CullmanTimes.com - Cullman, Alabama

National News

January 3, 2013

Analysis: Cliff deal is another pain-free punt

WASHINGTON — An AP News Analysis

Congress' hectic resolution of the "fiscal cliff" crisis is the latest in a long series of decisions by lawmakers and the White House to do less than promised — and to ask Americans for little sacrifice — in confronting the nation's burgeoning debt.

The deal will generate $600 billion in new revenue over 10 years, less than half the amount President Barack Obama first called for. It will raise income tax rates only on the very rich, despite Obama's campaign for broader increases.

It puts off the toughest decisions about spending cuts for military and domestic programs, including Medicare and Social Security. And it does nothing to mitigate the looming partisan showdown on the debt ceiling, which must rise soon to avoid default on U.S. loans.

In short, the deal reached between Obama and congressional Republicans continues to let Americans enjoy relatively high levels of government service at low levels of taxation. The only way that's possible, of course, is through heavy borrowing, which future generations will inherit.

While Americans widely denounce the mounting debt, not so many embrace cuts to costly programs like Social Security. And most want tax increases to hit someone other than themselves.

"This is another 'kick the can down the road' event," said William Gale, co-director of the nonpartisan Tax Policy Center and a former Republican White House adviser. "It is a huge missed opportunity."

"Going over the cliff would have put us on a better budget path," Gale said.

The fiscal cliff's combination of big tax increases and deep spending cuts would have provided major political leverage for both parties to achieve greater deficit reduction as they worked to ease some, but not all, of its bite. In fact, the whole point of the congressionally created cliff was to force the government — which borrows about 40 cents of every dollar it spends — to begin a fiscal diet that would spread the unpleasantness widely.

Instead, Congress and the White House did what they almost always do. At the last minute they downsized their proposals, protecting nearly every sector of society from serious pain.

The accord leaves most government programs operating as usual, postponing yet again the threat of serious reductions.

Aside from the payroll tax increase, which drew little debate even though it affects almost all working Americans, the compromise will raise tax rates only on incomes above $450,000 for couples and $400,000 for individuals. That's less than 1 percent of U.S. taxpayers.

Obama had campaigned for thresholds of $200,000 and $250,000. The fiscal cliff's implementation would have made it nearly impossible for Republicans to stop him, if Democrats had held their ground.

That might have produced an ugly scene, rattled the financial markets and sparked even more partisan bitterness. But any step toward major deficit-reduction will trigger anger, threats and genuine discomfort for people who receive government services or pay taxes. In other words, everyone.

And such steps can ignite opposition from powerful interest groups, which always stand ready to give money to the campaign opponents of lawmakers who displease them. The AARP, just as one example, used TV ads and other tactics throughout the fiscal cliff debate to warn elected officials not to touch Social Security and Medicare, even though those programs constitute a major portion of federal spending.

Activists on the left and right said the new law doesn't do nearly enough to tame the federal government's borrowing habits. Rep. Darrell Issa, R-Calif., said Congress achieved nothing "other than the smallest finger in a dike that in fact has hundreds of holes in it."

AFL-CIO President Richard Trumka praised elements of the deal. But he said that in postponing $1.2 trillion in spending cuts over 10 years, and leaving the debt ceiling unresolved, it is "setting the stage for more fiscal blackmail."

To be sure, Obama and House Speaker John Boehner flirted at times with a "grand bargain" that would include much larger tax increases and spending cuts than those in the newly enacted law. And high-profile groups such as the Simpson-Bowles commission also recommended tough combinations of tax hikes and spending cuts, calling them necessary even if politically unpopular.

These ideas went nowhere.

Less than 12 hours after the House's New Year's Day vote for the fiscal compromise, renewed demands for deficit spending dominated the Capitol. Democrats and Republicans from New York and New Jersey blasted Boehner for delaying legislation that would provide $27 billion to $60 billion in federal aid to victims of Hurricane Sandy. The sums would be added to the deficit.

It's easy to defend using public money to help Americans walloped by a vicious storm. And that's the heart of the government's inability, or unwillingness, to restrain its borrowing ways.

Every federal dollar, and every federal program, has avid supporters who can defend their functions. And every sector can explain why higher taxes would burden struggling people at the lower end, and "job creators" at the higher end.

High levels of government service. Low levels of taxation. Big deficits to make up the difference. That's what Americans have demanded and gotten from their federal government for years.

The agreement by Obama and Congress to spare Americans the pain of a fiscal cliff is right in line with that tradition.

Charles Babington covers Congress and politics for The Associated Press.

 

1
Text Only
National News
  • Fort Hood (UPDATED) Officials: 4 dead, including gunman, at Fort Hood

    A gunman opened fire Wednesday at Fort Hood in an attack that left four dead, including the shooter, law enforcement officials said.
    One of the officials, citing official internal U.S. Justice Department updates, said 14 others were hurt. The officials spoke on condition of anonymity because they were not authorized to release information by name.

    April 2, 2014 1 Photo

  • Consumer spending on health care jumps as Affordable Care Act takes hold

    Nancy Beigel has known since September that she would need hernia surgery. She couldn't afford it on her $11,000 yearly income until she became eligible for Medicaid in January through President Barack Obama's signature health care law.

    April 17, 2014

  • mfp file Hoffner Fired coach unjustly accused of visiting porn sites

    The president of Minnesota State University-Mankato accused a football coach of looking at Internet porn on a work computer before firing him, an arbitrator has revealed. The official said the claim could not be supported, and the coach shouldn't have been fired.

    April 11, 2014 1 Photo

  • High School Stabbings 4 students seriously hurt in Pa. school stabbings

    A student armed with a knife went on a stabbing and slashing spree at a high school near Pittsburgh on Wednesday morning, leaving as many as 20 people injured, including four students who suffered serious wounds, authorities said.

    April 9, 2014 2 Photos

  • Obit Ultimate Warrior Former pro wrestler Ultimate Warrior dies at 54

    James Hellwig, better known as former pro wrestler The Ultimate Warrior, has died, the WWE said. He was 54.

    April 9, 2014 1 Photo

  • news_amazonfiretv.jpg Amazon introduces Fire TV to challenge Apple in living rooms

    Amazon.com Chief Executive Officer Jeff Bezos is stepping up efforts to win over customers in their living rooms with a $99 TV box for watching digitally delivered shows and movies, challenging Apple's TV device.

    April 3, 2014 1 Photo

  • Washington Mudslide Death toll in Washington mudslide rises to 30

    As medical examiners painstakingly piece together the identities and lives of the 30 people known killed when a mudslide wiped out a small Washington community, one mystery troubles them.

    April 3, 2014 1 Photo

  • APTOPIX Fort Hood Fort Hood gunman sought mental health treatment

    An Iraq War veteran being treated for mental illness was the gunman who opened fire at Fort Hood, killing three people and wounding 16 others before committing suicide, in an attack on the same Texas military base where more than a dozen people were slain in 2009, authorities said.

    April 3, 2014 1 Photo

  • Supreme Court Campaign Big donors may give even more under court’s ruling

    The Supreme Court ruling Wednesday erasing a long-standing limit on campaign donations will allow a small number of very wealthy donors to give even more than is currently the case, according to students of the complex campaign finance system, and could strengthen the establishment in both parties.

    April 2, 2014 1 Photo

  • Former McDonald's store managers say they withheld employees' wages

    Two former McDonald's store managers, assisting with a campaign to raise pay for fast-food workers, said they helped withhold employees' wages at the restaurant chain after facing pressure to keep labor costs down.

    April 2, 2014

Facebook
AP Video