Posts Tagged ‘Fiscal Cliff’
On New Year’s Day, the Senate and House passed a “fiscal cliff” deal. The terms of the deal contain some good parts. But economic stimulus and job growth issues were largely ignored.
First, the agreement brought positive things. For the first time since 1990, a significant number of Republicans voted to raise taxes. The top income tax rate for the richest l percent of the population climbed from 35% to 39.6%. The estate tax went up marginally, and taxes on capital gains and dividends also increased a bit.
For struggling American workers, unemployment benefits were extended for a year. Five year extensions of tax boosts included the child tax credit, expanded earned income credit, and refundable tuition tax credits. The major social programs, Social Security, Medicare, and Medicaid, were not touched. Unfortunately the expiration of the payroll tax cut adds two percent to every working family’s taxes.
Tucked inside the last-minute fiscal cliff package were more than a dozen tax loopholes, many of which will benefit Wall Street financial firms and some of the nation’s largest corporations. Here are three of the more egregious of these subsidies. First, corporations can book U.S. profits in overseas, tax-free bank accounts. Second, U.S. multinationals pay no taxes on income earned by companies they own abroad. Third, businesses earning interest on overseas lending can defer U.S. taxes on that income indefinitely.
The fiscal cliff deal made no provision for dealing with other rapidly approaching cliffs: the postponed sequester (automatic cuts in domestic and military spending), the return of the debt ceiling, and the expiration of the continuing resolution to fund the government. This sets up another confrontation between the Obama administration and House Republican deficit scolds. These Republicans want low taxes for the wealthy, cuts in domestic spending, smaller government, and deregulation.
The media casts our biggest problem as excessive spending and the resulting budget deficit. So the debate centers on what to cut and how much to cut, a wrong-headed deficit hysteria. Federal deficits as a percentage of the total economy are dropping, and non-military government spending relative to the size of the U.S. economy remains the smallest of any other rich nation.
Rising government spending and declining revenues are mostly consequences, not causes, of the recession. You can’t fix the debt without fixing the economy. Deficit reduction will slow the economy further rather than fixing it as is evidenced by the austerity programs in Europe.
Our economy leaves working people behind while corporate welfare races ahead. Corporate profits soar while wages and other labor compensation decline. The median wage, adjusted for inflation, continues to fall even though the economy grows.
Just trimming the deficit fails to address the real problems of mass unemployment, stagnating wages, increasing insecurity, and rising inequality. We have a backlog of 12.2 million jobless workers looking for work, with additional millions too discouraged to even look. Job growth averaged 155,000 in November and December of last year, a rate half of what we need for a robust economy.
At a time when interest rates for borrowing are rock bottom, we should fund rebuilding and modernizing our crumbling infrastructure. Insourcing manufacturing, growing overseas trade, adding education programs, using clean energy, and investing in research and development also promote economic development. Reducing inequality can be done in several ways: raising the minimum wage, empowering workers to organize and bargain for a fair share of the productivity and profits they help to generate, limiting perverse CEO compensation schemes, and levying a tiny financial transaction tax.
Job growth and wage growth should be the central focus of economic policy, not deficit reduction. In short, we need stimulus spending, not austerity gutting.
The so-called “fiscal cliff” has been averted — but at what cost?
At the last possible minute, the Senate and House passed legislation that fails to address what should be our most important priority — supporting the middle class by creating jobs. It leaves the country in a position where we cannot generate the revenue necessary to meet our commitments to job training, to education, and other critical supports for the middle class.
But perhaps worst of all, this deal makes tax breaks for high-income earners permanent while only extending tax relief for lower-income and middle-class Americans for five years — locking in a tax system that is upside down and grossly unfair.
Furthermore, every dollar that the wealthiest taxpayers save through this plan will become a potential cut to Social Security, Medicare, or Medicaid benefits. After all, House Republicans have been vocal about their intention to cut these programs before raising the debt limit in just a few months. It would be naive to consider this “cliff” deal without also considering its impact on those programs.
Don’t get me wrong: I believe in compromise. But any compromise that permanently sets a new standard for the most fortunate among us while failing to fuel our economic engine — a thriving middle class — is something I cannot support.
This is a delicate time for our recovering economy, and it cannot sustain further damage. This was the wrong deal for Iowa and the wrong deal for our country.
