Whatever ultimately emerges from the fiscal-cliff negotiations over the past 48 hours, the country will survive. But the damage can't be undone. Taxes are going up for all working Americans. And so is the size of government.Technorati tags:
Businesses have been waiting to see whether a second Obama administration will encourage the economy. During the fiscal-cliff negotiations, however, the president made clear that his goal isn't to get business going again but instead to expand government and redistribute income. He offered no real spending cuts and instead used the year-end deadline to divide America into classes—to the point of campaigning on New Year's Eve against higher earners. Though the president talks about fairness, his policies penalize profit and investment. This hurts aspiring Americans more than it hurts those who have already made it.
The deal that emerged from the Senate early Tuesday morning is being sold as a tax cut for the middle class, but the expiration of the two-percentage-point payroll tax holiday means that working Americans' take-home pay will drop. The bill reduces the value of tax deductions for upper incomes and, with the new open-ended 3.8% Medicare tax that was enacted under ObamaCare, income-tax rates on families and small business owners earning over $450,000 have been pushed above 44%.
The Senate bill makes the tax code more complex, provides for no spending cuts and creates four deadlines—for the debt-limit increase within weeks, the March 1 automatic spending cuts known as the sequester, a second sequester on March 27 (to make up for overspending since the first sequester) and the March 30 expiration of government spending authority. These deadlines will keep Washington negotiations on the front page for months but with little likelihood that government will cut programs, sell assets or downsize the 1,300 federal agencies and commissions.
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