by Walter Brasch
Talk show hosts and other
bloviators have spent hours giving their versions of the fiscal cliff. In fewer
than 750 words, I'll explain the truth.
Taxes and the deficit are
intertwined. If Congress can't come up with a plan to solve those problems, the
U.S. will jump into the abyss of a deeper recession than existed under the
latter years of the Bush--Cheney administration.
Let's first look at taxes.
The Bush tax cuts expire at
the end of this year.
The idea of the cuts was to
spur the economy and give what is loosely called the "jobs creators" a slight
push to hire more people.
But, the millionaire "jobs
creators" held onto their money. They
continued to downsize and outsource jobs, making even more money--which they
used to buy whatever trinkets that rich people spend money on.
If Congress can't agree on tax
rates, beginning Jan. 1, 2013, every American will see a restoration of tax
rates to a level that is about what they were before the Bush tax cuts. The
lower- and middle-classes will be hit harder than the upper class.
President Obama, contrary to
what the screaming harpies of the extreme Rightwing claim, doesn't want to
raise taxes. He wants the tax cuts to continue for 98 percent of all
Americans--the ones making less than $250,000 a year. He wants to restore--note that word, restore, not raise--the tax liability for the richest 2 percent of Americans. The
rate to the rich would still be below the rates they paid during most of the latter
half of the 20th century. Even billionaires like Bill Gates and Warren Buffet
agree that the rich need to be paying more.
The Republicans, knowing where their financial base is, demand that the tax
cuts be extended to everyone. Their compromise was to allow the cuts to apply
to everyone making $1 million a year or less. That would be net income, not
gross income. Millionaires could still make $3 million a year if they can scam
$2 million in deductions. Their rates would still be lower than almost any time
since the income tax was first created in 1913.
The President countered with a
$400,000 limit. That would include about 99 percent of all Americans. House
Speaker John Boehner, however, found that a segment of his Republican party don't
want a compromise; they are determined to uphold some kind of a non-legal
pledge to Grover Norquist that there would be no tax increases--ever-- even if it is to restore, not raise,
tax rates.
The second part of the problem
is that of entitlements. The Republicans are willing to do some horse-trading.
They won't continue to hold 99 percent of Americans hostage if there are cuts in "entitlements" and
programs that would significantly reduce the deficit. These entitlements
benefit mostly the 99 percent. The Republicans even say they'll consider
closing some tax loopholes used extensively by the upper class. But, they won't
tell us what those loopholes are, even though the President has several times
asked for specifics. Apparently, the Republicans believe releasing such
information is classified, much like battle plans in Afghanistan or the number
of toilet paper rolls the Pentagon buys.
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