While we didn’t get what we wanted, our stand did make an impact and kept this deal from favoring the wealthy over the middle class even more. That wouldn’t have happened without you joining me to take a stand and make your voice heard. Thank you.
I will be in touch over the coming weeks as we look ahead to a new year and a new Congress. There is so much to do to keep fighting for the middle class, and I look forward to working with you in 2013.
Best wishes for a happy New Year,
I have been of two minds on the compromise on the so-called fiscal cliff. However, I must give kudos to Senator Harkin for his unrelenting support of the middle class.
by Michael Tomasky
The fiscal-cliff impasse has its roots in—where else?—the old South, with its lunatic blend of obstructionism and greed at the public trough.
While most liberals were stewing at Barack Obama yesterday for his “capitulation” on tax rates, I confess that I was feeling philosophical about it, and even mildly defensive of him. He is negotiating with madmen, and you can’t negotiate with madmen, because they’re, well, mad. I also spent part of yesterday morning re-reading a little history and reminding myself that rascality like this fiscal cliff business has been going on since the beginning of the republic. So now I’d like to remind you. It’s always the reactionaries holding up the progressives—and usually, needless to say, it’s been the South holding up the North—and always with the same demagogic and dishonest arguments about a tyrannical central government. We’ll never be rid of these paranoid bloviators, and if no other president could stop them I don’t really see why Obama ought to be able to.
From the blog Liberals Unite
By Brandon Weber
Independent Sen. Bernie Sanders of Vermont said when interviewed on MSNBC that Republicans were solely to blame for the lack of a budget deal to avoid the fiscal cliff.
“The problem that Boenher will have in the House is that his caucus is dominated by right-wing extremists who are very hesitant, who will do everything they can to prevent the wealthiest people in this country and the largest corporations from paying a nickel more in taxes.”
When asked by an MSNBC journalist, “Aren’t both parties to blame there in Washington?” he shot back, “No!” and proceeded to explain why.
My favorite part of the budget negotiations is when a glum-looking John Boehner — backed by the vulpine Eric Cantor, eyes blazing — steps in from of the cameras and accuses Barack Obama of “not negotiating in good faith.” And he does it with a straight face.
Apparently, good faith negotiation to a Republican consists of demanding unconditional surrender and an apology for disagreeing in the first place. This qualifies as theater of the absurd. Republicans can’t even negotiate in good faith with each other, for crying out loud, let alone with the president of the United States.
I had high hopes. I admit it. The economy was starting to revive, we had beaten the barbarians back from the gates of the city in the election and Mr. Obama seemed informed by a new resolve.
I was encouraged by Obama’s tough talk at the onset of the budget negotiations. He was prepared to cut the size of government and gradually reduce Social Security benefits through a complicated formula, yes. But he was also going to let tax rates rise by a few percentage points on income of more than $250,000 to even things out.
That wasn’t good enough for the Republicans. They kept holding out for no rate hikes on the rich, instead leaning heavily on taking money and benefits from the sick and the disabled to balance the budget.
Then Obama offered to raise the tax threshold to incomes of $400,000 or more.
“Oh no,” I said to myself. “He’s starting to negotiate with himself again. He always does that and he always loses.”
But then John Boehner, the Republican Speaker of House, started to negotiate with himself too. He offered to accept a tax rise for incomes of $1 million or more.
This, of course, was unacceptable to Democrats but, as it turned out, the Republican knuckle-draggers in the House wouldn’t go along either.
So, at this writing, there we are, on the very edge of the fiscal cliff with no easy way back. (Republican conservatives have an ancient Greek warrior streak in them. They stake out a position, then burn the boats they came in.)
As President Obama and House Speaker John Boehner continue negotiations on the so-called ‘fiscal cliff,’ I have one simple message: hands off Medicaid!
Federal health programs that millions of Americans rely on should not be on the bargaining table. Slowing the growth of healthcare spending is certainly necessary, and that’s why I was proud to sponsor the most significant healthcare reform in decades: the Affordable Care Act – a law that tackles cost containment from every angle, while providing essential care to Americans who need it most. By 2014, the Affordable Care Act will cover 180,000 Iowans who are currently uninsured. Cutting Medicaid funding now will only hurt the poorest Iowans and shift costs to beneficiaries, taxpayers, and state government.
