The Senate pushed through a fiscal cliff compromise bill, It's pretty much what I detailed yesterday.
Tax rates would go up to 39.6% from the current 35 percent on family incomes over $450,000, $400,000 for individuals.Counting the surcharges from ObamaCare I described at the above link, taxes on capital gains climbs from 15% to 23.8%, dividends from 15% to a whopping 43.4%, and other investment income (zero coupons, etc.) from 35.4% to 43.4%. Happy new year, retirees! What, you didn't realize you were part of the Evil Rich?
The Senate deal would restore limits on personal exemptions and itemized deductions, phasing them out for couples earning more than $250,000 a year and single people earning more than $200,000, a direct slap at a lot of small business owners.
Much is being made by the White House of the fact that these are 'the same tax rates we had during the Clinton years, when we had a booming economy.' True enough, especially thanks to the Reagan/Bush peace dividend, but the percentage of GDP we were spending was far less as well.Somehow, I seem to have missed calls from President Obama to go back to the spending levels of Clinton years as well.
There's a permanent Alternative Minimum Tax (AMT) fix, and an extension of unemployment benefits for another year.A mandated 27% decrease in Medicare fees paid to doctors was also avoided by essentially fudging the math, or in DC-speak 'fixing the sustainable growth rate formula through the end of next year.'
You might recall how the White House and their surrogates figured up the 'savings' they claimed for ObamaCare by saying that they would simply pay doctors less, conveniently avoiding the reality that doctors would simply refuse to take Medicare patients if it meant they would go broke in the process. This is an attempt to deal with that reality, or rather to avoid it for awhile.
The Republicans actually wanted to have this paid for by cuts in ObamaCare, but caved in when the Democrats dug their heels in and the Republicans smelled the possibility of The Deal.
The spending cuts that were agreed to in the sequestration agreement? Those get delayed for two months while some more bargaining goes on as to who takes the haircut.
The reality of course is that the cuts will never be implemented except on defense, if history's any guide.
In 1982, President Reagan was promised $3 in spending cuts for every $1 in tax hikes by Speaker Tip O'Neill and the Democrats.The tax hikes occurred but the spending cuts never materialized, and President Reagan later characterized it as the worst mistake of his presidency.
President George HW Bush got suckered the same exact way in 1990,making a deal with the Democrats for $2 in spending cuts for every $1 in tax hikes. The tax hikes went through, but not a single dime's worth of the promised spending cuts actually happened.
It will probably be the same this time around. President Obama and the Democrats will never admit we have a spending problem, because bribing their constituents for votes at the taxpayer's expense is how the party has functioned since the days of Tammany Hall:
So, the end result in reality is $41 in new taxes for every $1 in spending cuts - assuming those cuts ever happen.Naturally, there's no mention of the debt ceiling. That fistfight is being put off until February...while the spending continues.
I have to give credit to Senators Charles Grassley (R-IA), Mike Lee (R-UT), Rand Paul (R-KY), Marco Rubio (R-FL), and Richard Shelby (R-AL) for voting against this.It really does absolutely nothing to work on the real fiscal problems.
They were joined by Democrats Michael Bennet (D-CO), Tom Carper (D-DE), and Tom Harkin (D-IA),all of whom felt that the senate agreement didn't raise taxes enough.
We'll see whether the House goes along for the ride.
UPDATE: Yes, they went along. Boehner was able to get enough Republicans to come along and shove this through.