Fiscal Cliff Deal Redefines What It Means to Be “Rich”
To listen to the moaning of some Republicans in the House of Representatives, you could be forgiven for thinking that the Republicans are losing the fiscal battle in Washington.
Actually, they're winning.
To see this, you just need to step back and look at the tax deal and the country's fiscal trends from a broader perspective.
Yesterday, the government voted to extend almost all of the Bush Tax Cuts permanently.
Not temporarily, as a stimulus measure.
Permanently.
Ever since the Bush Tax Cuts were first enacted in 2001, one goal of the Republican party has been to "make the Bush Tax Cuts permanent."
For most of the last decade, this goal has seemed like an extremist view: Making the Bush Tax Cuts permanent would drastically reduce the federal government's revenue. It would also increase inequality and balloon the national debt and deficit--so how could we possibly justify doing that?
And yet now, suddenly, almost all of the Bush Tax Cuts are permanent.
And the definition of "rich" in America has been significantly increased: The only Americans subject to a minor increase in income taxes will be households making more than $450,000 a year.
The Republicans also got another good deal for America's investor and owner class, making the Bush dividend tax cut permanent. This saves a lot of money in tax bills for America's wealthier investors.
And the tax deal even socked it to the working class.
How?
By not extending the payroll tax cut.
This payroll tax cut added an extra $2,000 a year in the pockets of everyone who works for their money. The payroll tax hits everyone who earns wages, including the richest Americans, but it's a highly "regressive" tax: It takes a much bigger percentage of the income of those who earn less than $110,000 a year than it does from the richest Americans.
So the Republicans have won a battle there, too.
It's true that the Republicans have not yet won much ground on the other front that the party claims to be fighting on--namely spending cuts on programs that primarily benefit low-income and middle-income Americans (food stamps, Medicare, Medicaid, Social Security, unemployment insurance, and so forth).
But the key word there is "yet."
Yesterday's deal focused only on taxes. The next government fight will be about spending cuts and the debt ceiling, and the Republicans are already mobilizing to hold the country hostage and demand entitlement cuts in exchange for not forcing the U.S. to default. And it seems reasonable to assume that, no matter how crazy and irresponsible this behavior is, the Republicans will probably extort some spending-cut concessions in exchange for agreeing to allow the United States Of America to honor its commitments.