Ban the Fiscal Cliff: Results Pathetic, Predictable and Incomplete

The phrase “Fiscal Cliff” should be stricken from the English lexicon. The recent political action to avoid the short term the political morass was an ugly display of a dysfunctioning political system and feckless national leadership.

What are the off-the-cuff lessons of all of this? What did we learn? Did any of this do anything at all to improve the national outlook?

The panic is over for now. However, the results are pathetic. 

Taxes will go up on high-income taxpayers a few thousand dollars a year, a situation that can be remedied by them by a little creative tax planning. (Call me, I am in the book!)  The projected increase in government receipts from the rate increases will have an insignificant impact on the federal deficit, accumulating still at $ 4 billion a day. In fact, the changes made this week, increases the budget deficit $ 4 trillion over the next 10 years according to the Congressional Budget Office.

While liberals are gleeful at “sticking it to the rich”, the two per cent payroll tax reduction expired. (And rightly so) Therefore, while politicians pat each other on the back for saving the great middle class, the fact is, EVERYONE’S taxes will be going up. This will have an adverse impact on the overall economy. Oops, look, my paycheck is smaller. To hide this fact is deceitful. To say otherwise is ignorance.

Payment for the long-term unemployed was extended for another year. Might as well make this a welfare program.

Victory chest thumping over making the tax rates permanent is silly. Congress can change them anytime. The only positive for this action is it lessens the unreality of the budget game played by having laws theoretically expire only to be reinstated to make the deficit look smaller. 

Many of the tax provisions that expired at the end of 2011 and 2012 are to continue without really culling the silly ones out. Stimulus tax measures enacted in 2009 which amount to quasi-welfare and income transfer programs that have nothing to do with paying taxes will also continued with our further examination.

The Budget Sequester-the only thing Congress has done in recent memory to actually slow the growth of government- was put off for two more months.

So what occurred it to pick up a few bucks from people who can afford it, pick up a lot of bucks from people who will feel the payroll tax increase, punted on addressing the deficit, and left all the spending programs untouched.

The sequence of events was predictable. Mr. Obama has to be happy for the hollow results of increasing tax rates, a minor political triumph not really worth anything.  He has to be happy the largess of the government continues. No spending cut here, guys. If there was any doubt about his interest in cutting federal spending, it is no more in doubt. 

What the President should not be happy about are the problems of a sour economy, deficit spending, debt ceiling exceeded already, sequester and funding the government have not gone away. He had a lot of clout and power concerning the tax rates, he has much less now and I doubt his sway over the House Republicans has increased.

So, the game continues.