This was only a one-time leverage point that has now been used up intentionally thrown away

What were once the Bush-Cheney tax cuts are now
the Obama-Biden permanent underfunding of the US government.

“This law is just one step….the deficit is still too high…..initially tried to negotiate a larger deal…..that failure comes with a cost……last yr I signed 1.6 trillion in deficit reduction. There will be more deficit reduction…..I agree …Medicare the biggest contribute to the deficit….must reform tax code……we have to do it in a balanced way….blah blah blah….debt ceiling….bills have to be paid….deficit needs to be reduced but in a balanced way, everyone pays their fair share……cut spending and raise revenues….(Biden blinking alot)….Hippo Nu Yr.”

I guess voting for Obama and the Democrats is really working out for the progressive cause. Other than the post on Ameriblog this is the only correct assessment of the fiscal cliff mole hill I have seen. Grover Norquist won.

http://americablog.com/2013/01/breaking-bush-tax-cuts-have-expired-no-law-has-replaced-it.html

The average worker saw a 2% more of the paycheck going to Uncle Sam. High earners saw a bigger bite.

Make it stop I can’t take anymore. Stealing grandma’s SS and Medicare so Newt can buy his trophy wife another diamond bracelet from Tiffany’s. And Obama can’t stop it. Doesn’t really want to. Wtf is wrong with these people.

How quaint the days seem when the sunsetting of the Bush tax cuts in January 2011 was the one saving grace of the whole boondoggle :)

And a big hurrah for FIRE!/s
a sideplate of corporate pork of significant proportions:

HERE.HERE

And taxes for the working class go UP.

How is it possible to call “this new law was a massive tax cut for everyone” when it’s been called the Bush Tax Cuts For The Rich for over 10 years.

Someone’s been lying.

That little technical dodge in timing is how Biden got McConnell to get the bill passed.

Of course it’s PR. Sheesh, we are talking about US politics here. There are no non-PR statements from elected officials.

It was a one-time leverage point, and the White House used what leverage it could wrangle out of the Senate and House Democratic caucus.

As best I can tell, except for the farm bill, most all of what the bill did was restore the status quo before the sequester and fail to enact tax cuts for certain categories of individuals and businesses.

The importance is is in what of the tax cut expiration and sequester did not get reversed, not in what was in the bill, most all of which was status quo on Dec 28.

Probably the points that need the most analysis from within the bill itself are the middle class tax cuts; What did they do for ordinary folks? And the Medicare items. Is the “doc fix” permanent? Does it shift so that primary care and prevention services can get adequate reimbursement and specialist services are not cash cows?

Some analysis of the details is preferable rehashing the marquee items.

my rep chellie pingree voted for this fustercluck, which was predictable because she has no courage of conviction. Worse, she doubled down with a tweet about “wasteful spending” which, as we all know, is dog whistle for cutting programs to help the sick, elderly, and poor.

So in 2010, folks were angry about cutting the payroll tax because it endangered Social Security and made the argument that Social Security would be underfunded easier to make. Now folks are angry that the sunsetting of tax cuts but into the 2010 cut was allowed to occur and the tax cuts in the bill did not reverse that.

Isn’t the increase in the payroll tax the only tax increase that folks with incomes under $400,000 will see?

And lurking in the background is the letter that Tim Geithner sent to Congress on December 31 saying that the debt had reached the $16.4 trilion ceiling and that the government was borrowing money from the civil service retirement fund for operations, to be paid back after Congress raises the debt ceiling.

In other words, by the calculus used by the negotiators, the Democrats gave up something and the Republicans nothing. Thus an ominous precedent has been established for the debt ceiling negotiations. (This was a great analysis, by the way).

As I understand it, the farm bill is status-quo too. The bill simply extends last year’s farm bill for nine more months.

Of course what you say is a fact.
But where are the tax credits of yesteryear.
You think I am being angry? I am just pointing out that this is a loss of income that is unecessary.

Making Work Pay. tax credit was lost under Obama. Obama did not fight for the working class when he knew the switchout and switching back in of the payroll tax cut would be a tax hike for the working class.

http://en.wikipedia.org/wiki/Making_Work_Pay_tax_credit

Yes you may be right about the history, but I am right about the ‘cost’.

You are right, every one was angry that they cut the S.S. rate. It doesn’t bother me that that went back up. The tax increase at the $450,000 level don’t really bother me either, I would have rather seen all the tax cuts expire and seen the spending cuts eliminated except for the military. It would have been good to take the military spending cuts and use that money for increased domestic spending.

The big corporate give away that people aren’t talking about is the foreign loophole Subchapter F. Which allows US companies to keep their profits oversees tax free, which was extended in this bill.

THD @12

I generally agree with your take on this.

A few technical points.

Individuals under $4O0K will see an increase other than the 2.0% FICA restoration. Specifically, at $250K PEP [personal exemption phaseout] kicks in and at $300K PEASE [itemized deduction limitation]kicks in.

In addition, as a consequence of ACA, beginning yesterday, a 3.9% surcharge is being imposed on passive income above $250K [cap gains, dividends, etc] and a 0.9% surcharge on earned income above $250K.

