If anyone would like a change of pace from the typical debates we've seen over this "fiscal cliff" deal and who made out and who didn't, the upcoming debacle over raising the debt ceiling and what's really lead to the lack of upward mobility and record income disparity in the United States, I'd highly recommend you set aside some time to watch at least the first few segments from Up With Chris Hayes from this Saturday.
Unlike most of the brain-draining discussions we're treated to on the majority of our corporate media and despite the presence of guest Veronique de Rugy appearing again in less than a month on Hayes' show, I don't think most of our readers here will be disappointed with the discussions that went on.
As Hayes has been talking about for some time now, if you really want to know who our members of Congress represent, forget the rhetoric and look at how they vote and who they protect when we see them finally act and not just what we hear them saying during their posturing on television. As was pointed out during the discussions here, despite the fact that President Obama talked about protecting the middle class in this deal, most Americans are going to see their taxes go up with the expiration of the payroll tax holiday.
As the panel members discussed during the segments, there was bipartisan agreement on that for some good reasons, like not wanting to undermine the integrity of the Social Security trust fund. But as was also noted, that should have been replaced with a renewal of the Making Work Pay tax credit, which you can read more about here: Making Work Pay vs. the payroll tax cut, in two charts.
Sadly, our Congress is still showing themselves to be more worried about their rich campaign donors and this deal to make it through their last round of Shock Doctrine governance was no exception.
You can read more on all of this from Hayes' blog here and more video below the fold: The fiscal cliff deal: A tax hike for the real middle class:
What was perhaps most revealing about the final deal reached by President Obama and congressional Republicans to avert the so-called “fiscal cliff”–or “fiscal curb,” as we’ve been calling it at Up w/ Chris Hayes–is what it told us about who Washington actually serves, and what lawmakers think “middle class” actually means.
The deal, of course, raised marginal income tax rates for individuals making more than $400,000 a year. Nominally, as The New York Times reported today, this makes the federal tax code–at least as it appears in statute–more progressive than it has been in decades. The actual effect of the deal, however, was to raise taxes on 77% of American households, while giving away billions in tax breaks to politicians’ corporate patrons.
That’s because lawmakers on both sides of the aisle agreed from the outset not to fight for an extension of the payroll tax holiday signed into law by President Obama two years ago. That provision cut earners’ payroll tax liability by 2%. And while almost all households benefited in some way from the payroll tax cut, it was especially helpful to lower and middle income Americans, both because the payroll tax is capped at the first $110,000 of income and because higher earners tend to make more from investments, which are taxed at lower rates.
This statistic, for example, tells you everything about who lawmakers were really looking out for in the negotiations: Among Americans who make between $20,000 and $30,000 a year, 66.9% pay more in payroll tax than income tax, according to the Tax Policy Center. To those people, the payroll tax is what matters more. It’s what takes the bigger bite out of their paychecks.
Among Americans who make between $200,000 and $500,000 a year, 97.6% pay more in income tax than payroll tax. To them, the Bush tax cuts were a boon. And since income taxes went up only on income over $400,000, it’s easy to see who won in that battle. Citizens for Tax Justice estimates that people who make in the range of $279,000 will get a tax cut of about 3%, compared to just 1.9% for people making an average of $14,000 a year.
This arrangement proves a few things. For one, it turns out Republicans aren’t averse to raising certain kinds of taxes, as long they don’t burden wealthier Americans. “The Republicans have always been against tax cuts for lower and middle income people,” Rep. Jerry Nadler, Democrat of New York, said Saturday on Up w/ Chris Hayes.
The arrangement also proves that neither side really cares about deficit reduction. The payroll tax increase, for example, will save about $95 billion in 2013 alone. But Congress turned around and gave most of that savings away in tax breaks for businesses like NASCAR, Hollywood studios and Wall Street. The Joint Committee on Taxation estimates that those so-called “tax extenders,” tucked into the bill with little notice, will cost $68 billion in 2013.
Lastly, the arrangement lays bare how power is wielded in Washington: Not just in decision-making, but in agenda-setting. The current artificially induced crisis is all about deficits and spending cuts–issues that, studies have shown, are much more important to wealthier Americans. The political class has apparently convinced itself that unemployment is no longer a problem, despite the fact that only 58% of Americans have jobs, essentially the lowest number since 1983 and virtually unchanged since the end of the recession. Read on...
And here's more on those tax extenders where while working class Americans saw their taxes go up, NASCAR, Hollywood, Disney and Wall Street got an extension on their breaks.