Senate members met, debated,
negotiated, passed stopgap legislation, and largely delayed deficit cutting
On Tuesday, the House followed suit. Obama will sign it into law
or may already have done so.
Media reports announced it. The New York Times headlined "Senate
Passes Legislation to Allow Taxes on Affluent to Rise." Members voted
The Washington Post said "Obama, Senate Republicans reach agreement
on 'fiscal cliff.' "
The Wall Street Journal headlined "US Budget Compromise Deal Reached."
A New York Times editorial called it "A Tepid Fiscal Agreement."
As this is written, House up or down follow-through awaits. Expect House
Republicans to back strong party-line Senate support.
Speaker Boehner said "The House will honor its commitment to consider
the Senate agreement if it is passed."
Doing so overwhelmingly assures support. Republicans know they have
much to answer for if millions of constituents lose benefits.
Obama did what he does best. He lied. He said "this agreement is
the right thing to do for our country, and the House should pass it without
It will "grow the economy and shrink our deficits in a balanced
way," he claimed.
It's economic effect is negative. With or without cuts, deficits
will grow exponentially. Addressing them was largely left for later. Whatever's
agreed will resolve nothing.
The Times called the agreement "a weak brew that remains far too
generous to the rich, and fails to bring in enough revenue to deal with
the nation's deep need for public investments."
Provisions include raising personal income taxes to Clinton-era
levels. Doing so affects families earning over $450,000 and individuals
making more than $400,000.
Obama didn't surprise. He compromised on his $250,000 threshold.
Repeatedly he pledges one thing and agrees to another. His word is duplicitous
He's a serial liar and shows it. He spurns ordinary people. He's
done it throughout his political career.
Unemployment benefits, low-income family tax credits, college tuition
ones, and Medicare's "doc fix" were extended. A permanent alternative
minimum tax fix was enacted. Its impact on middle income families was
Capital gains and dividend taxes rise from 15% to 20%. Personal
exemptions and itemized deductions are limited. They'll affect families
earning over $300,000 and individuals making more than $250,000. Payroll
taxes revert to their Clinton-era 6.2% level.
Taxes are 40% on estates over $5 million. Currently those valued
over $5.12 million are taxed at 35%. Most spending cuts are delayed for
Q I discussions.
Congressional pay is frozen for 12 months. Other government workers
aren't affected. A provision prevents sharply rising milk prices. Current
farm bill legislation continues for another year.
Hurricane Sandy relief was excluded. Last week, Senate members passed
$60 billion in emergency aid separately. House legislation didn't follow.
In the cold light of day, markets were assuaged. Little else was
accomplished. Few expected more.
A Washington Post editorial headlined "Small politicians at the
cliff's edge," saying:
"HAVE THE NATION'S LEADERS ever seemed smaller? It's hard to remember
when." Bipartisan complicity reflects failure to do the right thing.
"Instead of crafting a bargain that could set the nation on a steadier
fiscal course, (Senate members) jockeyed to ensure that their political
opponents would bear the public ire when things went sour. Thatís how
small politicians behave."
Print and broadcast editors and reporters betray readers and viewers.
They support policies harming them. They conceal what they most need to
know. They're not told that fiscal cliff duplicity targets America's social
contract. Destroying it entirely is planned.
"Revenues have to rise," said the Post, "and spending, especially
on Medicare, Medicaid, Social Security, and military health care, has
to be brought under control."
At all times, social and domestic spending should be prioritized.
During hard times, when millions need help, social and other domestic
spending matter most. Increases, not decreases should follow.
Progressive taxes should hit high-income earners harder. Corporations
should pay their fair share. Speculation should be taxed. Military spending
should be drastically curbed. Funding for imperial wars should stop.
If congressional members governed responsibly, deficit and debt
problems wouldn't exist. America's social contract would be strengthened
and preserved. Prosperous economic growth would benefit everyone.
Instead, wealth, power, privilege, and dominance matter most. Media
scoundrels don't explain. They want ordinary Americans bearing the
greatest burdens. Resolution always ends up that way.
New year negotiations remain. They'll continue in Q I. Sequester
cuts and debt ceiling limits aren't resolved. Agreed on tax increases
provide $600 billion in added revenue.
