Fiscal Cliffhanger

Today in “things that would’ve made a killer episode of ‘The West Wing’ but that suck in real life,” our nation’s leaders are still arguing about the so-called fiscal cliff that our federal budget will hit at the end of the year.

In a very large nutshell, this started last summer when the federal government was approaching its debt ceiling. Instead of raising the debt ceiling, preserving the U.S. credit rating (as it has done many times before), Congress instead acted like that one kid in my 7^th grade math class who deliberately didn’t do his homework in order to keep our class from getting the merit-based pizza party that EVERY OTHER CLASS GOT that year… but 20 years later I still remember his attention-whoring ass, which I guess is the Tea Party’s end-game as well.

As a backstory, Congress and the Obama Administration had previously faced off over the Bush tax cuts – signed into law in 2001 and 2003 and set to die naturally in 2010. In 2010, President Obama and Democrats in Congress wanted a jobs bill; Republicans held the tax cut renewal as leverage. Their compromise was a jobs bill that included a two-year extension of all of the Bush tax cuts.

Welp. It’s been two years, so here we are talking about the Bush tax cuts again. It’s not just that they’re set to expire (again), but that they’re a key point in the debate over how to resolve the fiscal cliff issue. Because the last-minute Budget Control Act of 2011, which temporarily resolved the debt ceiling problem, gave Congress until the end of this year to reach a long-term deal on deficit reduction. If they can’t, then automatic cuts kick in across the board. Automatic meaning, there’s nothing anyone can do about them. Across the board meaning EVERYWHERE, including the Department of Defense, which – apologies to Social Security – is the actual third rail of American politics.

So, the fiscal cliff and the death-date of the Bush tax cuts are separate things, and the fact that they’re coming to a head at the same time is A) cosmic sh*ts and giggles, or B) proof that we really are living in an Aaron Sorkin TV show, in which case I should have better dialogue and more scenes with Bradley Whitford.

But unfortunately, this isn’t TV. This isn’t something we can or should observe ironically from great remove in between checking our fantasy football scores and reruns of “30 Rock.” One of the proposals for resolving the whole fiscal cliff/deficit reduction/tax cut brouhaha – which, for the sake of clarity, will now be referred to as “Roscoe” – will directly impact the class of Americans whose direct expenditures drive our entire economy, and the other proposal for dealing with “Roscoe” will affect a vastly smaller number of Americans. So I feel like we should understand our choices.

Choice #1: No increases in tax rates for anyone, but eliminate tax deductions such as those for mortgage interest payments and some charitable contributions. Cut $1.2 trillion in spending on health care and entitlements, and raise the eligibility age for Social Security.

Choice #2: cut federal spending, keep the Bush tax cuts for most, but allow the tax cuts for incomes over $250,000 to expire like they’re going to anyway if we can’t agree on a deal.

Choice #2 asks the wealthiest Americans to go back to paying the tax rates they paid in the 90s, when, to my knowledge, people making six figures were not, in fact, reduced to panhandling. Look, no one’s saying that an AGI of 250k+ makes you “own your own yacht” rich, but you’re not exactly hurting. And no, I’m not advocating some draconian tax rate that de-incentivizes your success – just reminding that that the American Utopia y’all conservatives love to wax poetic about was also the era when the top marginal tax rate was 90 percent. So you’d think that going back to the much lower rate you paid when I was in high school would be a reasonable compromise.

Because under Choice #1, we’d kiss goodbye to the public incentives that are available to basically any American who owns a house or donates to a charity. I own a house, and my mortgage interest deduction is a big part of the reason why I’ve held on to my house. There’s not a nonprofit in this country that could survive without contributions from individuals or corporations. For high-wealth Americans, charities are a key part of their wealth management. You mess with that by nixing charitable deductions, and you’re screwing with the foundations and non-profits that allow the well-off to maximize their wealth, not to mention the thousands of jobs created by nonprofit organizations.

So, we can do all that, and STILL not fix Roscoe, or we can extend all of the Bush tax cuts minus one and be closer to okay.

Now would be a good time to ask a question I’ve always wanted to ask the John Boehners of the world. If funneling cash to the very wealthy is the best way to create jobs… when do they start? Because – again – tax rates on high income households are the lowest they’ve ever been – ever – and this isn’t something that happened last week. The first round of Bush tax cuts happened 11 years ago. What are they waiting for? Am I to believe that the wealthiest one percent have portfolios full of sure-fire investment opportunities that would put thousands of Americans to work and make even more millions for themselves, but they’re holding out for another one or two percent drop off their tax rate?

The tax cuts are among the largest contributors to the federal debt. We did this because letting the uber-rich keep their cash was supposed to trickle down to the rest of us, but doing so has coincided with the worst U.S. economy since the Great Depression. If they are the ones to save us, then apparently the uber-rich are very bad at this. So maybe we should just stop listening to them.

The universally acknowledged “best ever” times for our country economically were those when a guy like my grandfather could work decades for a local manufacturer, buy a house and put three sons through college though he himself had only a high school degree. You can’t do that in many places in America these days, and federal spending is NOT the reason why. No, Congress shouldn’t be in the business of redistributing wealth. What it should do is set fair tax rates and get out of the way. What Republicans in Congress are proposing is the opposite of that.