans won’t see a tax increase. What is relevant is that 43% of the tax base WILL see an increase and that 43% is by far the most productive part of the economy. And, they’re not only increasing income taxes on these folks, they’re increasing taxes on investment gains. In fact, that is the much bigger increase, from 15% to 23.8% on long-term gains. Hey, that’s a grand idea. The economy has been in the tank for 5 years; let’s put higher taxes on growth and investment! Yippee.

So, when we get to the mid-term elections in 2014 and the 2016 presidential election and the economy is still in the tank and we’ve moved even closer to the Obamian dream of the Eurosclerotic model of socialism, voters will have no reason whatsoever to vote for Republicans any more than they will Democrats. They will be equally complicit. I can’t envision even a single voter getting excited by a Republican campaign speech that says, “Hey, I know I pushed the economy farther into the abyss, but I took a stand. I raised taxes for sure and I did so on the most productive part of the economy. But, I didn’t raise them as much as I could have!”  I think a better path is to stand on principles, take your lumps in the first few innings of the game, but offer voters a real choice going forward. The liberal socialist path of higher taxes and more spending HAS NEVER WORKED. Not in this country. Not anywhere. It hasn’t worked for the last 4 years. It isn’t going to work for the next 4 years. In what altered state of reality would Republicans want to be any part of it vs. offering voters a different choice.

Maybe we avoided a cliff, but we did so by running into a brick wall. How can that possibly be any better?

I know most of this is probably fantasy because the two parties have been indistinguishable on these points since Reagan left office. But, a boy can always dream.

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About Bruce Robertson

Bruce Robertson is an amateur writer and professional provocateur
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3 Responses to Did We Avoid a Cliff?

  1. Andy Brusman says:

    I’ve decided to just stop reading everything and wait and see your summary. I hate to admit it, but I am just tired of all the bullshit in DC. I truly believe that it is impossible to get anything done in today’s political world. My only hope is the Seahawks kick the Skins ass this weekend.

  2. Not only did I read your sentence again, I will quote it back right here: “The top 2% (who would bear the brunt of the tax increases in yesterday’s deal) currently pay about 43% of all federal income taxes.” I have some questions about this, because I have always found this a slippery statistic. I have no idea where to look for the answers, but since you are a self-professed data-driven guy, you can probably fill me in.

    Question 1: how much of the country’s income do the top 2% of wage earners control? This is probably impossible to answer, since it’s hard to measure out exactly how much of Corporation A’s stock Billionaire X owns, but I’m wondering if there’s an estimate out there.

    Question 2: how much of the country’s annual income do the top 2% earn? I know I’m an ignoramus, but even I won’t accept “2%” as an answer. If the top 2% earn, say, 75% of the total income earned in the US, then paying 43% of the taxes sounds like a good deal. If they earn 5% of the total, maybe it’s less of a good deal. If we have 10 people, and 9 earn $1 a year and 1 earns $1,000,000,000 a year, that one (10% of the population) is going to pay way more than 10% of the expenses of the group (I would hope – or is this European socialism??). To people like me, you can throw around a lot of %s and do more obfuscating than clarifying.

    Question 3 (starts with a statement): I had dinner the other night with yet another cousin. He likes money, always has, and he earns plenty. I got the feeling that, given his love of money, if his tax rate goes up from 35% to 40% (making up the numbers here), he’s unlikely to say, “I guess I’ll stop trying to make money now.” Given that most of the people I hang out with make under 75k a year, I’ll put the question to you: do people earning over $1 million a year lose their drive if the tax rate goes up? Does the CEO of, say, Citibank (I’m assuming he or she (hah) makes over 75k a year) decide not to invest any more money when her tax rate rises a few percentage points? Otherwise put:

    Question 4: is your issue one of principal (rich people don’t “deserve” to have to pay taxes) or one of economics (the country will fall apart if rich people have to pay more taxes)? Or is it a matter of who deserves what (if the really wealthy pay more, it will be “redistributed” to people who don’t deserve it because they are lazier, stupider, or don’t give a shit)?

    Question 5 (starts with a statement): right now, people like me don’t have a lot of loose money floating around. I’m told that the reason the economy is not doing so well is that “we the people” aren’t buying stuff (if you think this is false, please explain). I am told that corporations have plenty of money, but aren’t spending it. I think you have indicated that this is because they have a fear of the rising expenses of ObamaCare. Is it possible that it’s also because it doesn’t make sense to make more shit when people aren’t buying your current shit? Meanwhile, rich folk can buy anything they want – they are rich. So doesn’t it make sense to try to keep money in the hands of people like me, who need every penny and will spend what they earn, and tax people like Bill Gates a little more?

    Question 6: if taxing the rich is such a tremendous drag on the economy, should we in fact get rid of all taxes on the rich? Isn’t the logical end of the argument that we should only tax those earning UNDER a certain amount, since they are not the engines of job creation?

    You have 60 minutes. Go.

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