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Yes, Virginia, The Rich Did Very Well With the Fiscal Cliff Deal

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The Real News Network has conducted a series of interviews on the fiscal cliff deal, and the two most recent are worthwhile in and of themselves, and are also good tools for persuading those who fallen for the idea that Obama got a good deal to reexamine their view. With the Vichy Left now trying to soften up the public for Social Security and Medicare “reform,” it’s particularly important to keep an accurate scorecard on what has already gone down.

The newest chat, with economist James Henry, focuses on how the deal on estate taxes allows the rich to pass on wealth to their children, allowing inequality to persist across generations. And he reminds us that a lot of Congressmen are rich enough that this provision will benefit their families.


More at The Real News

Gerry Epstein of UMass Amherst minces no words in his overview of the pact. He calls it a debacle for middle class families because it preserves nearly all of the Bush tax breaks for the rich.


More at The Real News

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37 comments

  1. YankeeFrank

    Trying to imagine how Obama could be any more disgusting and atrocious… Pretty much everything of import he has “achieved” has had the effect of taking our nation back to the lawless late 19th century. He has defended and protected the worst criminals in the history of our nation, from torturers to bankster scum, and turned the justice system on its head for them. He has ensured that the poor and middle class will continue to collapse into debt slavery and destitution, and betrayed everything good the democratic party ever stood for. He continues the mad trajectory of horrifying “trade pacts” that only serve the desire of massive corporations to access slave labor while eliminating jobs for American citizens. He has eliminated habeas corpus and declared and codified the right of the president, whose role is now that of mutant murdering dictator, to assassinate anyone he declares an enemy of the state. He demands we reduce social security benefits to the elderly and reduce access to medicare because if there is one thing that is apparently destroying our nation it is elderly people that can afford shelter, food AND medical care.

    What more could he do to cement his legacy as a regressive, dictatorial, monstrous elitist pig? By the end of his second term he will have finally attained the grudging approval of the Washington insiders he so desperately desires to be part of, while the rest of the nation looks on in horror at what he has done. I actually think he believes that he will be remembered with love, like Reagan was (not that I ever understood it, but there’s no arguing that many people really liked the man), or FDR. At best he will be remembered the way Herbert Hoover is. At worst, well how will we describe the president that oversaw the total criminal takeover of the nation and the institutionalized destruction of the constitution?

    1. Max424

      Perfectly and eloquently stated, Frank.

      In my opinion, Obama has done only one good thing while holding the modern American office of magistratus extraordinarius, he has resisted the pressures, and the temptation, to attack Iran.

      Iran will define Obama’s second term,* in my opinion. If he holds at bay the war hounds, Obama goes down as the second worst president in our history. If he doesn’t, Obama will slip ahead of Reagan into the first worst all-time slot.

      *We know now, beyond a shadow of a doubt, what Obama is going to do elsewhere –he will relentlessly pursue and execute the neo-liberal agenda, on all fronts.

      Note: I had Junior number two until it was clear, somewhere around March or April of 09, that Obama really was going to “look ahead, not back,” and by his open refusal to investigate/prosecute any post or future high crimes, of any kind, he would not only allow for but ensure, complete lawlessness at the top.

      Hey, I’ve noticed a trend! The worst –most decidedly treasonous– Presidents in our history are piling up so fast they’re smashing into each other.

    2. Woody in Florida

      Never seen my own opinion of our president put any better than that. Well done sir. As for Reagan, he may have helped push the middle class into oblivion, but he knew how to make people feel proud to be American again, and kept us properly distracted from what he was actually doing.

    3. Hugo Stiglitz

      Indeed, well said Frank. It is a wonder why anyone in the US still respects authority or obeys the law. If not for the fear or retaliation and excessive use of force by paramilitary police forces located throughout the nation (thanks to the aptly named Homeland Security Agency financing SWAT forces, even in the most rural counties), I would expect lawlessness to have spread to the ruled classes by now. The US is a proto-fascist state, the two-tiered justice system simply completes it.

      “Decency, security and liberty alike demand that government officials shall be subjected to the same rules of conduct that are commands to the citizen. In a government of laws, existence of the government will be imperiled if it fails to observe the law scrupulously. Our Government is the potent, the omnipresent teacher. For good or for ill, it teaches the whole people by its example.
      Crime is contagious. If the Government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.”
      ~ Louis D. Brandeis, Olmstead v. United States, 1928

  2. Chris Engel

    Love the work Jim Henry has done with Tax Justice Network and on trying to bring sanity to the US system. Makes me proud to be an alum.

