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January 13, 2013

Column: We’re ‘compromising’ ourselves into insolvency

As one congressman said at some point on New Year’s Day, about the “fiscal cliff” legislation: “What the heck just happened?”

I don’t remember who it was, could have been a legislator from either party — lots of other Americans were asking the same question. Unfortunately some people rushed to attack various players before being able to answer it. House Republican leaders were accused of “selling out”; Sen. Scott Brown was accused of voting to raise taxes as his last act in office.

I was watching much of the television coverage after following the debate in newspapers over the holidays, and can understand the confusion. My Proposition 2 ½ mentor, Marblehead journalist Warren Brookes, always told me to KISS: “keep it simple, sweetheart”, so here goes.

The “Bush tax cuts”, passed as temporary in 2006 and renewed for one year at the end of 2011, and the also temporary Social Security payroll tax cut of 2010, were due to expire at midnight on New Year’s Eve, 2012. President Obama ran on higher taxes on “the rich”; in return for renewing the 2012 tax rates for most people, he insisted they remain high for income over $250,000. He and Democratic leaders also argued for a “balanced approach” — tax increases on “the rich” and spending cuts.

The president and legislative leaders met in private through the holidays to work out a “balanced” deal, but on Dec. 31 the clock struck midnight and all the tax cuts turned into pumpkins; rates and payroll taxes automatically increased on all taxpayers without any politician voting at all. There were no spending cuts.

The Wall Street Journal’s Stephen Moore writes that House Speaker John Boehner was stunned during his negotiations with Barack Obama when the president told him “We don’t have a spending problem.” At one point in the negotiations, Boehner agreed to $800 billion in new taxes, then asked “what am I getting”? Obama replied: “You don’t get anything for it. I’m taking that anyway.”

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