Last year, both parties settled on $1.2 trillion initially. Minimally
they want $4 trillion over 10 years. They barely scratched the surface.
Major cuts remain.
Domestic spending will be hit hard. Social programs will bear the
greatest burden. Defense will be largely untouched. Overall amounts appropriated
will rise, not fall.
Expect current year's spending to exceed 2012. Cutting annual amounts
depends on prioritizing domestic needs over imperial ones. Political will
Spending cuts will dominate upcoming negotiations. Expect Republicans
to play hardball. They may reengineer the August 2011 debt ceiling debacle.
Agreed on $1.2 trillion in sequestered cuts followed.
Before Q I ends, deficit crisis 2.0 may emerge. Another sequester
may follow. Expect a larger one this time. Social spending cuts will be
Obama's strategy gave Republicans considerable bargaining leverage.
They'll take full advantage. They'll play debt ceiling brinkmanship hardball.
They'll extract unacceptable pounds of flesh. America's middle income
earners and least advantaged will be hardest hit. Corporate taxes will
be cut. Defense spending will be protected. So will income and benefits
for super-rich elites already with too much.
Expect America's fragile economy to tip into recession. Some believe
it's there now and heading south. It's been held hostage for months.
Bipartisan complicity assures fiscal squeezing. Instead of vitally
needed stimulus, economic activity will be seriously curtailed.
In Part II of his "America's Deceptive 2012 Fiscal Cliff" article,
Michael Hudson discusses financial warfare. It's more than about "acquir(ing)
land, natural resources, and key infrastructure rents as in military"
It's to "centralize creditor control over society." Financial oligarchs
want ordinary people hit hardest. They want domestic government spending
Social Security, Medicare and Medicaid are prioritized. They want
a tribute on the entire economy levied. "Tax favoritism for the wealthy
deepens the budget deficit." It forces governments to borrow more.
Interest paid on debt "diverts revenue from being spent on goods
and services." Fiscal austerity "shrinks markets." Doing so "reduce(s)
tax revenue to the brink of default."
Bondholders treat governments like bankrupt families. They force
them to sell prime assets. Banks treat households the same way. So does
congressional fiscal cliff legislation.
Corporate and super-rich favoritism comes at the expense of destroying
America's social contract. Economic activity suffers.
In its November 2012 report, the Congressional Budget Office (CBO)
said without fiscal tightening, "the economy would remain below its potential,
and the unemployment rate would remain higher than usual for some time."
Force-fed austerity when stimulus is needed assures much tougher
times ahead. Resources directed for growth produce jobs. Workers with
money spend it.
Economic pounds of flesh extracted are contractionary. The gap between
rich and poor is greater than ever. Privileged segments of society are
better off now than earlier. Middle income earners and America's least
advantaged are hardest hit.
Longstanding social programs are on the chopping block for elimination.
Both parties agree. It's baked in the cake. Obama and likeminded Democrats
match Republican harshness.
Fiscal cliff hype is duplicitous scaremongering. It's force-fed
American austerity. It targets ordinary people needing help. It wants
safety net protections eliminated.
It curtails economic growth. It assures federally mandated protracted
Imagine bipartisan complicity favoring policies this destructive.
Imagine dismissing public need. Imagine the world's richest nation spurning
their own people.
Imagine most of them too out of touch to know how gravely they're
harmed. Imagine not standing up for their own rights. Imagine today's
unfit to live in America more intolerable than ever ahead.
Republicans and Democrats agree. Obama's fully on board. Only America's
wealthy, powerful and privilege matter. Others are increasingly on their
Scheming politicians target them. Double-dealing reality assures
harder than ever hard times. It won't be pretty full-blown. It's coming.
Expect it. They'll be no place to hide.
Stephen Lendman lives in Chicago and can be reached at firstname.lastname@example.org.
His new book is titled "Banker Occupation: Waging Financial War
Visit his blog site at sjlendman.blogspot.com and listen to cutting-edge
discussions with distinguished guests on the Progressive Radio News Hour
on the Progressive Radio Network Thursdays at 10AM US Central time and
Saturdays and Sundays at noon. All programs are archived for easy listening.