Cliff Notes: The Price of Politics
After months of warning Americans of the devastating economic consequences of going off the cliff, all we’ve seen from Congress is more grandstanding, more press conferences and the same sticking points we’ve known about for more than a year. Now, according to recent reports, some in Washington believe the politics of going off the fiscal cliff could be better for their own self-interests than actually finding a solution. So if going over the cliff is better than a raw deal, Americans should be asking who exactly it’s better for—them or the politicians?
WASHINGTON PUTTING POLITICS AHEAD OF THE ECONOMY
Politicans Likely To Benefit From Going Over Fiscal Cliff:
Going Off the Cliff Might Be A Good Thing – But Only For Lawmakers. “Washington’s Democratic and Republican power brokers have sent the message to the nation that going over the fiscal cliff is a worst-case scenario. But they’re not acting that way, not at all. Instead, many of them have calculated that it’s better to go over the cliff — at least temporarily — than swallow a raw deal.” (Jonathan Allen, “Why They Want to Go Over the Cliff,” Politico, 12/28/12)
Both Sides Playing The Blame Game, Acting In Own Political Self-Interests: “Both sides are playing blame-game politics, with no budget deal in sight just days before the year-end deadline. … The capital’s politicians seem wedded to acting in their own self-interest, rather than the national interest, even as we barrel toward a fiscal train wreck.” (Howard Kurtz, “Parties Resort To Finger-Pointing As U.S. Heads Over Fiscal Cliff,” The Daily Beast, 12/28/12)
Republicans Can Blame Obama For Big Tax Hike And Later Vote For “Tax Cuts.” “For many Republicans, a cliff dive means blaming President Barack Obama for a big tax hike in the short term and then voting to cut taxes for most Americans next month. That’s an easier sell back home in Republican-heavy districts than a pre-cliff deal that raises taxes on folks making over $250,000 or $400,000, extends unemployment benefits and does little if anything to curb entitlement spending. If they back a bad deal now, they run the risk of facing primary challenges in two years.” (Jonathan Allen, “Why They Want to Go Over the Cliff,” Politico, 12/28/12)
Democrats See Greater Room For Negotiating With Republicans Post-Cliff Dive. “For Democrats, the cliff is better than setting a rich man’s cutoff in the million-dollar range — or worse yet, extending the Bush tax cuts for all earners — and slashing Medicare and Social Security to appease Republicans. They, too, see an advantage in negotiating with Republicans who will feel freed from their promise not to vote to raise taxes once the rates have already gone up.” (Jonathan Allen, “Why They Want to Go Over the Cliff,” Politico, 12/28/12)
Obama Approval Rating Up, Republicans Down. Why Cave To GOP? “Obama’s polling in the mid-50s on his handling of the fiscal cliff situation, according to Gallup. Republicans are mired in the 20s. Why cave to the GOP when the president is winning?” (Jonathan Allen, “Why They Want to Go Over the Cliff,” Politico, 12/28/12)
DAYS AWAY FROM FISCAL CLIFF, WASHINGTON TWIDDLES THUMBS
Congress Playing Politics As Usual, No New Ideas To Avoid Cliff:
Days Left To Avert Cliff And Congress Shows No Urgency. “[W]ith days left before the fiscal punch lands, both sides are exhibiting little sense of urgency, and new public statements Wednesday appeared to be designed more to ensure the other side is blamed rather than to foster progress toward a deal.” (Jonathan Weisman, Jennifer Steinhauer, “Senators to Return With 5 Days Left and No Clear Fiscal Path,” New York Times, 12/26/12)
Lawmakers Revert To Old Bargaining Positions. “So, with just five days to go before some $600 billion in tax hikes and spending cuts take hold, congressional leaders are hunkering down in bargaining positions back to where they were before the August break.” (Gail Russell Chaddock, “’Fiscal cliff’: Finger-pointing furiously, Congress slouches toward deadline,” Christian Science Monitor, 12/27/12)
Congress Returns From Vacation Only To Resume Gridlock. “Democrats and Republicans snarled across a partisan divide and showed no sign of compromise to avoid year-end tax increases and spending cuts.” (“Congress bickers over ‘fiscal cliff’ as Obama cuts vacation short, returns to White House,” Associated Press, 12/26/12)
WHAT ABOUT ALL WASHINGTON’S PROMISES OF COMPROMISE A MONTH AGO?