I have also been concerned by Governor Branstad’s resistance to Medicaid expansion. This is not what the people of Iowa voted for in November. A large majority of Iowans rejected the Republicans’ plans to repeal the Affordable Care Act and to dismantle Medicaid. It’s time for the Governor to do what Iowans want.
Stopping the expansion of Medicaid will cost Iowa an estimated $140 million in “uncompensated care” – care that people currently get for free when visiting the emergency room. If the state expands this program, Medicaid spending in Iowa is projected to actually decrease by 2.6 percent and over the next decade – Iowa could save almost $2 billion if our state fully participates in the insurance exchanges and the Medicaid expansion.
The Medicaid program is a lifeline to hundreds of thousands of middle class American families who have children with lifelong disabilities, including Down syndrome and autism. Instead of cutting these families off from a critical lifeline, we should strengthen the long-term financial viability of the program and reassure these families that America will not turn its back on them when they need help the most.
It’s time to concentrate on the real issues in this ‘fiscal cliff’ debate, beginning with the need for the most fortunate and wealthy Americans to pay their fair share in taxes.
For more information, including recent statements and speeches on this issue, please visit
It is also the day that union members and their community allies will be holding demonstrations and making calls to Congress to block cuts to Social Security and Medicare/Medicaid as part of the “fiscal cliff” negotiations.
The AFL-CIO has sponsored call-in efforts to Congress in the last few weeks, lobbying them on the issue. Monday is a National Day of Action that will target nation-wide calls to members of Congress as they wind down their lame duck session negotiations.
When Social Security was passed in the 1930s, half of American seniors lived in poverty. Research shows that even now, long after the end of the Great Depression and despite the advent of other anti-poverty programs like housing vouchers, food stamps and Medicare and Medicaid, if Social Security didn’t exist, half of seniors would again be thrust into poverty. It is unconscionable that anyone in Congress would consider making cuts to these programs when there are still unnecessary and enormous corporate subsidies to Big Oil, Coal, McDonalds, Walmart, John Deere and countless other head-over-heals profitable industries at every level of government.
But the conventional wisdom you hear repeated everywhere in our culture is that of a meritocracy: you work hard you prosper – you be lazy, you deserve no handouts. This simple-minded ethic is flat-out wrong on so many levels (we are constantly subsidizing profitable enterprises, and our nation’s largest demographic are the working poor), but it’s insulating on a deeper level. Taking care of our most vulnerable people – especially at the time when they are no longer in their role as “productive” workers in society – is what defines us as civilized and not barbaric.
So please join one of the actions taking place in Iowa on Monday.
And if you can’t be there in person, please call in, directions below.
1.Dial – in Toll Free: 888-659-9401
2.Listen to message instructions
3.Press 1 to be directed to Congressperson or 2 to be directed to Senator
4.Enter your Zip Code
5.You will be re-directed to their office
If you reach a real person, please share with them how you personally are affected by Social Security, Medicare or Medicaid. Be sure to give them your home address and urge them to preserve and protect these important programs.
Burlington: CONTACT: Midge Slater, 515-250-4873, email@example.com
CAMPAIGN AGAINST CUTS
WORKERS WILL THANK CONGRESSMEN LOEBSACK FOR HIS SUPPORT IN NOT MAKING CUTS IN SOCIAL SECURITY, MEDICARE, OR MEDICAID AND NO TAX BREAKS FOR THE RICHEST 2%. On Monday, December 10 Iowans will hold a Candlelight vigil and press conference at the Burlington Public Library, 210 Court Street, Burlington, IA. They will be releasing a report that shows the impact of these programs on Iowans and asking their Congress people protect programs such as Social Security, Medicare and Medicaid.
5:00: Candlelight vigil in front of the library
5:15: People move inside to Meeting Room B for press conference
Speakers: Midge Slater, Iowa Alliance for Retired Americans/Ryan Drew, Treasurer, Des Moines, Henry County Labor Council/Jared Hershberger, Staff, Congressman Dave Loebsack
Where: Sen. Chuck Grassley’s Davenport office is located at 201 West 2nd Street.