    However in the first video I think it’s important to clarify to people more what it is the wealthy are doing with the windfalls of unearned income from interest on interest.

    It’s true, they’re not consuming it, but then the logical question is, what are they doing with the money? The answer of course is they are saving/investing it, but the mechanism by which they are doing this is essentially just bidding up bond and money market prices. This is contributing to the persistent liquidity trap conditions where there’s TONS of cheap money out there if you’re a big wig with great credit, but if you’re on the lower end trying to get a loan, banks don’t see it as profitable, at least not now.

    I don’t know all the details of how this has worked out, but it would be helpful for someone like Jim or another credible economist (not some “financial analyst” but an actual intellectual to go through the social effects) to expand on this idea more. Since a lot of traditional economic theory is, “hey, the rich are getting richer, but they provide jobs and their money is either consumed or invested.”

    It’s important for people to know about banks’ excess reserves, the money market mechanics, and how all the excess money “invested” these days goes to high-finance circle jerks instead of commercial bank loans to lower/middle classes.

    1. LifelongLib

      Well, there’s the conventional FDR/Truman high-taxes-on-the-wealthy solution, or a more extreme [?] one in which we develop an economy that does not funnel money to a wealthy do-nothing investor class.

  3. Glen

    Funny, I was arguing all these exact points on a rather progressive blog (routinely gets called extreme by Daily Kos), and was repeatedly told I was just flat wrong, shrill and(on another blog) a “drama queen”.

    So, I agree with the above predictions on the debt ceiling negotiations, that’s where Obama will ask for Social Security and Medicare cuts because the deficit is still too high, which is another way of saying the middle class has to pay for all the Bush era tax cuts I just made permenant.

    1. LucyLulu

      Social Security, however, doesn’t contribute to the deficit. By law, only revenues from FICA and the trust fund can be used to pay SS benefit payments. Saying that it contributes to the deficit is a lie told to the American public by the right that the left doesn’t bother to dispute. Obama even plays along with it.

      It only contributes to the deficit in that Congress can no longer use surplus SS revenues to fund its wars and tax cuts. The problem is that this will probably be all the tax revenues Obama will be able to get now. That will bring revenues up to ~18% of GDP. We’ve been spending ~25% GDP, which relatively speaking is high (due to increased social spending as result of the financial crisis), but historically speaking, 18% is low for revenues. It has taken at least 20% GDP to run the government.

      We need to grow our way out of this recession. That means we need jobs, jobs that pay living wages. At the current rate, we won’t hit full employment until 2020. I vaguely remember our politicians talking about jobs once upon a time. “Jobs, jobs, jobs”…….. “we’re going to focus like a laser on jobs”. Now one hears only about deficits. The taxpayer isn’t worried about gov. deficits. They’re too busy worrying about their own personal deficits.

      1. Glen

        Agree with everything you say. And have commented many times that SS has never contributed one nickel to the Federal debt. Also have pointed out the irony that the taxpayers came up with the Wall St/TBTF bailout (estimates from $4 T to $26T) all within a period of one year but we still see attacks against SS as “unfunded” or a ponzi scheme even though it is funded for at least twenty years and could be funded “forever” by lifting the cap.

        It seems as if this reality is starting to gain some traction but believe me, I felt like a voice in the wilderness even on very progressive blogs until I started finding people making the same observations here and at other blogs. I think the problem on most of the blogs I posted to during the economic crisis was they lacked the finanacial background to provide a basic understanding of the problem and too readily bought into the fear mongering, especailly that coming from our supposed liberal President and his advisors. To me, the bailout never passed the smell test and luckily I was able to find blogs like nc which explained why it was such a rip off.

      2. jrs

        What is the real state of SS funding? Because my understanding is that since 2009 SS FICA taxes have been bringing in less than is being paid out to beneficiaries. This was no doubt worsened by the FICA tax holiday which luckily has ended (yes I do think it’s lucky it ended in terms of the liklihood of saving SS). So the *slightly* improving economy plus increased FICA taxes may put it back in the black by this measure.

        However this is not the only possible measure. In addtion to FICA income, SS also has it’s trust fund which earns interest, so it’s not in the red after the interest payments are taken into account. Still you could say paying that interest arguably adds to the deficit I guess, as ultimately less is taken in from FICA taxes that is paid for SS. I by no means think there is anything wrong with SS earning interst on money borrowed from it from many years, I’m just looking at it from a budgetary perspective first in order to get to the moral perspective later.

