When future historians write about the Great Obama Inflation their milestones will include the $800 billion stimulus plan, Obamacare, and the Fiscal Cliff – the compilation of all of the GOPs futile efforts to limit taxes and spending. Obama would have none of it and the Republicans in Congress whiffed.
- The Congressional Republicans are Linus to Obama’s Lucy van Pelt. The President really does want to be financially responsible, we just have to give on the taxes now in exchange for future spending constraints. Trust him. Again.
- The populist beat the aristocrat in the election. Obama has had little to offer other than “tax the rich”. When Congress members talk to their constituents, lo and behold, they like the idea of having somebody else pay the bill. And what’s the big deal if 2% of the people have their marginal tax rate go from 35% to 39.6%? Petty change.
- The big deal is that the quid was negotiated away for no quo. And trillion dollar deficits are a big deal. And at least half of the people do know that.
- It must be OK; the stock market likes it. A bit less uncertainty is good – for the moment.
- It is not as painful as the election, but it hurts to see folks like Paul Krugman, Nancy Pelosi, and Joe Biden taking victory laps.
- So, what’s in it?
– Lots of tax increases: rates for families making over $450,000; higher rates for dividends and capital gains for wealthier households; personal exemptions phased out for families over $250,000; higher estate taxes; expiration of the 2% payroll tax holiday.
– Lots of cost increases: an extension of the Medicare “doc fix”; a farm bill extension; tax credits for working families and favored businesses; a year’s extension of unemployment insurance; indexing of the Alternative Minimum Tax.
– Cost reductions? Well, a congressional pay freeze. In the immortal words of Porky Pig, “That’s All Folks”.
- The Senate voted 89 to 8 in favor. Tom Coburn, Pat Toomey and a few others voted no, but it was token and nobody tried to filibuster. Capitulation.
- The House voted 257 to 167 in favor, with 85 Republicans joining 172 Democrats in support. The Republicans were pleased to be allowed to vote however their constituents wanted, and promptly re-elected John Boehner Speaker of the new House. Capitulation.
Sequestration ($1.2 trillion of automatic cuts over 10 years to defense and discretionary spending) was deferred until March 1, about the time that gimmics to put off the $16.4 trillion debt ceiling breach will reach their limit. Having won the battle and taken the measure of the Republicans, Obama has declared that he will not negotiate spending cuts in exchange for increasing the debt ceiling. Prior offers to fix the inflation calculation in Social Security or increase the eligibility age have been withdrawn. Nyet! Nyet!
The Republicans are off to lick their wounds at a strategy session, but will probably determine that the inertia of automatic tax increases was heavily to Obama’s advantage, and the inertia of automatic spending reductions is to theirs if they can find a backbone. The debt limit? Up she goes.
This week’s video is an assessment of President Obama’s objectives by Bill O’Reilly. Pretty depressing, Miss van Pelt, but in a democracy people get what they want.