Wednesday, January 2, 2013

Too Little Too Late?

At long last, the Congress working with Obama, has finally passed a measure to prevent the nation from falling off the much-talked about fiscal cliff. The question that immediately arises however is if this 11th hour affair is too little and too late to tackle the economic challenges that this nation faces. The answer to that question might vary depending on who you ask but the unmistakable albeit half-hearted agreement seems to be that the measure no matter how imperfect has been of enormous benefit for the nation.

Apparently, with the prospect of taxes hiking for 97% of American families and the return to pre-Bush tax framework of 39.6% for the top 2% staring the democrats and the republicans in the face if they did what they know how to do best (which is to do absolutely nothing for the American people), this “do-nothing” congress found a way to lay aside their interminable partisan wrangling to pass a “compromise bill”. The bill guarantees that the vast majority of American families will not see an abrupt rise in taxes. More importantly, this deal will temporarily prevent the kick-off of across-the-board stringent spending cuts known as Sequestration.

Nevertheless one must ask—and unfortunately, not too many Americans seem to be sufficiently engaged on this—whether this late compromise bill even remotely begins to address the gargantuan debt and deficit issues facing the nation. The answer should be pretty obvious: a resounding negative; we are by this bill simply kicking the proverbial can down the road.

Check this out: the White House declared somewhat triumphantly, after the congress managed to not sit on their hands and let the nation burn as was their custom, that the measure would raise $620 billion in new tax revenue over a 10 year period. That may sound impressive to you only if you have failed to realize that even with that, there will hardly be a dent in the deficits. As a matter of fact, that figure is less than the projected deficit for EVERY SINGLE YEAR over the 10 year period. Laughable, isn’t it?

Under Obama the debt is now at $16 trillion dollars; with this new measure, we’ll be tacking on another $4 trillion to the national debt. Yet, at every turn, everyone realizes that there needs be a serious reining in off spending if there’s ever to be the faintest hope that these debt and deficit issues will ever be successfully tackled.

Who wants to bother about problems that will most certainly show up in the future to jeopardize the economic life of the next generation of Americans if we continue at these present unsustainable spending levels? Perhaps the bold and honest answer is that most Americans have lost the vision of their forbears and the desire to make the future of the country brighter than what obtains presently because they are simply interested in taking maximum advantage of big government spending here and right now.

So yes, a compromise bill has been reached which would amongst many things extend the unemployment benefits and other assorted refundable tax-credits for the struggling working class. Capital gains taxes also which were sliced under Bush are now raised; the estate tax which were almost repealed under Bush have risen to 40% with this new measure as well.

It would seem that Obama’s re-election is yielding fantastic dividends for liberal causes. Frankly one cannot understand why the Republicans after holding out for so long on these hefty fiscal issues, and generally giving the impression that they were serious about reining in runaway spending, have managed to give their consent to this very progressive tax code. Were they intimidated or worse disorganized? If disorganized, was it Boehner’s fault? Could it be that Obama and the democrats compromised somewhat but held the line firmly at the prospect of  higher-than-Clinton-era tax hikes for the top 2%- the last straw that broke Republican backs and sent them scurrying to reach an agreement?

Whatever the story is, I suppose the nation can breathe a temporary sigh of relief for having managed to avoid the cataclysmic side effects of years of uncontrolled and riotous government spending. Of course it goes without saying that this temporary relief will be very much short-lived for sooner than many people recognize we shall witness once again, on the floor of congress, the next chapter of the debt limit fiasco.

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