House passes fiscal cliff bill
The House GOP contemplated amending the Senate-passed bill to add spending reductions. However, reports indicate that the GOP Conference could not muster the necessary votes to amend the Senate bill; no vote was held. The House then passed the Senate bill outlined below by a vote of 257-167.
AFP urged a no vote on this bill. Two things worth noting: Boehner did not carry a majority of his conference and the Dems overwhelmingly supported the bill. The bill now moves to the President’s desk.
The last-minute deal to avert the so-called fiscal cliff suffers from some of the worst ailments of Washington’s backroom deals. Primarily, it does not address the nation’s fiscal imbalance because it allows taxes to go up but fails to tackle the true driver of our economic woes: runaway government spending. Not surprisingly, President Obama has already stated that he wants to raise taxes again next year too.
The package is being rushed through at the last minute, possibly voiding the Speaker’s promise that the country would be able to review legislation for three days before the House voted on it. Much like the President’s health care law, it looks like we’ll have to pass the tax bill to find out what’s in it.
Worst of all, the deal allows taxes to rise in a weak economy, something economists across the ideological spectrum counsel against. Taxes are going up across the economy:
- Capital taxation is rising as taxes in President Obama’s health care law take effect.
- Labor taxation is going up and not just on top earners. The payroll tax reduction is expiring for 160 million American workers, exposing the falsity that President Obama and Congress are protecting middle-income workers.
- Consumption taxation is rising as the health care law slaps a 2.3-percent tax on medical devices.
- Not even death can escape higher taxes; the immoral double and triple taxation from the death tax is going up five percentage points next year.
Thankfully, low marginal rates for some are being made permanent and the alternative minimum tax is finally being fixed for good, avoiding the yearly race to “patch” the income thresholds. Capital gains and dividend rates are being held down to a reasonable level and made permanent as well.
Details on “business extenders” remain unclear. However, reports indicate that the distortionary wind production tax credit will not only be extended but expanded so that even more uneconomical, unreliable electricity will be produced.
In the end, the country’s economic policies will take a turn for the worse as the calendar flips to 2013. Taxes will be higher, economic growth will be burdened and the nation’s budget will still not be fixed.