There is some good news out of the tax deal that Congress struck not at the last possible second, but actually after it. With it, Congress avoided the worst effects of the fiscal cliff, almost certainly saving the economy from what would otherwise have been another recession.
But overshadowing whatever positive developments came out of the deal is the indisputable fact that Congress left hundreds of millions of Americans on the hook for weeks, playing a dangerous game that everyone knew had only one possible solution: a compromise in which everyone must give. That is what happened late Tuesday night, though it is only a start on the painful but necessary compromises that are yet to come.
It wouldn’t have gotten done if House Speaker John A. Boehner had stuck to his usual routine of not allowing a vote on any matter that lacked a majority of Republican support. To pass the bill that the Senate had previously approved, Boehner had to tacitly acknowledge the fact that the Republican tea party contingent is the tail wagging the dog in Congress. Wisely, he allowed the vote, a lopsided 257-167 victory, with 172 Democrats and just 85 Republicans voting to continue the Bush tax cuts on everyone except individuals earning more than $400,000 a year and couples earning more than $450,000 a year.
Those aren’t the only taxes that are going up. At President Obama’s urging two years ago, Congress enacted a cut in the payroll taxes that fund Social Security. That tax holiday ended on New Year’s Day, so virtually all Americans are going to see a higher amount taken out of their paychecks.
The law also finally crafted a permanent fix to the alternative minimum tax, which was meant to ensure that the wealthiest Americans couldn’t reduce their taxes to zero, but which annually threatened to squeeze less-affluent Americans. That problem has been fixed by indexing it to inflation.
It is shocking that so many members of Congress were willing to sabotage the economy to slake their own insatiable demands for tax cuts for the wealthiest Americans, but that’s how zealots are. They wear blinders.
Fortunately, common sense was found among New York’s Republicans. In particular, it was good to see Rep. Tom Reed, R-Corning, vote in favor of the bill, despite his misgivings about the critical issues it sidestepped. As he said, “that will have to wait for another day.”
Those issues involve the nation’s debt and spending levels, both of which demand attention. While we don’t argue with significant deficit spending to survive a recession – especially one as profound as this one – at some point, government must pull in the reins. That remains to be done and may yet happen as Washington confronts the next in its never-ending series of crises: raising the federal debt ceiling.
Washington actually hit the debt ceiling on Monday, but financial maneuvering provides another six weeks or so until the nation can’t pay its bills. Before that happens, there needs to be serious negotiation about spending levels and how much should be cut in a time of continuing economic weakness.
In a sane world, this discussion would have been occurring throughout 2012, but presidential election years and sanity do not always walk hand in hand. No one running for election wanted to talk seriously about those issues before Nov. 6, and there was no time to take up something so complex and far-reaching in the few weeks that remained between then and the edge of the fiscal cliff.
Congress also has yet to take up sequestration – the draconian budget cuts demanded by a law it foolishly passed in 2011. Combined with the debt ceiling deadline, that could be a useful way to prompt Democrats to finally address the serious issues facing Social Security and especially Medicare, instead of pretending that the laws of mathematics don’t apply to popular programs. Retiring baby boomers are flooding the system; it has to change.
The best thing both parties can do for Americans now is to deal with these remaining issues straightforwardly. Each side has legitimate points and, just as with the fiscal cliff, there is only one practical solution: compromise. Let’s try to do it better this time.