For further information, please call 309-788-1303
Members from organized labor unions, Alliance for Retired Americans, Progressive Action for the Common Good, MoveOn, and numerous faith-based organizations in the Quad Cities will be rallying outside Sen. Chuck Grassley’s (R-IA) office in Davenport, Iowa at 4:00pm to make clear the following: “NO to tax breaks for the Richest 2% and NO to cuts in Social Security, Medicare, or Medicaid benefits.”
In one of the most prosperous countries in the world, everyone should be able to retire with health and dignity. Working families across the country have made it clear that we need to protect Medicare, Medicaid and Social Security benefits. Millions of working people, jobless people and retirees shouldn’t have to sacrifice their health care and retirement security so that the richest 2% can continue getting more tax breaks. It’s time for our elected leaders to focus on creating an economy that invests in jobs, healthcare and education for all.
DES MOINES: 300 East Locust, Des Moines: 4 PM to 5 PM
AMES: 1421 South Bell Avenue, Ames : 4 PM to 5 PM
CONTACT: Lance Coles, 515-669-8046. firstname.lastname@example.org (Des Moines Event)
Charlie Wishman, 515-262-9571, email@example.com (Ames Event )
WORKERS WILL GATHER OUTSIDE LOCAL CONGRESSIONAL OFFICES TO THANK CONGRESSMEN BOSWELL AND LOEBSACK FOR THEIR SUPPORT AND ENCOURAGE LATHAM TO MAKE NO CUTS IN SOCIAL SECURITY, MEDICARE, OR MEDICAID AND NO TAX BREAKS FOR THE RICHEST 2%.
On Monday, December 10 Iowans from around the state will gather in front of the Iowa offices of Congressmen Boswell and Latham, asking them to protect programs such as Social Security, Medicare and Medicaid.
These Iowans will also be asking these Congressmen to stop the tax breaks for the richest 2% as well.
In a post-election “lame-duck” session, Congress is taking on high-stakes decisions with major consequences for working people and the economy.
Polling after the election clearly supports that the majority of American is saying no to the tax cuts for the top 2% and no to cuts in Social Security, Medicare and Medicaid. “We want to thank Congressman Boswell for standing with working Iowans,” said Charlie Wishman, Secretary/Treasurer of the Iowa Federation of Labor. ” The voters made it clear they want the rich to pay more in taxes, without making cuts in programs like Social Security.”
“We will continue to demand that members of Congress and the President stand up for fairness and economic security and refuse to increase already raging inequality during the lame-duck session in Congress”
Rep. Tom Latham was presented with a golden opportunity today to put partisan politics aside for the good of the middle class families he represents and to help avoid pushing our economy off the ‘fiscal cliff’. Reportedly, the Democratic leadership in the U.S. House filed a ‘discharge petition’ that would force a vote on legislation passed earlier this year in the U.S. Senate – and that GOP House leadership has ignored — to allow the Bush tax cuts to expire for those making more than $250,000 a year while preserving them for 98% of Americans and 97% of small businesses. The petition requires at least 218 signatures to bring the bill forward, making bipartisan support essential.
In response, Progress Iowa called on Rep. Latham to immediately sign the petition and send a message that when it comes what’s best for Iowa, he is not beholden to selfish special interests or his/her irresponsible party bosses — a message that it is not worth holding middle class families tax relief hostage a minute longer to protect tax breaks for the richest 2%.
“While the recent election results clearly have not sunk in yet for Congressman Latham, he would be wise to examine recent polling,” said Matt Sinovic, executive director of Progress Iowa. “Latham may not realize it yet, but he and his party will be held responsible in if Congress fails to act and allows taxes to go up on every Iowa family at the beginning of next year. A typical middle-class family of four would see its taxes rise by $2,200; that means less money to buy groceries or fill a prescription. That means a tougher choice between paying the rent and paying tuition. Fortunately for Latham, he can help avoid all this by joining this responsible effort to prioritize middle class families over millionaires. Time is running out. Latham can show he is a true independent voice for Iowa by signing the petition and sending the middle class tax bill that his constituents and Iowa small businesses want to the President’s desk now.”
Editor’s note: While we’re on the subject of Tom Latham, remember when he publicly ridiculed bike lanes? Apparently assuming that bicyclists don’t also own and drive cars, he said that every biker is “one less person paying into the transportation trust fund.”
