“It looks awful.” That’s what Senator Dick Durbin of Illinois had to say after a frustrating day of negotiations with Republicans on the fiscal cliff.
At midnight tonight, unless the cliff is averted, income tax rates go up for everyone. The 2% payroll tax reduction put in place 2 years ago expires, taking an additional $2,000 out of the paycheck of a taxpayer earning $100,000 per year. Emergency unemployment benefits for 2 million Americans will end.
A host of other cuts will come into effect. Attention Medicare beneficiaries: do you have a doctor’s appointment scheduled in January? Your physician will be paid 27% less for your visit that he or she would have been paid in 2012. What sort of welcome are you going to receive when you walk into the office?
As a result of these myriad cuts, not to mention those that will result when the $110 billion “sequester” of defense and civilian spending begins to kick in, economists are reducing their forecasts for economic growth in 2013. According to this morning’s New York Times, the economy had been expected to grow at 2% to 2.5% in 2013, but now 1% is likely the best we can manage. Many economists fear that we will have no growth at all, but rather will fall into a self-inflicted recession.
All this could have been avoided. President Obama proposed $1.1 trillion in spending cuts over the next ten years, and even offered to lower the rate at which annual Social Security benefit increases are calculated – much to the dismay of many Democrats. He would have protected middle class wage earners from tax increases. He would have stimulated the economy in the short term with a $50 billion transportation infrastructure package, which would have created jobs and boosted tax revenues.
But Republicans will have none of it. Instead, they are going right down to the wire trying to preserve income tax cuts for the wealthiest; trying to keep tax rates on interest, dividends, and capital gains at their current extremely low rates; trying to exempt estates up to $5 million from the estate tax, rather than the $3.5 million exemption Democrats are willing to concede.
What’s the solution? First and foremost, the country needs a Democratic majority in the House of Representatives. That’s what voters chose in 2012, when 1.1 million more voters opted for Democratic candidates rather than Republicans. Unfortunately, the vagaries of districting and redistricting kept the voters from getting what they wanted. Here in the 23rd NY and around the country, Democrats are going to have work doubly hard to prevent this from happening again.
- For Republicans, It’s All About the Rich, the Very Rich, and the Super-Rich (motherjones.com)
- Sticking points in fiscal cliff talks (politicalticker.blogs.cnn.com)
- Source: Fiscal cliff talks see major setback (politicalticker.blogs.cnn.com)