Fiscal Cliff Over, Now the Attack on the People Begins
By Kevin Zeese
January 02, 2013
Last night, Congress passed a watered down fiscal cliff package that will raise taxes on everyone, but the worst is yet to come, and this “deficit cutting” measure contains some surprises.
Economist Jack Rasmus highlights Obama’s comments after passage which signal what we can expect:
“I am very open to compromise . . . Medicare is the biggest contribution to the deficit.” In fact, Medicare does not contribute to the deficit because it is funded by a separate tax, but Obama has signaled – expect cuts to Medicare and Medicaid.Obama has been laying the ground work to cut social insurances since 2010.
The “deal” only cut the deficit by $620 billion of the bi-partisan goal of $4 trillion so there are a lot of budget cuts ahead and they will not come from the military or national security state, they will come from the necessities of the people. Even if the U.S. had gone over the cliff cuts to the military were minimal, DoDcuts scheduled to take effect in 2013 were only $24 billion, according to the Congressional Budget Office, much less than the oft-mentioned $500 billion reported in the media. The $500 billion are cuts over ten years, mostly backloaded to the out years. Thus these are cuts the military would likely never see.
The reason that the deal cut the deficit so little is because Obama backed off his campaign promise to raise taxes on the top 2%, and instead only repealed the Bush tax cuts on the top 1.5%, those earning over $400,000. As a result, rather than raising $1.2 trillion in revenue, the deal only raised $600 billion and part of that came from working people as payroll taxes were re-instated. The result will be more cuts on the rest of us – so later this year the bi-partisan cut to corporate tax rates can be passed.
The “deal” was not all about cuts, as Matt Stoller writes, the deficit cutters were very generous to Goldman Sachs: “Goldman got $1.6 billion in tax free financing for its new massive headquarters through Liberty Bonds.” Another gift to big finance and multinationals: a provision was included that allows U.S. multinationals to not pay taxes on income earned abroad at a cost $1.5 billion to the budget.