Avoiding Fiscal Cliff Not Great
There seems to be almost universal agreement that the decision to avoid the fiscal cliff by raising taxes a little bit on the very rich was not significant. It merely showed that Congress could do something, not that it could do something serious. It did the absolute minimum. It kept taxes from going up on everybody, but it socked it to the poor as well as the rich, by raising payroll taxes. So, working people will see their Social Security and Medicare taxes go up from 4.2% to 6.2%. Arguably, that’s only 2%, but as a percentage increase, it’s an increase of almost 50%. For rich people, the tax will go from about 35% to 39%, i.e. 4%, but as a percentage increase it’s just an increase of about 12%.
So Obama and the Congress raised taxes on poor, working people by 50%, and taxes on rich people by 12%. We can see who pays off a corrupt Congress. Obama seems less corrupt, but so weak and cowardly that he is virtually useless.
Howard Dean is right that it would be better to go over the fiscal cliff than to have some half-hearted package to avoid it that just makes the long term debt situation worse. That’s what Congress and Obama did. The debt will continue to escalate as they kick the can down the road.