Washington Is All Talk And No Action On Bargaining:
Obama Promised “Action,” No More “Politics As Usual” After Election-Night Win. “’Tonight, you voted for action, not politics as usual,’ Obama said.” (Christi Parsons and Kathleen Hennessey, “Obama pledges ‘not politics as usual’ in second term,” LA Times, 11/6/12)
Boehner Post-Election: There’s A “Mandate For Us To Find A Way To Work Together.” “If there’s a mandate in yesterday’s results, it’s a mandate for us to find a way to work together on solutions to the challenges we all face as a nation.”—House Speaker John Boehner (video: “John Boehner: There’s a Mandate to Work Together,” ABC News, 11/8/12)
Obama: Let’s Get A Fiscal Cliff Deal By Christmas. “’I believe that both parties can agree on a framework that does that in the coming weeks. In fact, my hope is to get this done before Christmas,’ Obama said.” (Mark Felsenthal, “President Hopes For Deficit Deal By Christmas,” Reuters, 11/28/12)
Reid: We Don’t Have To Fight. “Everything doesn’t have to be a fight. That is the way it’s been the last couple of years.”—Sen. Harry Reid (Josh Levs and Tom Cohen, “Re-elected Obama plunges into debate about deficit,” CNN, 11/8/12)
Obama: “[W]e Can’t Risk Partisan Bickering And Political Posturing.” “’The nation, as you know, is at a critical point,’ [President Obama] said. ‘At a time like this, we can’t risk partisan bickering and political posturing. Our leaders have to reach across the aisle to do the people’s work.’” (Josh Levs and Tom Cohen, “Re-elected Obama plunges into debate about deficit,” CNN, 11/8/12)
AMERICANS BRACING FOR THE IMPACT OF THE FISCAL CLIFF
Cash-Strapped Parents “Terrified,” Small-Business Owners Worried. “Cash-strapped parents are terrified they won’t be able to buy essential items for their children if tax credits are slashed by half. Wall Street brokers are afraid that higher taxes will lead investors to pump less money into the economy. And small-business owners worry they’ll have to cut staff and implement hiring freezes.” (“NYers brace for full impact of fiscal cliff,” New York Post, 12/28/12)
American Paychecks Set To Shrink. “After strong gains in income in November, American households will see their paychecks shrink a bit when a two-year payroll tax ‘holiday’ expires Dec. 31.” (John W. Schoen, “Consumers, businesses brace for ‘fiscal cliff’ impact,” NBC News, 12/27/12)
Going Over The Cliff Means A $3,500 Increase In Annual Taxes For The Average American. “The Tax Policy Center estimates that the combined effect of the tax hikes will raise taxes by an incredible $500bn over the next decade, which means a $3,500 increase in the yearly tax bill for the average American.” (Heidi Moore, “Fiscal cliff: what happens if Congress can’t strike a deal?” The Guardian, 12/28/12)
Wealth is not Created at the Top: It is Only Devoured There
The UK has left the EU and we can argue about the minutiae of Wealth until we’re blue in the face. But the overriding factors are apparent and in one of the richest countries in the world it is shocking that so many people can’t even be sure if they are going to be able to eat enough today or provide for their loved ones.
These days, politicians from the left to the right assume that most wealth is created at the top. By the visionaries, by the job creators, and by the people who have “made it”. By the go-getters oozing talent and entrepreneurial-ism that are helping to advance the whole world – Opinion by Rutger Bregman
… across the spectrum virtually all agree that wealth is created primarily at the top and so entrenched is this assumption that it’s even embedded in our language. When economists talk about “productivity”, what they really mean is the size of your paycheck. And when we use terms like “welfare state”, “redistribution” and “solidarity”, we’re implicitly subscribing to the view that there are two strata: the makers and the takers, the producers and the couch potatoes, the hardworking citizens – and everybody else.
