I have been saying for months and months and months that there was no such thing as a fiscal cliff, that there was no way either party was going to let the tax rates go up for 98% of the population, and that there was no way they were actually going to really address the debt fiasco we have in this country. As it stands now, the tax rates are not going up for anyone but those making over $400,000 per year ($450,000 for married couples), and the estate tax, dividend tax, and AMT tax are all being massively reduced from what they were scheduled to be. These tax increases are going to cost me a lot of money, but they are all substantially lower than they were legally scheduled to be.
There is nothing to celebrate or bemoan in what happened over the last 24 hours. A little rule-of-thumb of mine may be appropriate to share here: When BOTH parties say they want a certain thing, you can bet that after a whole lot of posturing or politicking and time-wasting, that thing is going to happen. It is not that easy when only one party says they want something. BOTH parties said they wanted the bottom four tax rates to stay where they were. BOTH parties said they did not want the estate tax exclusion amount to revert to the preposterous $1 million level. BOTH parties said they wanted a dividend tax rate at 20% or lower. It is no surprise that all these things are happening.
Now, do I want my income tax rate going up? No, and I think it is immorally high even at 35%, let alone 39.6%. However, anyone telling you that the Senate or House voted for a tax increase is lying, and they know it. The law of the land was for a dramatically higher increase in rates across the board to kick in, and there have been huge reductions passed in the last 24 hours from all of those legally set levels. In other words, a tax cut was passed, not a tax increase. Did the Republicans hold their ground about not agreeing to see the top rate go from 35% to 39%? No. Did the always-pompous Obama keep his sworn campaign pledge for rates to go up on all incomes above $250,000? No, with all the leverage in the world he folded like a bad poker hand and agreed to a $450,000 income level for that increase. There are things to like and things not to like, but there is simply no debating that it is better than what we were going to get – by a mile.
So why are people like Erick Ericson so mad? Because this plan does not cut spending the way we want. Well, no kidding Sherlock (I like the real expression better). It does not tackle deficits and debts because THE WRONG PARTY WON THE ELECTION. I love the bravado and tough-guy tone a lot of my conservative friends possess on the blogosphere, but for the grown-ups in the room, elections matter, and the party that won is going to spend us into oblivion until the bond market tells them enough is enough. That is the only thing going on right now.