With Congress back in session, it’s time for Chuck Grassley and Tom Latham to work for us and end the Bush tax cuts for the top 2%.
Tell Sen. Grassley and Rep. Latham it’s time to end the Bush tax cuts for the richest 2%. Click here to sign the petition.
After you’ve signed
As part of a national day of action, we’ll be singing “Fiscal Cliff Carols” outside the Ames office of Rep. Latham at Noon, and the Des Moines office of Sen. Grassley at 3:30 p.m. (here’s Matt with some volunteers warming up).
Will you join us this Saturday?
Click here to sign up to join us at Rep. Latham’s office at 1421 S Bell Ave in Ames at noon.
Click here to sign up to join us at Sen. Grassley’s office at 210 Walnut Ave in Des Moines at 3:30 p.m.
Wall Street bankers and corporate lobbyists are committed to protecting their loopholes and giveaways. They’re taking action to make sure many of our nation’s CEOs continue to pay lower taxes than their own secretaries.
That’s why we have to work even harder. If we gather enough signatures and show our legislators that we’re committed to making sure fat cats pay their fair share, we’ll win.
Will you join hundreds of Progress Iowa members from across the state and ask Senator Grassley and Rep. Latham to stand with Iowa families?
Click here to tell Grassley and Latham to protect Medicaid, Medicare, Social Security–not more tax breaks for the super wealthy.
Thank you for all you do,
P.S. Once you’ve signed the petition, forward this message to your friends — and be sure to visit our new website, www.iowansfortaxfairness.com!
Will anything get done in the lame duck session of congress between now and the end of year holidays? The answer is yes. Like during the 2010 lame duck session, expect congress to get some stuff done, and the debate will be engaging. First will be dealing with the so-called fiscal cliff, and an easy prediction is that the country will avoid it.
On Nov. 6, just after the results of the election were known, the conservative Heritage Action released a video titled “Stand with Us,” that asserted “the election is over, but the campaign isn’t.” The video was a little scary with the closeup shots of Heritage CEO Michael Needham, and a musical score that sounded like it was from the movie “the Omen.” They warned viewers to be on the lookout for “Taxmageddon” (a.k.a. fiscal cliff) coming Jan. 1, 2013.
President Obama had other ideas about the fiscal cliff, which he expressed in his weekly address last Saturday. It is worth watching.
According to Thomas Kenny, “’Fiscal cliff’ is the popular shorthand term used to describe the conundrum that the U.S. government will face at the end of 2012, when the terms of the Budget Control Act of 2011 are scheduled to go into effect.
Among the laws set to change at midnight on December 31, 2012, are the end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, the end of the tax cuts from 2001-2003, and the beginning of taxes related to President Obama’s health care law. At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect.”
Either congress will kick the can down the road, or they will come together with a solution. If they attempt to extend rather than solve, then watch President Obama’s reaction. He made his position clear, saying, “if Congress sends me a clean bill extending the tax cuts on the first $250,000 of every family’s income, I will sign it right away.” After winning the election, President Obama has some political capital, and using it here makes some sense.
Other things to watch for in the lame duck session?
Will Social Security be on the table as the fiscal cliff is averted? Stay tuned, Harry Reid said no.
Senator John Kerry indicated he will call up the Law of the Sea Treaty for ratification, even though 34 senators have said they are against it (two thirds majority needed for ratification). The treaty is perceived by conservatives to infringe on American sovereignty, and they are against it. How dare the United Nations attempt to update laws in place since the 17th Century when international waters were defined by how far a cannonball flew from shore?
The farm bill may come up during the lame duck session, but don’t look for anything but an extension here. The types of reform needed are to end big ag subsidies and reform SNAP (food stamps) and other nutrition programs. There does not appear to be enough time to do either. While people on SNAP view the farm bill as a matter of survival, conservatives view it as a $1 trillion boondoggle.
Immigration reform and the DREAM Act. We’ll see if all the Republican talk about immigration reform is more than a cynical ploy to gain support among Hispanic voters in 2014.
Changing the Senate rules on the filibuster: I bet it gets filibustered.
Regardless of what happens, the lame duck session will be anything but lame.