We fell over the fiscal cliff for more than a day, but chaos was avoided except for a case of metaphorical whiplash.
The Mayan calendar was wrong and Wall Street is relatively stable.
Members of Congress — and the media — paid the price of having their New Year’s celebrations largely ruined because they allowed the crisis to last until the umpteenth hour.
And what did the public win?
Small tax increases — larger ones for the wealthy — and more doomsday fights over the federal debt ceiling and automatic spending cuts, called “sequestration,” that are delayed until February and March for the lack of a so-called “Grand Bargain” that President Barack Obama had desired. So C-SPAN junkies will get something of a movie trilogy out of the fiscal cliff fight that could go on longer than “The Lord of the Rings” and “The Hobbit” trilogies combined.
The national media has already repeatedly debated who “won” and “lost” in the fight but the fact of the matter is both sides gave in and the battle is still raging. The tea party base is upset so many Republicans “caved” and agreed to the compromise and progressives are upset with Obama for conceding as much as he did and giving up much of whatever leverage he had after winning re-election.
Here’s how liberal New York Times columnist and Nobel Prize-winning economist Paul Krugman put it: “The only thing that might save this situation is the fact that Obama has to be aware just how much is now riding on his willingness to finally stand up for his side.” “If he doesn’t, nobody will ever trust him again, and he will go down in history as the wimp who threw it all away.”
Even the Louisiana congressional delegation divided sharply on the matter after 89 of the nation’s 100 senators voted for the deal.
U.S. Sens. Mary Landrieu, D-La., and David Vitter, R-La., both backed the cliff compromise that was negotiated between Senate Republican Leader Mitch McConnell, R-Ky., and Vice President Joe Biden. “This is a much better tax outcome under Obama than I would have guessed,” Vitter said at close to 3 a.m. after the vote.
But on the House side they were joined only by U.S. Reps. Cedric Richmond, D-New Orleans; and Rodney Alexander, R-Quitman.
U.S. Reps. Bill Cassidy, R-Baton Rouge; Charles Boustany, R-Lafayette; Steve Scalise, R-Jefferson; John Fleming, R-Minden; and outgoing Rep. Jeff Landry, R-New Iberia, all voted against the plan.
The bigger fight in the House was whether they would vote on the deal straight up. Once that came to pass, the deal easily passed on a 257-167 vote. Scalise, who now chairs the conservative Republican Study Committee, Fleming and Landry opposed the deal from the start for increasing taxes and temporarily punting on spending cuts. Boustany and Cassidy remained mum until it was time to vote, but they ultimately opposed the deal as well and stated similar reasons.
Many conservatives, like Scalise and Fleming, are saying it is time to use every bit of leverage they can on the debt ceiling and sequestration to push Obama on spending cuts and entitlement cuts. While the federal deficit is not significantly hurting the U.S. economy for now, it eventually will and both sides acknowledge the deficit is a substantial problem.
Revisiting the debt ceiling fight of 2011 is a dangerous proposition because of the effects it had on the economy and the nation’s credit rating, but the fight is coming again, even if it will only be used as a leverage tool. The federal debt ceiling has been raised more than 70 times in the past 50 years, including 18 times under President Ronald Reagan and three times under Obama thus far. Raising the debt ceiling allows the nation to pay its bills on spending that has already occurred.
But the real result of the deal is this: Most Americans will pay a few hundred dollars more this year in payroll taxes because Republicans and Democrats agreed to let the 2010 Social Security payroll tax cut expire and households making more than $450,000 a year will pay thousands of dollars more in income taxes because they are losing the 10-year-old, Bush-era tax cut.
Jordan Blum is chief of The Advocate’s Washington bureau. His email address is firstname.lastname@example.org.