A tax increase on income over $400,000/$450,000 is not nothing. Because the bill reverses the sequester and restores only some but not all of the tax cuts, it is hard to say what the Republicans got besides restoration of a lot of the business tax cuts and a partial restoration of estate and capital gains tax cuts.

Thanks for these details.

So the only hit on incomes under $250K is the expiration of the payroll tax. Most everything else is status quo. And there are some hits on folks with incomes above $250K, just not in the ordinary income tax rates.

THD @ 19

Yes. But, I would caution, at this point I have not received an/or reviewed any professional analysis of this legislation.

Delong sees the permanent nature of the tax cuts as a big problem.

Obama-Biden permanent underfunding of the US government

Allan, allan, allan. If you look at it THAT way you’re just being…uh….well.. kinda, sorta….accurate.

Re: Corporate Loophole

With all Obama’s talk about closing corporate loopholes for businesses outsourcing jobs it takes a lot of gall to sale this deal with a straight face to progressives.

Around here, it pays to set the limbo bar really high so the US government can get under it.

Allan @21

How are they permanent? One Congress cannot bind another Congress. These tax measures, like all other tax legislation, are written on paper, not chiseled on granite. They can be changed at any time by Congress.

I agree with you. Of course, when do I not. Listening to our legislaturds explain things like this is like listening to Norm Crosby or Professor Irwin Corey.

Nothing is permanent with Congress. But it is easier to raise taxes in boom times than in recession. In fact, raising taxes in boom times or having automatic tax stabilizers that kick in based on economic activity can moderate booms and avoid bubbles and crashes.

But if the middle class tax cuts are permanent that those rates, it limits what can be done to move the economy and increase employment and it makes the deficit and debt reduction slower without spending cuts (hint: national/homeland security overbloat).

Don’t read their lips, read the bill.

$16.4 trillion. I think this whole thing is getting out of hand.

Remember the good ol’ days when the national debt was just a few hundred $$billion$$ ???

Happy New Year! OldGold

We are clapping at how Obama and Nancy produce this Kabuki show! It was Oscar Worthy!

I expect more fireworks, dancing trojan horse Dems, crying trojan horse Dems,when Obama, Nancy, Reid, have Dems vote to cut Social Security, Medicade, and Medicare in a few weeks.

I think real progressives should write the trojan horse dems in congress, and tell them let us stop all the Drama, just laugh, jump around for joy, smile, when you cut Social Security, Medicare, and Medicade. ” no one needs to hear these lying sad stories about how the bad GOP made U cut Social Security”

Grover Norquist? won last night “History will say Obama always loss to Morons! thus Obama must have been a Moron or not intelligent at all? Worst Dem president ever title will belong to OBAMA”

GOP members voted for a tax cut last night! not a tax increase? and a lot of GOP members did not vote for tax cuts, which was amazing and strange? can u say party of the STUPID!! but they always find a way to beat Obama.

Oldgold? we all love how OBAMA lied last night? really Obama is not going to let the GOP hold the world hostage over the debt ceiling? does anyone believe this? NO

Oldgold? after Obama cuts Social Security, Medicare, and Medicade, this should end his second term. Obama will leave the WH like Bush 2 did?

Oldgold? I foresee Reid and Nancy trying to protect Dem Senators up for election in 2014 from taking the vote to cut Social Security, Medicare, Medicade?

Oldgold? what do you think will be the Obama, Reid, and Nancy game plan for killing Social Security, Medicare, and Medicade?

Oldgold? I also think the leaders of the following groups should resign or be fired
AFL CIO
MoveOn-org
Progressive Change
because every Trojan Horse House Dem kick them in teeth last night? “MoveOn-Org letter encouraging people to call and tell their congress critter to vote no was Hillarious!!!”

Thanks for the link.

I trust you and yours had a Happy New Year???
Still got the same number of fingers as last year???

I still don’t know why I should worry about the debt or the deficit. I know lots of folks get the vapors over it, but I don’t see it. Maybe that’s why I should worry, bc you are?

There is certainly a self imposed limit on our debt. That is something of a crazy law, sort,of like a suicide pact.

What I haven’t heard anyone say (except me) is that if voting FOR this bill was not a violation of the Grover Norquist anti-tax pledge because it was technically a vote for a tax DECREASE (since we had already gone over the cliff at midnight 12/31),then voting AGAINST this bill was technically a vote for a tax INCREASE and all those GOP Senate and House members who voted NO violated their pledge. In other words, Norquist can’t have it both ways. If a “Yes” vote was a tax decrease and therefore ok, a fortiori a “No” vote was a tax increase. So Norquist should be flogging those members of Congress who voted against the bill, right?

– Dave (Proud Not to Own a Gun)

It has tripled since the first day George W. Bush took office. And Gore was campaigning to cut it to $2.5 trillion in ten years and keep a lock box on Social Security. Wall Street and Alan Greenspan were in a political panic.

Here’s why. The interest payments on that portion of the national debt that does not go to the Social Security Trust Fund is one of the biggest upward transfers of funds from ordinary taxpayers to the well-to-do and corporations in the budget. At least $200 billion or so every year. (One of the few benefits of Bernanke keeping interest rates near zero is that T-Bill interest rates that the government has to pay are low.

