Archives

As of this posting, a deal between Congress and the White House appears to emerging to resolve the so-called “fiscal cliff,” the expiration of $5 trillion in tax cuts signed under Presidents Bush and Obama, $1.2 trillion in automatic spending cuts known as “sequestration,” the cessation of Unemployment Insurance for unemployed workers, and the expiration of various other tax policies, including the 2010 payroll tax cut and a range of business tax credits.

While nothing has been finalized (and indeed could easily unravel over the next few hours), the emerging deal represents a mixed bag for the nation’s working and middle-income families—it extends a range of key middle-class tax cuts, but at the same time, continues large-scale tax breaks for the wealthiest Americans—and as a result—keeps the door open for spending cuts devastating to many working families.

Read More

As Congress debates solutions to the “fiscal slope,” the future of the Bush Tax Cuts on incomes over $250,000 continues to play a pivotal role. Allowing these tax cuts to expire will provide over $1 trillion in new revenues—a key component of a balanced approach to deficit reduction—yet we consistently hear that taking this approach will disproportionately harm small business “job creation” and long-term economic growth.

As a new policy brief clearly demonstrates, these concerns have little merit—allowing these tax cuts to expire will have virtually no impact on the kind of small businesses that genuinely contribute to job creation. The specific tax changes under discussion would allow the 2001 and 2003 tax cuts on incomes above $250,000 to expire in 2013, thus changing the top marginal tax rate from 36 percent to 39.6 percent.  According to the report, allowing the upper income tax cuts to expire in this way would affect only small percentage of small business owners and small business income, and even those few would see no significant barrier to capital reinvestment and job creation as a result.

Read More

Uncategorized

A swelling chorus of advice is emerging in recent days amongst progressive thinkers and commentators about the ongoing fiscal policy negotiations in Washington. The message: “Hang tough Mr. President.”

James Protzman over at Blue NC has posted an example — a nice little video from former Secretary of Labor Robert Reich.

But other are saying the same thing:

Robert Kuttner says a lot of the same things in this column, entitled “About time: Obama finally gets tough.”

Meanwhile, the experts at the Center on Economic and Policy Research have weighed in on the hysteria surrounding the so-called “fiscal cliff.”

Finally, Paul Krugman exposes the true nature of the conservative con game in this NYT column.

As Congress continues to debate the best approach to reducing the federal debt and resolving the “fiscal slope” of looming tax increases and automatic spending scheduled for 2013, it’s critical to recognize that while everyone wants to “fix the debt,” the real questions are how to fix the debt, and who should pay to fix the debt.  Do we attempt to reduce the national debt through spending cuts alone, which would require eviscerating key public investments and core safety net programs in order to generate sufficient savings to make deficit reduction work? Or do we take a balanced approach that includes new revenues, along with smart spending cuts that spare programs vital to protecting the most vulnerable among us?

The American public has decisively answered this question during the recent election, choosing by overwhelming margins to support President Obama’s proposal to raise new revenues by asking the wealthiest Americans to pay their fair share.  According to a new survey by nationally acclaimed pollster Hart Research Associates, 61% of respondents support allowing the Bush Tax Cuts on incomes above $250,000 to expire at the end of the year, while simultaneously extending middle-class tax cuts on incomes below that threshold.   This includes 40% who strongly agree. At the same time, a strong majority of respondents (53%) rejected the proposal made by the US House of Representatives to hold the middle class tax cuts hostage to ensure passage of the tax cuts on incomes over $250,000. Only 42% supported blocking passage of the middle class tax cuts in order to secure passage of the tax cuts on incomes over $250,000 per year.

The Hart Associates survey reinforces the very similar findings of the exit polling conducted during the recent Presidential election—Americans support asking the wealthiest among us to contribute to fixing the national debt. For more details on the survey and its results, see the full polling memo here.

On Tuesday, Congress returned for its long anticipated lame duck session, and first up on its agenda is addressing the looming “fiscal slope”—the expiration of $5 trillion in tax cuts signed under Presidents Obama and Bush, coupled with the phase-in of $1.2 trillion in automatic spending cuts to federal defense and non-defense programs known as sequestration.

As Congress engages this debate, here are the Four Key Facts you need to know: 

#1.  It’s a “fiscal slope,” not a “fiscal cliff.”  Although the tax cut expirations and spending cuts are scheduled to begin taking effect in January 2013 (leading to overheated rhetoric about a “fiscal cliff”), they will only have a gradual impact on the state’s economy.  Both sequestration and the tax cut expirations phase-in over months and years and can be replaced by Congress at any time.  This is why we call it a “fiscal slope”—because it will only affect the economy gradually.

Read More