The so-called “Fiscal Cliff” that America faced on December 31, 2012 was really just another symptom of a bi-partisan leadership failure in Washington, D.C. However the biggest damage to the last minute deal that was signed could be to the Republican leadership, specifically John Boehner.
Obama got his tax increases, although they weren’t as much as he wanted. Despite the tax increases being only a partial victory, individuals earning over $400,000.00 per year and couples earning over $450,000.00 per year will see their taxes increase from 35% to 39.6%.
The tax increase is expected to produce $600 billion per year – if reported incomes don’t decrease – which is, sadly, a drop in the bucket towards getting the nation back on a healthy financial basis.
So what was the point?
Obama making a campaign point about “fairness.”
And since most of Washington has been tied up regarding whether taxes should be raised, injecting all this fiscal uncertainty just to make a point about “fairness” seems very immature.
We can’t simply cut our way to prosperity.
And the end result, according to the Congressional Budget Office, is $1.00 in cuts for $41.00 in spending.
And many Republicans supported this bill in the House and the Senate.
There were some exceptions to Republican support. Marco Rubio, Eric Cantor, and Majority Whip Kevin McCarthy didn’t vote yes.
Payroll taxes are also increasing which means that 77% of Americans will have the Government take more of their money from their paychecks. The LA Times estimated that will wipe $115 billion of discretionary spending out and, combined with the other tax increase:
Michael Feroli, chief U.S. economist at J.P. Morgan Chase, cautioned that the deal is a stopgap measure at most.
“What’s challenging is that we’re still going to have some slowing in growth because of the tax hikes,” said Feroli, who estimated Tuesday that the deal will subtract 1 percentage point from already meager growth. “What’s not good is that deficits are still going to be large and it doesn’t begin to touch the longer-term horizon.”
Obama said he’d raise taxes – and he did along with the help of many Republicans.