This afternoon, I got an email from MoveOn.org, asking me to send an email to my Congresswoman, urging her to oppose the aforementioned deal. And so, of course, I sent her an email urging a vote in favor of the fiscal cliff compromise. What boggles the mind though - although, I suppose I should be used to the intransigence from the Left's howling crowd demanding flying unicorns from the president - is what possibly could be keeping a group like MoveOn and its ideologue brotheren from supporting the deal.
But to understand their grievances - or if you take my frame, hair-on-fire stagecraft - you need to understand, in short, what is in the deal. Summarizing from Wonkblog by Ezra Klein:
- Income tax rates for incomes above $400,000 ($450,000 for joint filers) rise to a marginal rate of 39.6% permanently. All expiring (lower) tax rates for incomes below that amount are made permanent.
- Estate tax increases to 40% for inheritances over $5 million, from the expiring 35%.
- Stimulus tax breaks - the expanded Earned Income Tax Credit, the Child Tax Credit and the American Opportunity Tax Credit - are extended for another year.
- The Alternative Minimum Tax is permanently fixed to stop it from affecting the middle class.
- Extended unemployment benefits are extended for another year.
- The stimulus business tax breaks - including R&D and wind energy credits - will also be extended for another year.
- Medicare provider payments are prevented from decreasing drastically (both from the sequester deal, 2%, and the automatic yearly reductions that Congress prevents every year).
- The rest of the sequester - i.e. the automatic defense and domestic cuts - is postponed for two months, financed 50% by defense and domestic cuts.
- Personal exemptions are phased out for incomes above $250,000; itemized deductions will be reduced for people with incomes over $350,000.
Sounds like a pretty good deal to me. As compromises go, to me, it looks like the Republicans got rolled. They got no austerity cuts, the president got tax increases on the rich and unemployment benefit extensions. The only "compromise" our side made was setting the income level above which taxes are going up. The president opened with $200,000/$250,000 level, and we are ending up at $400,000/$450,000.
According to MoveOn.org's email, though, the $250,000 line on raising income tax rates is so sacrosanct that the line being raised to increase tax rates on those making $450,000 for couples (and $400,000 for individuals) is just unacceptable. I mean, damn the unemployed, the middle class families who depend on the earned income tax credit and the education tax credit, and to tell with doctors who see Medicare patients. We need to tax that middle 200 grand that half-millionaire makes at a 3 percent higher rate! Also, this bill fails to end all suffering and homelessness. Kill the bill!
Let's get serious. This bill is a big win for the Democrats. Not just in terms of being able to raise taxes on the rich, but this is a big strategic victory. That strategic victory cannot be underestimated. The first, and biggest strategic victory was this: we finally decoupled the tax provisions of the cliff from the spending cuts provisions. This means that Republicans no longer have a hostage. They can no longer hold the middle class hostage to help out the super rich. This is the biggest of losses for them. The president was masterful in devising this strategy to disarm them.
Consequently, when the sequester comes up again, Republicans will have no leverage when they want to prevent the defense cuts. They will not be allowed to move over the defense cuts into domestic cuts, and if they want to restore the defense cuts, or want replace or add to the domestic cuts, the president has already outlined what he will insist on: even more revenue. The Republicans are trying to take this medicine of total and disastrous loss by pretending they would be able to force austerity cuts later. Not a chance. If the Republicans don't play ball, it will be much easier for the president and the Democrats to let the automatic cuts take place - which is the biggest on defense - when there is no big hits to the middle class taxes or unemployment benefits coupled with it.
Another big strategic victory not to be overlooked is that this vote gets Republicans to finally throw the Norquist pledge under the bus, and abandon their seriously antidemocratic screed of not allowing votes on anything that does not have a support of a majority of the Republican caucus. This vote breaks the back of that Republican obstructionism. This isn't to say that they will not be obstructionist later again, but it spells success for the president's political strategy: if you back the Republicans into a corner, and go around the House Republicans to work out a compromise with the Senate, you can force them to vote even without a "majority of the majority." This bodes well for the upcoming fights, whether it's on immigration reform, gun safety, energy policy reform, education reform, or another item on the president's second term agenda.
Strategically, the far right of the Republican party has been broken. This is huge. The Republicans went for a big gamble against the president, and they lost. They fell flat on their face. That victory of breaking the back of the obstructionist Republicans is nearly as important as the policy win of getting a clean, almost revenue-only bill passed over the heads of the teabaggers.
As America's happy warrior would say, this is a big f*cking deal.
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