That reverse-Robin-Hood effect is something that progressives should bear in mind about the debt. It does indeed need to be paid down at some point just to stop that unhelpful transfer of funds. But writing off the money owed to the Social Security Trust Fund is not paying down the debt; it is theft of the same kind as the corporations who borrowed from their underfunded pension funds and then left retirees without income.

And you need bottom-up money circulating in the economy to stimulate the economy. It doesn’t matter whether it is borrowed or printed. As long as there is no major resource shortage, it will not be inflationary.

Yep. But don’t expect anyone to make that case to the deficit concern trolls.

So Obama has again traded something for nothing (or did he actually get exactly what he wants?) and the dim apologists are out in force.

Lather, rinse, repeat.

Personally, when it got over $3 trillion, I sorta quit being concerned.

I am afraid, however, that that is what caused the Greece problem. I rather avoid being a lead character ion the real life play.

dave: I think I understood what you said.

Outstanding analysis as always. When yo explain it like that it makes it so simple. Why can’t our elected legislaturds understant it????? Is it maybe they are owing some third parties who benefit from our predicament????

Naaahhhh. Couldn’t be that.

Greece is not a currency issuer. We are. Makes a big difference.

The difference between us and Greece is that we print our own money. Greece had no control over its currency, so could not bail itself out.

On edit – seems I owe bluedot12 a drink.

Ben has kept interest rates near zero on short term debt for the last four years (probably negative real interest). He also reduced the yields on long bonds as well. To the extent the Fed holds treasury the interest goes to the Treasury.

I would take exception to the idea the debt has to be paid down. That is what clinton did and it was followed by a recession after he left office. But I think interest rates (which Ben controls) should be kept near zero for short debt. We have to remember that the fed is a currency issuer and cannot be forced into default. So there has to be a pretty darn good reason to pay any of it off. I havn’t heard one yet, except when we reach full capacity/full employment. But there prolly is one somewhere.

There is one reason to issue long debt that pays interest and that is FBO pension funds, just like SS. So we gotta give some to the rich.

Make it a double scotch. And I’ll return the favor.

I think Obama is kinda like Gary Wheatley when I was ten yrs old. Baseball cards, you could get him to trade a Willie Mays or Mickey Mantle for a Walt Dropo by convincing his that a .221 batting was BETTER thana .318 and HR’s was a bad thing.

Surprisingly, I do know that. But we cant just go printing money all willy-nilly.

He didn’t get everything he wanted and attempted to get such as more cuts to Medicare and chained CPI for Social Security. He says he will not negotiate on the debt limit so we can expect him to put those back on the chopping block. The Republicans will never agree to any deal on the debt limit because they know Obama will give away the farm.

I think you caught about 3 whips of the saw there (2 explicit, 1 implicit): Looting the SS trust fund, then siphoning off the interest payments, and no interest-rate cushion for inflation if the economy were ever to come back. Theft, embezzling, sabotage all apply.

Agree, and we know how they’re going to pay for it – cuts to Social Security, Medicare and Medicaid.

So there it is – the Bush taxes cuts passed by the majority in the Senate and House so we’ve don’t have to put on the planned expiration – in that sense – permanent.

Stupid, stupid, stupid, stupid…

Great comment, thanks.

Totally my bad, Mr. Walker, stellar read and thanks for your work. The comments kinda drew me off the diary a bit, they are good, also.

Thanks to all.

So in 2010, folks were angry about cutting the payroll tax because it endangered Social Security and made the argument that Social Security would be underfunded easier to make. Now folks are angry that the sunsetting of tax cuts but into the 2010 cut was allowed to occur and the tax cuts in the bill did not reverse that.

I don’t think those of us who were angry about cutting the payroll tax are angry that this cut that never should have been part of any Democratic proposal is being allowed to expire. I count the expiration of this cut to be a good thing. The folks that are angry now are the folks that ignored the danger this cut presented to the political calculus behind Social Security’s dedicated funding in the first place. That calculus was laid out bu FDR himself, as recounted in Luther Gulick’s famous Memorandum on Conference with FDR Concerning Social Security Taxation, Summer, 1941:

In the course of this discussion I raised the question of the ultimate abandonment the pay roll taxes in connection with old age security and unemployment relief in the event of another period of depression. I suggested that it had been a mistake to levy these taxes in the 1930’s when the social security program was orgiginally adopted.FDR said, “I guess you’re right on the economics. They are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.”

The payroll tax cut was always an ‘effin horrendous idea and an absolute failure with respect to either stimulus — see “Everything You Know is Wrong: Tax Cuts Don’t Work” for more on that — or the preservation of the earned benefit model which has kept Social Security safe from idiot politicians* on both sides of the aisle for more than seventy years.

I’m glad to see the payroll tax cut expire. It was bad politics and bad policy when enacted. It remains bad politics and bad policy now…except for those on board with the undermining of Social Security. A skilled politician by the name of Franklin Delano Roosevelt knew this when he set the system up. That calculus has not changed.