        And when the trust fund bonds themselves actually have to be redeemed that will be another cost arguably adding to the deficit (on paper – really it’s just switching the deficit from SS obligations to treasuries). FICA income will be less than expenditures for SS and less than trust fund interest payments. That money has to come from somewhere and assuming it comes from taxes that will be generally revenue.

        And I go into all this because I think it’s what the whole fight over SS is really about and the seperate fund stuff obscures it. The politicos see future expenditures far exceeding revenue, part of that is paying back what is owed on SS. They want to weasle out by defaulting on the SS part even though it’s an owed obligation like any other bond. They would not treat their bond market obligations so lightly. The working class has subsidized the government for ages during all the years of SS surplus that led to trust fund bonds, subsidized all the wars and so on, and when it comes time to pay back the working class what it is due (what it was PROMISED from it’s SS contributions that were borrowed for years and years), they want to default! They would not dare default on the capitalist class (the bond market), but they want to default on the working class.

        None of this is a monetary analysis or course. This is just what I’ve figured is a straight budget analysis of how things stand, which I think is powerful working class amunition. Entitlements my @ss, they’ve been borrowing from working class revenues, by a tax that was regressive, but which we gladly gave to ensure old age security, in order to fund the general government for ages, and they want to weasle out when the bill comes due.

        1. LifelongLib

          “That money has to come from somewhere…”

          It comes from the U.S. government, which can create any amount of its sovereign currency (the dollar) at any time, without taxing or borrowing.

      3. Hugo Stiglitz

        Social Security might not have anything to do with the deficit, but if the media mentions the deficit and Social Security in the same sentence, the public will start to think otherwise. This has been SOP for some time. Perhaps it still works, we’ll see.

    2. Max424

      re: shrill, and “drama queen”

      Don’t let the perfect be the enemy of the good, Glenn.

      Giggle. On the old Yglesias blog, during the interminable Battle for Universal Health Care, I would daily write something like:

      “You worthless sell-out motherf-ckers, do realize your “new” staked out position is in perfect alignment with the Heritage Foundation?”

      “You’re not progressives, you’re right wing f-cktards.”

      And without fail, along with some other tasty tidbits, someone would paste in below me:

      “Don’t let the perfect be the enemy of the good, Max.”

      Note: I swore a lot back then. I blame close proximity to the Vichy.

  4. docG

    What suddenly hit me after all the excitement over the fiscal cliff “deal” was the blunt fact that the outrageous Bush tax cuts had not only been renewed, but made permanent! Talk about misdirection. When first proposed, these cuts were bitterly opposed by liberals, and for good reason. Most of the cuts favored the wealthy and super wealthy, the cuts for the rest of us were modest or nonexistent, and, most important, the whole point of these cuts was to “starve the beast” of “big government.” Which is exactly what happened.

    Have we forgotten so soon that a principal cause of the huge deficit, now of such great import to conservatives, was, in fact, these draconian revenue cuts? No question, these outrageous cuts should never have been renewed. Instead of standing fast in opposition to their renewal, Obama literally changed the terms of the debate. Instead of a return to the moderate and reasonable tax rates of the Clinton era, the expiration of the Bush cuts was framed as a huge tax increase, that would inevitably lead us over a “fiscal cliff.” What garbage!

    A return to the original Clinton rates would have been a huge step toward balancing the budget, which, as you might recall, Clinton was in fact able to achieve. Any concerns about the effect on demand could have been allayed by putting a chunk of that cash to work in a Roosevelt-style jobs program. Instead of extending unemployment insurance yet again, the govt. could have created programs that provided decent jobs for the great majority of the unemployed.

    I know many commenting here like to see Obama as some sort of monster of deceit who’s made all these terrible decisions in a deliberate effort to undermine the working class. I can’t agree as to his motives. I see him basically as a well meaning dupe who, like G. W. Bush before him, is being manipulated by the power brokers who financed his campaign. But in the long run it doesn’t seem to matter, the damage is being done — and the stage is being set for the next act, in which Obama is due to “cave” big time and slash “entitlements” for no good reason.

