And so Congress has passed a bill to avert the fiscal cliff. Details about what it contains are difficult to come by at this early stage.
A few things are known, however, and they should anger every citizen. We are being told that this bill does not raise taxes for all but the highest-earners. This is a lie. This bill does not renew the payroll tax cut enacted two years ago. According to the non-partisan Tax Policy Center (an organization with a solid track record of fairness and accuracy), this will cost the average family $1,635 per year in additional taxes. If you get paid every two weeks this means your paycheck will go down by $63. So much for the vaunted concern our politicians have for the middle class. This tax hike will take place immediately, and it will inflict the most pain on low- and middle-earners.
This tax hike will exert a powerful drag on our economy. By lowering the cash almost every household in America has to spend, it will decrease consumer spending, thereby lengthening the already historically slow recovery we have experienced.
According to the Congressional Budget Office this bill raises federal spending. Over the next decade the CBO estimates it will add an ADDITIONAL four trillion dollars to our federal debt. (The debt now stands at roughly sixteen trillion. So this bill increases our debt by about 25%.) The CBO's report states that even if the most creative, generous accounting were used, the ratio of higher taxes to (theoretical) spending cuts is 41 to 1. That is, for every $41 added in new taxes we are supposedly going to save $1 in lower federal expenditures. This, of course, is also a lie, as the federal government uses "baseline budgeting." (Hint: if you used baseline budgeting when applying for a mortgage the lenders would laugh you out of their offices.)
I certainly subscribed to the idea that Congress and the president needed to do the grown-up thing and address the fiscal cliff in a timely fashion. But never, not even in my most cynical moments, did I expect this disaster. As far as I am concerned they all share the blame: both parties, both houses of Congress and the president.
We voted for them. So I blame us, too.