Bankers, pharmaceutical giants, Google, Facebook … a new breed of rentiers are at the very top of the pyramid and they’re sucking the rest of us dry
In reality, it is precisely the other way around. In reality, it is the waste collectors, the nurses, and the cleaners whose shoulders are supporting the apex of the pyramid. They are the true mechanism of social solidarity. Meanwhile, a growing share of those we hail as “successful” and “innovative” are earning their wealth at the expense of others. The people getting the biggest handouts are not down around the bottom, but at the very top. Yet their perilous dependence on others goes unseen. Almost no one talks about it. Even for politicians on the left, it’s a non-issue.
To understand why, we need to recognise that there are two ways of making money. The first is what most of us do: work. That means tapping into our knowledge and know-how (our “human capital” in economic terms) to create something new, whether that’s a takeout app, a wedding cake, a stylish updo, or a perfectly poured pint. To work is to create. Ergo, to work is to create new wealth.
But there is also a second way to make money. That’s the rentier way: by leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others’ expense, using his power to claim economic benefit.
But here comes the rub. Most rentiers are not as easily identified as the greedy banker or manager. Many are disguised. On the face of it, they look like industrious folks, because for part of the time they really are doing something worthwhile. Precisely that makes us overlook their massive rent-seeking…
The problems we face are that the politicians are firmly in the hands (pockets) of the uber wealthy. We live in a corporate plutocracy and those holding all the wealth and therefore power have no intention of changing the status quo, even if it isn’t sustainable. They remind me of bacteria (or cancer) devouring the host body more and more even though eventually it will kill them too.
Donald Trump Forgets Important Lesson From Grandad:
Harper’s Magazine reprints an interesting letter from US President Donald J. Trump’s own grandfather that may get you thinking. Here is it then:
The Emigrants – By Friedrich Trump – From a letter written in 1905 by Friedrich Trump, Donald Trump’s grandfather, to Luitpold, prince regent of Bavaria. Trump had been ordered to leave Bavaria for failing to complete mandatory military service and to register his initial emigration to the United States twenty years earlier.
Prince Luitpold rejected Trump’s request for repatriation; the family later settled in New York. Translated from the German by Austen Hinkley.
Most Serene, Most Powerful Prince Regent! Most Gracious Regent and Lord!
I was born in Kallstadt on March 14, 1869. My parents were honest, plain, pious vineyard workers. They strictly held me to everything good — to diligence and piety, to regular attendance in school and church, to absolute obedience toward the high authority.
After my confirmation, in 1882, I apprenticed to become a barber. I emigrated in 1885, in my sixteenth year. In America I carried on my business with diligence, discretion, and prudence. God’s blessing was with me, and I became rich. I obtained American citizenship in 1892. In 1902 I met my current wife. Sadly, she could not tolerate the climate in New York, and I went with my dear family back to Kallstadt.
The town was glad to have received a capable and productive citizen. My old mother was happy to see her son, her dear daughter-in-law, and her granddaughter around her; she knows now that I will take care of her in her old age.
But we were confronted all at once, as if by a lightning strike from fair skies, with the news that the High Royal State Ministry had decided that we must leave our residence in the Kingdom of Bavaria. We were paralyzed with fright; our happy family life was tarnished. My wife has been overcome by anxiety, and my lovely child has become sick.
Why should we be deported? This is very, very hard for a family. What will our fellow citizens think if honest subjects are faced with such a decree — not to mention the great material losses it would incur. I would like to become a Bavarian citizen again.
In this urgent situation I have no other recourse than to turn to our adored, noble, wise, and just sovereign lord, our exalted ruler His Royal Highness, highest of all, who has already dried so many tears, who has ruled so beneficially and justly and wisely and softly and is warmly and deeply loved, with the most humble request that the highest of all will himself in mercy deign to allow the applicant to stay in the most gracious Kingdom of Bavaria.
Your most humble and obedient,
… Well then. Long ago, yes.. Still applies? You tell me.
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