    1. Brooklin Bridge

      Yes, Obama the innocent dupe decided to go to sleep on January 1, 2009 and left instructions to be woken first thing January 1, 2017. They are keeping him in a tower somewhere and have Stephen Colbert as his ‘stand in’ in the meantime. Colbert, no doubt, will tell us all what a great joke it was on the following Colbert Report… and the biggest part of the joke is that all sales of the constitution, the middle class and of the safety net were final.

    2. Glenn Condell

      ‘I see him basically as a well meaning dupe’

      More evidence that the PR effort is working a treat. Increasingly, it is those who take the ‘fool’ over the ‘knave’ option on Obama who fit your description. He has made a little blackness go a long, long way.

      I just can’t see how anyone who has read and agreed with YankeeFrank’s distillation at the head of this thread could still entertain this notion, which is ultimately exculpatory, and worse, a path-foamer for an Orwellian future of entrenched elite rule.

      1. jrs

        Oh well at least we can be assured all our future entrenched elite rulers will be dupes rather than actually evil. I for one look forward to our new dupe rulers with harmful policies of our new banana republic.

  5. commenter8

    How To Raise Taxes: Think Eisenhower!!!

    Quoting J.J. Goldberg at forward.com:  
      
    [...] Eisenhower inherited a top marginal income tax rate of 92% from his predecessor Harry Truman when he entered the White House in 1953. He quickly lowered it to 91%, where it stayed until Lyndon Johnson lowered it again to 77% in 1964 and then 70% in 1965.  
      
    During his eight years in the White House, Eisenhower managed to reduce the federal deficit by 75% — down to a quarter of the size he inherited — while building the Interstate Highway System and launching America’s space program. GDP growth averaged 3% per year. Unemployment averaged just under 5.5%.  
      
    Reagan, entering office in 1981, inherited Johnson’s 70% top marginal income tax rate and immediately lowered it to 50%, then to 38.5% and finally to 28%. His theory was that high taxes stifle economic growth, while lowering taxes unleashes growth and creates jobs. It was a great national experiment, and the result was conclusive: It didn’t work. Growth averaged 3.4% per year during Reagan’s presidency, hardly better than Eisenhower’s, while unemployment averaged a shocking 7.43%, far worse than Eisenhower’s and hardly better than the much-maligned Obama record. [...]  
      
    So the next time you listen to a presidential debate, remember that nobody up there is taking the Democratic side. The debate we’re having today is between a robust Reaganism and a faint, timid echo of Eisenhower Republicanism. In fact, when you get down to it, the Democrats can’t even bring themselves to take Eisenhower’s side with any conviction. We’re all touting variations on a flimflam theory that’s been tried and proven a colossal failure.

    ——–

    How To Cut Spending: End Corporate Welfare!!!     
        
    As Rex Nutting of Marketwatch noted in his 12/18/2012 article “Why isn’t Obama demanding corporate welfare cuts?”, “$2.6 trillion could be saved [...] It’s possible to achieve all the budget savings we need for the next 10 years simply by cutting the fat out of discretionary spending programs and tax expenditures [removing all of the corporate welfare] without raising tax rates on the wealthy or cutting the safety net at all.”     
         
    Oil and gas companies, which are raking in record profits, certainly don’t need $4 billion a year in subsidies, and even the oil company CEOs admit they don’t need it!     
         
    Why are cuts to Social Security and Medicare even being discussed while literally billions in corporate welfare are constantly spilling out of the Treasury? 
        
    White House petition to End Corporate Welfare: http://wh.gov/Qa6f

  6. Susan the other

    Cut the 20 – 30% profit allowance just given to the “Health” Insurance industry – cut it back to non-profit on a tight budget status, then sit back and see how long it takes for that useless parasitic “industry” to cave and say “We don’t wanna do this anymore!” Then do single payer. Repeat with big Pharma. Mandate that the military stop using oil, completely. Make the mining and burning of coal illegal, say a felony with a 10-year sentence. Do an immediate jobs program to create public transportation; free tuition; and the decentralized production of clean organic food. Jobs to mitigate the disaster sea level rise will bring. These measures will turn the economy around and keep our debt within a proper balance. There is no Debt Ceiling, that’s nonsense. But we desperately need new budget priorities.

