After months of hype and hysteria, we are no better off with this new deal than we were before. In fact, we’re worse off for numerous reasons. The first being, there are only $40 billion in cuts, but $330 billion in new spending. That’s a net increase in borrowing of $290 billion. I thought we were supposed to cut spending, not increase it?
Second, there is a 2.5% tax increase on everyone earning an income greater than $50K a year. This is the payroll tax increase that helps contribute to the Social Security trust fund. Problem is, the government has been robbing from it for decades, so it’s really just another way for the government to tax the middle class and use the money for other stuff. That will cost everyone making less than $140K about $1600 in taxes each year, so make sure you account for that by increasing your federal tax withholding. The rich will get hit more, but it’s unlikely to affect them as much as it will the middle class.
Third, when you look at the math involved, there is nothing “balanced” nor “fair” about it. It’s actually rather humorous. Take a look at this:
- Taxing the rich generates $600 billion over ten years according to the CBO
- Divide that by 10 and you get $60 billion a year
- Divide that by 365 days and you get $164 million a day
… now …
- They just raised the debt ceiling in 2011 by $2.4 trillion
- Divide that by 365 days and you get $6.56 billion a day
After ten years of taxing the rich, only 2.5% of the $2.4 trillion deficit for 2011 is paid back. Who pays the other 97.5% of the $2.4 trillion? And what about future debt ceiling increases for 2013, 2014, 2015, and 2016? Who will pay all 100% of those debts? Can’t be the rich because all 10 years of the tax revenue generated from the latest fiscal cliff deal is used up by the 2011 debt increase.
So after all the hoopla about the rich paying their fair share, it really amounts to nothing. It won’t help one iota. It only pays back a measly 2.5% of the 2011 debt increase and does nothing to generate meaningful revenue looking forward.
FORWARD! Full steam ahead! To what, I have no idea.