I know, I know. We've thrown this term around for weeks now, posting updates from press conference after press conference that really weren't updates at all.
In fact, they were promises and messages of encouragement to boost our morale. And President Obama did his best to stave off the panic that was creeping up on us. I mean, when Congress keeps telling you you're about to fall off a cliff, how are you supposed to feel?
Especially when they decide to work on the project until the wee hours of deadline when they had 17 months to fix the damn thing. Then they keep telling you the country is going to go into a recession. And that you'll be paying $2,000 more in taxes this year. Or any of the other melodramatic ploys to keep us glued to the television during the holidays instead of focusing on gathering with friends and family. This is not a damn movie. This is real life.
And I'm pissed.
In any case, a deal was reached. But you're still probably wondering why it's such a big deal. What did we get all worked up about? Did we really avert pushing the country into a recession? Who wins in all of this anyway?
Have no fear. We're here to give you a breakdown. And not a Congress "beat-around-the bush, I have my own agenda, we hate each other, waaaah I didn't get my way," breakdown. Turn off the TV. And tune in below.
What the hell is a fiscal cliff?
The now infamous "Fiscal Cliff" is a term coined to describe the undesirable situation that would have happened when the Budget Control Act of 2011 went into effect.
In other words, at the stroke of midnight on Jan. 1, there would be an automatic two percent tax increase for workers and over 1,000 government programs, including Medicare, were in line for "deep automatic cuts." The end of tax breaks for businesses and the increase in taxes on the middle class were said to push us right into economic hardship. So yes, the so-called "cliff" mattered! I for one, was NOT trying to fall off.
Well, they came to a decision, right?
Yeah, after eternity! But a lot happened between...well between Congress bullsh*tting and it actually being passed. For starters, Boehner's Plan B was thrown out the window. But nevermind that...if today's news is any indication, he's going to see major problems way worse than that green tie he wore in the House last night. Then the holiday happened upon us. But Obama wasn't having it. He told Congress to come back ASAP to get this issue fixed. After all, by this point there were only like 5 days until the deadline.
There was a lot of back and forth and bipartisanship seemed to be lost. But Obama was "modestly optimistic" about it all. And Vice President Biden was even called in to "jump-start" the deal-making process. He and Senate Minority Leader Mitch McConnell used their muscle to spearhead the talks late Sunday night.
It worked. The White House and Republicans reached an agreement, which the House voted on (and passed) by Jan. 1.
So. What does any of this mean?
Let's be clear on all of this: this is a huge success for President Barack Obama.
And it should be celebrated as such. Not only has the President successfully raised taxes on the wealthy for the first time in 20 years, he also vowed that he would not raise taxes on the middle class, which he did not. He also contended that in order to steer clear of economic downfall and the fiscal cliff, that we would need to raise taxes on the wealthy. Not surprisingly, Republicans (especially those married to Norquist) weren't having it. But even in the House (majority Republican), he managed to do just that. Check out the details of the deal below:
Maintains tax cuts for individuals earning less than $400,000 per year and couples making less than $450,000.
As promised, the bill will raise tax rates for those who make more
Extends unemployment insurance
Delays two months of automatic cuts in federal spending.
Clap it up!
Hell Yeah! We're in the clear!
Um. Hol' up, hol' up, hol' up.
Not exactly. While we can peg this as a major accomplishment for President Obama, there are still some issues looming with this "fiscal cliff."
For starters, everyone will see more taxes coming out of their paycheck. Yep. The deal doesn't address an increase in payroll taxes.
According to CNN:
Americans earning $30,000 a year will take home $50 less per month. Those earning $113,700 will lose $189.50 a month.
There are also three other fiscal cliffs on the horizon. Well, kind of:
The deal delays the sequester, a series of automatic cuts in federal spending, for two months. In the meantime, the Senate plan calls for $12 billion in new revenue and another $12 billion in spending cuts. The spending cuts are to be split between defense and nondefense spending.
So the deal adds another battle to this year's docket of apparently inevitable congressional squabbles over money. The other two: the debt ceiling and a continuing budget resolution.
And then there is the bittersweet aspect. Obama succeeded in raising taxes on the "rich," but what does that mean any more?
The President initially wanted to raise the threshold for higher taxes from $250,000. With this new deal, it was raised to $450,000. That means more "rich" people get tax cuts...but it also means a helping hand for more Americans. Good or bad??
Clearly there are still some hang-ups. But in a nutshell we need to take the deal that we have because it's not bad. Not bad at all. And congratulate our President for working through the mess that Congress made during this fiscal fight.
As for the problems looming? Let's just hope they can be more democratic about it. Maybe we should let Chris Christie be the mediator in future talks? After all, he already has it out for cry-baby Boehner.