  7. rps

    Voters had confused Obama as George Bailey. In cinemaworld Obama is Henry Potter’s bodyguard serving the destroyers of the commonwealth. It wasn’t government that saved the community, it was the humanitarian actions of George Bailey that held the Potter’s machinations at bay. We all need to step up at the community level and taking care of all our citizens to rebuild what Reagan through Bush had dismantled

  8. Dean

    The uber wealthy aren’t wage earners. They earn income and capital gains of piles of money stashed away overseas and have legions of attorneys and accountants to thread the needle on tax laws and money laundering regulations. The talk about marginal tax rates is a red herring meant to distract the wages slaves and make them think the rich are paying their fair share at 39.6% and make them (including myself) feel lucky to have my rates permanently fixed while socking it to the ‘richer’ wage slaves.

  9. Paul Tioxon

    In the newly minted category of “TOO BIG TO COMPREHEND”, HCA, The Health Care Act of 2009. Starting 5 days ago, taxes were increased for those making over $200k/yr or $250k/yr for couples, legal ones of course. The Medicare Tax has just been imposed on that group to the tune of 3.8%. But that is not the real import of that tax. The real import is the wide dragnet of unearned income that will now be included as taxable for this purpose. That’s right, unlike the Social Security portion of FICA, this tax has no limit on income and goes after just about every way a scheming capitalist can skin a cat. That is how the 30 million or so new people heading into Medicare and Medicaid will be paid for as result of making health reform a universal program. Remember the mandate? Insert universal for mandate. It was a spoon full of sugar to make the medicine go down for the cultural resistance to universal, which is immediately replaced with the term “freedom killing totalitarianism” by the paranoid style of American politics.

    Here’s more details for you finance fetishists. Good luck with the fine print tax avoidance strategies being whipped up by loyal advisers everywhere. This one source should do, but inquiring minds should feel free to google if you have more questions, and please do not reply to me with tax planning advice, I am not a licensed professional.

    https://www.fidelity.com/viewpoints/personal-finance/new-medicare-taxes

  10. athena1

    “But, von Hayek continued, “You see, one of Reagan’s advisers told me why the president has permitted that to happen, which makes the matter partly excusable: Reagan thinks it is impossible to persuade Congress that expenditures must be reduced unless one creates deficits so large that absolutely everyone becomes convinced that no more money can be spent.”

    Thus, the economist said, Reagan “hopes to persuade Congress of the necessity of spending reductions by means of an immense deficit.”

    http://news.google.com/newspapers?nid=1964&dat=19811209&id=6SZXAAAAIBAJ&sjid=lTsNAAAAIBAJ&pg=2619,5316892

    X out Reagan, substitute Obama, and we have a probable plan.

  11. GrandMistressFlash

    Music + lyrics from Brother D, 1980 (the Golden Age of Hip Hop). Nothing’s changed, they don’t make music and lyrics like this anymore and we need it here in Austerity USA 2013!

    “I’m Brother D … and I’m here to shed some light … ”

    “America was built by stolen labor and stolen land …”

    “How we gonna make a [Black] [Looted, Multi-colored] nation rise? Gonna educate, organize. Agitate, agitate, organize.”

    “‘Cause there ain’t no party in a police state!”

    “We’re fired up, won’t take no more!”

    http://www.youtube.com/watch?v=S-HQR2-s1J4

  12. tar, etc.

    Yves said this is to “soften up the public for Social Security and Medicare “reform,” -

    Agreed. I’d like to see the non-Vichy Left out maneuver the Tea Party’s call for cuts. Let’s insist that the excessive profits in healthcare be cut, and that corporate welfare be cut more broadly as commenter8 posted above. You want cuts? We got them. There are trillions in potential cuts once you look at cost side instead of blaming patients – as if it had been in their interests or under their control to cause healthcare cost to double over the last 10 years.

    The second tactic I suggest is not letting anyone in Washington get away with saying something is on or off the table. Who made this table king? This is shorthand for saying the only business being conducted by government is for those that purchase a seat at this fabled table. Scam, you don’t have the money. They got away with saying single payer was “off the table,” without ever having to address its merits or say WHY is couldn’t be publicly mentioned, let alone introduced and voted on.

  13. Alan

    I’m surprised at the anti-Obama sentiment coming from this website. Wasn’t it obvious he was going to support the crony capitalists from, say, 1-2 months of his presidency? It sure was to me, and it was a shock. How is it that everyone finds out just now after re-electing him? not to mention his gutting of whistleblower laws, wiretapping, big brother policies…
    I admit…the alternative sucked.
    I never understood, and still don’t, the cars with “Stop this Endless War” stickers sporting new “Obama 2012″ ones.

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