Fiscal Cliff Deal

Dailyhaymaker has a run down on the deal

  • A $30 billion one-year extension of Medicare doc fix
  • A $30 billion one-year extension of 73 week unemployment insurance. Over the past four years, the federal government has collected roughly $192 billion in federal unemployment payroll taxes, while paying out $510 billion in benefits. Evidently, that’s not good enough.
  • Stimulus Refundable Tax Credits: Somehow, a 5-year extension of Obama’s stimulus refundable tax credits got inserted into the deal. So he calls a tax cut a handout, and a handout a tax cut. These latter three provisions alone will easily top $100 billion a year, dwarfing the $50-$60 billion in static revenue projections from the tax cuts on the rich. So much for a balanced approach.
  • Green Energy Pork: The irony is that while the rich earned every penny of their money, Obama refers to the current system – one in which the top 1% pay 37% of the taxes – as a handout to the rich. Yet, this deal extends a true handout, the 2.2 cent per kilowatt/hour wind Production Tax Credit. This is a refundable credit that can be claimed by any wind company that fails to generate a profit, of which there are many. In addition, all special interest credits passed out of the Senate Finance Committee – the real loopholes in the tax code – are included in the deal.

Of course, nothing is being done about the 5 major Obamacare tax hikes that are set to take effect this week, including the deleterious 2.3% tax on all medical devices, the millionaires’ surtax, and the 0.9% increase of the Medicare payroll tax. It’s absolutely stupefying that Republicans couldn’t use this as a leverage point, after 16 Democrat senators, including Al Franken, wrote a letter requesting a delay in the implementation of this tax.

Of course, there is no agreement that Senate Democrats must formulate a budget for the first time in 1342 days.

Moreover, the preliminary framework of this deal calls for delaying the sequester for two months. That will coincide perfectly with the debt ceiling fight, providing Obama with another bargaining chip and gratuitously exacerbating the schism between fiscal conservatives and defense hawks.

Read the rest.

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