So we have news this morning that, allegedly, Vice President Biden and the Turtle leader, Senate Minority Leader Mitch “I’m going to lose to Ashley Judd” McConnell have made some alleged and mysterious progress overnight in their last second talks to reach some kind of deal to avert falling off the fiscal cliff.
Sources close to the talks said a deal is now more likely will come together but cautioned that obstacles remain, including how Speaker John Boehner and House Republican leaders react to any tentative agreement.
“The Leader and the VP continued their discussion late into the evening and will continue to work toward a solution. More info as it becomes available,” a McConnell spokesman said.
I am cynical, and I am pretty convinced a deal is impossible, and thus this is nothing but further political kabuki theatre so that McConnell can later blame the breakdown on Biden and Obama, or Senate Dems. The reason why I say that is that because a raise in tax rates on the wealthy is the line in the sand and a dealbreaker for both sides. For the Dems, a deal must include it. And for the Rethugs, a deal cannot include it. There is no getting around that central fact. The Republicans have proved time and again that they will continue to fellate the rich and billionaires at the expense of the rest of us until the end of time.
So what is going to happen tomorrow?
Nothing, really. Not right away, anyway. Here are the affects of going over the slope:
1. The economy will shrink by .5 percent and unemployment will soar to 9.1 percent, according to the non-partisan Congressional Budget Office.
Ok, we can absorb that, though. A setback for an economy that is growing by 3 percent right now, so it will mean that the economy will grow by 2.5. It won’t be a double dip recession.
2. The vacation is over for payroll tax holiday, which Obama introduced in 2010 and affects 125 million households. Post-cliff: The average person making $50,000 annually will see $83 a month taken out of their paycheck, according to CNNMoney.
This will hurt a little bit, but the payroll tax holiday was always temporary.
3. Under the Bush era tax cuts, parents can get a $1,000 tax credit per kid. Post-cliff: That’s slashed to $500 per kid, according to The New York Post.
Again, this will be restored shortly after January 1, unless the Republican Party wants to lose all their seats in 2014.
4. For the estimated 5 million people who have been unemployed for at least six months — more than 40 percent will lose their benefits, according to CBS News.
This sucks. No doubt about it.
5. An 8 percent cut to the $2 billion federal grants to state and local law enforcement agencies has already triggered some prisons to release prisoners early because they can’t afford to keep them behind bars, according to The Associated Press.
I don’t see this as a problem. Release all those non-violent drug offenders who only bought or sold marijuana and who shouldn’t be in prison anyway.
6. The Research and Experimentation Credit was introduced in the 1980s and offers entrepreneurs and business leaders tax credits. Post-cliff? It’ll expire, according to The Tax of Adviser.
Meh.
7. Married couples receive double the tax deduction than that of single people under the Bush tax cuts. Post-cliff: That could expire, costing married couples $2,000 extra, according to CNN Money.
For those making under $250,000, this will be restored after January 1 as well. So no big deal.
8. Obama’s Higher Education Act — a prominent pillar of his 2008 election campaign — includes the American Opportunity Tax Credit. For families paying college tuitions, it’s a tax credit worth up to $2,500 annually for four years. Post-cliff: That tax credit could be reduced to $1,900 annually for two years, according to The Wall Street Journal’s SmartMoney.
I imagine this too will be restored after January 1.
9. Going off the cliff would reduce the national deficit by $607 billion between fiscal years 2012 and 2013, which amounts to 4 percent of GDP, according to the CBO.
That’s a good thing, right?
This fiscal cliff thing is just a media made and politician endorsed “crisis.” Isn’t cutting spending and raising taxes on the rich what we all are supposed to want in the end? Democrats want to raise taxes on the rich, and Republicans want spending cuts. Well guess what, a good compromise does both. In fact, we are cutting spending by a ratio of 2-1 over raising taxes. So Republicans should love it. The media should love it.