…”Obama promised no middle-class tax hike. Obama promised no middle-class tax hike…”
Unless Congress takes additional action to address the deficit before then, when the New Year’s hangovers wear off, two big things will have happened.
First, the Bush-era tax cuts will expire. That means income taxes for everyone would return to the higher rates that existed under President Bill Clinton. Taxes on dividends and capital gains also would rise from the current maximum of 15 percent. Top individual rates for high income earners could reach 39.6 percent
Second, $109 billion in automatic federal spending cuts will be set in motion, split evenly between defense spending and domestic programs. That’s because last summer’s agreement to lift the debt ceiling required lawmakers to forge an agreement to reduce the budget deficit by $1.2 trillion. As they failed, the automatic budget cuts are set to take effect.
But remember – it’s neeeeeever a spending problem. No, it’s all you greedy peasants and the spending the government must do on you!:
“People are calling it the fiscal cliff,” Franken said. “It isn’t. It’s a slope.”
Franken said the tax increases would have little immediate effect on most people since their 2013 taxes won’t be due until the following year.
While that’s not the outcome he wants, Franken concedes that a willingness to let taxes go up is part of the Democrats’ negotiating strategy. “This is the only leverage we have, I think, to focus the Republican Party on being serious about this,” he said.
Franken and most Senate Democrats have signed on to President Barack Obama’s proposal to keep the Bush tax rates in place for those making less than $250,000 a year.
To paraphrase that greatest of Democrat thinkers, Rahm Emanuel, “Never waste a wedge issue”.
Some Republicans get it:
“They have a tax policy that says that they’re going to hold the entire economy hostage unless Republicans agree to a tax increase,” said U.S. Rep. John Kline, a Republican. “Is a tax increase on anybody, let them pick the number for how wealthy you have to be, so important that they’re going to send us over the cliff?”
Kline doesn’t want to see taxes go up at all. He’s also worried that the automatic budget cuts could devastate the economy by throwing thousands of defense contractors out of work.
“You’re going to have huge cuts in the private sector, and that’s the piece that I think is most problematic,” Kline said.
But Kline voted for the debt ceiling deal that created the automatic budget cuts, and Democrats say the only way for Republicans to help undo the cuts will be to negotiate a deal with them on taxes.
Of course they do.