Senate Republicans Cave, Pass $620 Billion In Tax Increases
The fiscal cliff was supposedly “averted” late last night, as the Senate voted 89-8 on a “deal” brokered between Republican Senate minority leader Mitch McConnell and Vice President Joe Biden. The details…
The bill raises income tax rates for those taxpayers with incomes more than $400,000 for individuals and $450,000 for couples from 35 percent to 39.6 percent. These higher income taxpayers will also pay higher rates on investment income, with rates on dividends and capital gains rising from 15 percent to 20 percent. Add the 3.8 percent ObamaCare surcharge on investment income — another tax that takes effect in January, and the top rate on investment income would rise to 23.8 percent for those high-income households.
The bill also raises taxes on couples earning more than $250,000 a year and single people earning more than $200,000 by limiting personal exemptions and itemized deductions.
Estates taxes will also be increased, with the top rate raised to 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates.
Of course, with no deal it might have been worse.
This has been scored as a $620 billion tax increase. But as Rand Paul notes, sometimes you raise taxes and get no additional revenue. Anybody who actually thinks we’re going to get $620 billion in additional revenues out of the rate increases in this plan is an idiot.
Washington is covered with idiots, so naturally they’ll count on every dime of that $620 billion coming in.
And there are supposedly spending cuts, too. A grand total of $15 billion of them. Which means there are $41 in tax increases for every dollar of spending cuts.
Those aren’t cuts, naturally. They’re reductions in the rate of increase. Because Washington budgets increase organically every year regardless of anything else. And our “leaders” all know how idiotic those automatic increases are in a time of budget deficits, but nobody – not even people like Paul Ryan, who recognizes the problem and honestly wants to fix it – has the stones to demand Washington spend the same amount of money it spent last year.
House Republicans, some of them anyway, say without spending cuts this deal is worthless. Of course it’s worthless. But they’ll pass it anyway, in all likelihood, because they’ve given away their leverage and to vote against it will make them look intransigent and mean – and we certainly can’t have the Washington Post and NBC News saying that a Congressman whose district does not include Washington and New York City is intransigent and mean.
Because to be criticized by the Washington Post or NBC News – or Heaven Forbid, The Hill or POLITICO – is the worst possible thing that can happen to a Congressman from Dayton or a Senator from Nebraska.
This deal’s only virtue is that it beats – slightly – the tax consequences of no deal. Except that now the GOP will be on record as supporting tax increases on rich people. That virtue has been lost. And it was the Obama administration’s objective all along. Fox News’ Chad Pergram tweeted this morning that his colleague Ed Henry got a quote from White House staffers saying that getting the GOP to break their tax pledge is, “One of the most consequential policy achievements of the last couple of decades.”
They’re going to spike the football over this deal when Boehner twists arms to pass it.
Five Republicans in the Senate voted against it. Rand Paul and Marco Rubio voted against it. So did Mike Lee, Richard Shelby and Charles Grassley.
David Vitter voted for it. His statement…
“This is a much better tax outcome under Obama than I would have guessed. It preserves the Bush tax cuts for 99 percent of Americans, with good policy on the death tax, dividends and capital gains, so important to small business. Just as importantly, it makes it all permanent, which we could never do before. But of course we still must pass real and dramatic spending reform. For me, that’s a non-negotiable requirement of all budget or debt limit bills, due around March 1.”
Sounds like a lot of Tabasco sauce poured on a crap sandwich.
Maybe we shouldn’t be too hard on Vitter for serving us a crap sandwich. It’s Washington, after all. Virtually all Washington offers is crap.
Washington runs the finest military in the history of the world. That’s a great achievement. The military wastes money in breathtaking amounts, but at least the overall quality of what it produces is there.
Our foreign policy is crap. Our diplomacy is crap. So is our intelligence product.
Our fiscal and economic policies are crap. Our energy policy is crap. Our agricultural policy is crap. So is the quality of our bureaucracy. So are our environmental policies, trade policies, health care policies, monetary policies…you can go on and on.
We’re going to hold Vitter to his word, because he’s right that if it’s impossible to get a deal from Obama on taxes worth having with no leverage, then maybe the only hope of trying to rein in federal spending is the debt ceiling – where the GOP-controlled House has all the leverage.
But only if they’re actually willing to go over THAT cliff. As in, a government “shutdown” when no debt ceiling increase is passed. It’s not actually a shutdown, mind you – the government will continue to collect revenues and can run on those revenues; it just can’t borrow any more money.
It’s fantasy, of course, to expect the GOP congressmen to have the balls to hold to that position. The Washington Post, New York Times and NBC News would say all kinds of mean things about them if they did, and we’re only 22 months away from another election.
But that is the only thing left to do. Starve the federal government using the debt ceiling as a tool, and force the powers it can’t afford to exercise back to the states where they belong.
When there is no money for the federal Department of Education, for example, the feds can no longer make policy on education and the states get the freedom to do what works for them.
It’s the kind of thing which has to happen. But it won’t. Because all that is possible in Washington is crap.
Last night’s vote proved that.