Winnipeg Free Press - PRINT EDITION

A 'progressive' view of fiscal cliff deal

  • Print

Many liberals are bashing the deal passed this week by Congress, and not without reason. Even Senate Majority Leader Harry Reid reportedly thought this was a bad deal, though he did buck up and support it.

There are some key ways this deal falls short. But let's first credit what's good about it:

Raising rates on top earners. If you're a member of the top one per cent, you don't like this deal. For the first time in over a decade, people making more than $450,000 in household income will pay a 39.6 per cent income tax rate, up from 35 per cent -- thus achieving a long-held liberal goal of reducing the inequity of the Bush tax cuts. True, the threshold was raised from $250,000, but that only sacrifices $100 billion to $200 billion in revenue over 10 years. Meanwhile it's broken the iron anti-tax ideology of the GOP. This shouldn't be overlooked.

Extended unemployment insurance. Two million long-term unemployed Americans would have lost benefits if no deal was reached, and another one million in the first quarter of 2013. Now they won't, which provides a critical boost to the economy and a helping hand to the victims of an awful economic crisis.

No Medicare, Medicaid, and Social Security cuts. This is also a big win. For months, well-funded Wall Street and corporate interests flooded the airwaves with ads demanding that Washington "Fix the Debt," and sent a steady stream of lobbyists and advocates through offices across the capital. One of the overriding goals of this effort was to cut the social safety net. They failed miserably.

Sequesters delayed. This isn't over -- more on this in the bad news section -- but the non-defence domestic cuts could have been devastating, and now won't happen. It's true this will come up again in two months, but the Democrats haven't given anything away until they have. Republicans are seeing a disturbing trend of being promised spending cuts and then not getting them -- this is the third time they've been put off.

Some good tax breaks. Obviously not the desired stimulus of most liberals, but it's important that the opportunity, child, and earned income tax breaks were extended for five years, which aids many middle- and lower-class Americans. The wind power industry also received significant tax help, so there's something for environmentalists to like too.

Farm and dairy fixes. The expiration of the farm bill could have been devastating for working farmers, and has for now been avoided. A lapse in federal dairy support would have sent prices soaring and hurt many families already stretching paychecks to buy food.

That's all rightfully being praised by Democrats that support the deal. But here's what has a lot of progressives ticked off:

No future standoffs avoided -- and more are created. By delaying the sequesters, President Barack Obama has set up another spending fight (in addition to the one over funding the government in March when the current continuing resolutions run out) -- and one in which he doesn't have the leverage of the expiring Bush tax cut rates. Obama insists that he will still insist on one dollar in revenue for every dollar in cuts during those talks, but that's going to be a dogfight. Also, despite an ironclad insistence earlier in these negotiations that the debt ceiling be permanently fixed, this deal achieves no fix. We've actually already hit the debt ceiling and the Treasury Department can only run the clock out until around February -- so get ready for another epic showdown.

Taken en masse, the three remaining cliffs could be disastrous for Democrats. It's why Harry Reid told the White House he hated the deal, and even threw one version of it into the fireplace. Rep. Jim Morgan of Virginia gave voice to the concerns of many. "The problem is, we have set up three more fiscal cliffs," he said. We're gonna have to deal with the debt ceiling. We're gonna have to deal with the continuing resolution expiration, and we're gonna have to deal with the sequester. And all that's left is spending cuts. And all that's left to ask ourselves is, what programs do we cut and how deep do we cut them? We have to look back on this night and regret it."

Too much revenue was given away. Raising the threshold to $450,000 in household income gave away as much as $200 billion in revenue over 10 years, and there was an even deeper concession on the estate tax. Democrats initially wanted a 55 per cent taxation rate on estates worth more than $1 million, and settled for a 40 per cent rate on estates worth $5 million and more -- with that level indexed to inflation. That's nearly $400 billion in revenue lost. All told, Obama walked into these talks demanding $1.2 trillion in revenue and came out with $620 billion in revenue. And for what did he give away half the farm? An unemployment extension and a handful of tax credits? That's too much in the eyes of many liberals, especially when the rates went up automatically on Jan. 1.

Not nearly enough stimulus. Obama came in talking a strong game, actually asking for around $50 billion in new federal spending to stimulate the economy in this deal. Not only did he fail to get any new stimulus whatsoever -- he failed to extend some existing stimulative tax measures. Democrats gave up on the payroll tax cut, which had a huge economic impact. It was worth $1,000 per year to the average family, and letting it expire will shave 0.6 per cent of GDP this year.

Collateral Damage to federal workers and Sandy victims. House Republicans pulled two abhorrent stunts: On Monday night, they froze federal worker pay for another two years. There are about two million federal workers nationwide, and contrary to conservative dogma, they are not living large on the public dime. In fact they earn 34 per cent less than their private sector counterparts, and will now see their wages frozen for two more years. This is a direct and punitive austerity measure, and one that was supported by 55 Democrats. Meanwhile, to ease the jangled nerves of far-right Republicans who actually oppose federal aid to hurricane victims, House Speaker John Boehner pulled a hurricane Sandy relief bill from the floor late Monday during the final fiscal cliff vote. Americans whose property was ravaged by the storm and are waiting for help will have to keep waiting.

In truth, we don't yet know how bad this deal is. If President Obama and the Democrats do indeed fend off damaging spending cuts in the coming budget and sequester fights, and if they do ensure that what is cut is offset by new revenue -- and if Obama does refuse to let the debt ceiling be used to enact slashing safety net cuts -- then this deal is probably defensible on its merits. The top-earner tax hikes are good, so is the unemployment aid, and while there was a lot of other things that weren't achieved, nothing grievous was really given away either. So it was probably a fair takeaway from tough negotiations with a GOP that still controls the House. But if this sets the stage for deep cuts in the future, liberals may come to rue this day.


George Zornick writes regularly for The Nation. He was senior reporter/blogger for, a researcher for Michael Moore's SiCKO, and an associate producer on The Media Project for the Independent Film Channel.


-- Agence Global

Republished from the Winnipeg Free Press print edition January 3, 2013 A15

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes


  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.


Make text: Larger | Smaller


Winnipeg Cheapskate: Tech support alternatives

View more like this

Photo Store Gallery

  • A goose flys defensively to protect their young Wednesday near Kenaston Blvd and Waverley -See Bryksa 30 Day goose challenge- Day 16 - May 23, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • Geese fly in the morning light over Selkirk Ave Wednesday morning- Day 22– June 13, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos


Should the August civic holiday be renamed to honour Terry Fox?

View Results

View Related Story

Ads by Google