Submitted by: Mike Spindell, guest blogger
Fear not though, because just as the collective We has just bitten one bullet, another comes along to frighten us once again with disaster and that “disaster” will occur on December 31, 2012, as we come to the end of another turmoil ridden year in societal intercourse. I’m writing, of course, about the “Looming Fiscal Cliff” that has been so very prominent in what our mainstream media calls “news and commentary” and our leaders of both parties call governance. My opinion and that of many others with far more economic expertise than myself, is that the “Fiscal Cliff” is a mere “bogeyman”, used by those politicians on the Right and the Left as leverage to accomplish their particular political agendas.
Since one of the interests of this blog is the Constitution and the consequent Rule of Law that should be its’ result, this comes within our purview because serious issues of national interest are being driven by false mythology grown to myth like proportion. Let’s look at what is behind this mythology and its propaganda.
The premise of the “Fiscal Cliff” is that unless something is accomplished to prevent its dire consequences from occurring on December 31st, our country will slip into the throes of economic disaster. What is the nature of the dire events that will occur?
“The “fiscal cliff’, however, is an invented term applied by politicians to the date various temporary legislative changes to the country’s tax code and spending policy take effect. Politicians began instituting temporary tax cuts with the intention of later transforming them into permanent law in the 1990s. According to a Center on Budget and Policy Priorities report, this practice exploded during the George W. Bush administration and was accompanied by budget gimmickry to hide their affect on the federal deficit.
The Bush era tax cuts, known respectively as the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003, are at the center of the storm that is raging around the “fiscal cliff’. The legislation, which was set to expire in 2010 but was extended to 2012, significantly reduced rates on income, estate and dividends and capital gains taxes and exemptions.
After the sunset of the Bush era tax cuts, estate and gift tax exemptions will end raising the tax rates on transferred estates over $1 million to 55%. Long-term capital gains taxes will rise from its current rate of 15% to 20%. The tax bracket for the country’s wealthiest citizens will rise from the current 35% to 39.6%. In other words, the tax code will largely return to the rates that were in place prior to the George W. Bush administration.”http://www.opednews.com/articles/The-Myth-of-the-Fiscal-Cli-by-Abigail-W-Adams-121218-861.html
Now when I read the above my feeling is what does this have to do with me? The Bush Era Tax cuts did little for me, perhaps an extra few hundred dollars a year in my pocket, but given the cost of living today that effect is negligible. As far as Estate Taxes, my children know enough about my financial wealth to understand that what they stand to inherit could possibly pay for my burial and little else that would make them economically better off. In truth by the ideas presented above it seems those most in turmoil about this “disaster” are those whose income is at the top of the heap. Now those on the Left argue that this will also mean the expiration of the so-called middle class tax cuts. As a member of the middle class I remember those cuts well and my overall impression then as now is, the little extra money was nice, but really insignificant in terms of its effect on my standard of living. Where I guess it had some meaning is in a collective sense of the actual extra money spent being circulated in and therefore boosting our economy. The bald reality is that the extra money gained by the working classes does enter the economy, while the extra money garnered by our elite, is simply re-invested in financial instruments for their interest yield and have little effect on the economy via the hoary theory of “trickle down’. It doesn’t “trickle down”, rather it pools at the top.
“This return to the pre-Bush era tax code, coupled with the implementation of spending cuts to reduce the federal deficit and tax penalties associated with health care reform, have many economists screaming recession. Fear of a recession has politicians scrambling to reach a deal that would prevent the parameters of already established legislation from taking effect. The Republican demand in “fiscal cliff’ negotiations in Congress: the permanent implementation of the Bush era tax cuts.
The Congressional Budget Office reported that the Bush era tax cuts were responsible for 14% of the swing from federal budget surplus to federal budget deficit over 2002-2011. The Council of Foreign Relations projects that a permanent extension of the tax cuts will increase federal debt by $3 trillion over the next 10 years. However, due to the fear inspired by the economic catastrophe that is associated with the “fiscal cliff’, the temporary tax cuts instituted to fulfill the campaign promises of George W. Bush may become permanent under Barack Obama. http://www.opednews.com/articles/The-Myth-of-the-Fiscal-Cli-by-Abigail-W-Adams-121218-861.html
So what are the consequences of jumping off the “fiscal cliff’? According to many experts, there are none, because the “fiscal cliff’ does not exist. Ken Fisher, named as one of the thirty most influential people in the investment industry, pointed out in an interview with Forbes that changes to the tax code and federal spending do not take affect in one fell swoop. He refers to the “fiscal cliff’ as, “more of a fiscal rolling plain.” (Ken Fisher Talks the Fiscal Cliff, Forbes, 12/18/2012)
There is no “Fiscal Cliff” that this country will fall off from immediately in the New Year, but merely a sequence of events that could be adequately dealt with due process and due diligence as 2013 proceeds. However, the major political parties, each for their own reasons, are willing to say “boo” to the American People to push forward their different agendas. My own suspicion is that much of this fear mongering propaganda has been put forth by those whose economic interests are most vitally at stake and those whose political canon dictates less taxes and less government. “Less Government” except for that “government” most vital to their economic interests, with our bloated Defense Budget being a prime example. The other party of the corporatocracy, the Democratic Party, has once again been upstaged by masterful propaganda and so must play along with this “Fiscal Cliff” mythology by adding their own spin to it. Lately, that has included our President seeming to offer up “entitlement cuts” to programs that aren’t really “entitlements”, but must be pretended to be, since the prevailing propaganda war calling Social Security an “entitlement” seemingly has been won by his opposition. Those who pay payroll taxes, in many case significantly more money than their income taxes, should know that Social Security is not an “entitlement”. However, they have become confused by the propaganda created myth that “Social Security” is not an insurance program, which it most certainly is.
What is going on here put in simple terms is that the wealthy elite of our country have used their media minions and pundit hangers-on to control the public discussion and pollute it into mythology. To understand this better I would to present “Ten Numbers the Rich Would Like Fudged” by Paul Buchheit, from a Nationofchange OpEd.
“1, Only THREE PERCENT of the very rich are entrepreneurs.
2. Only FOUR OUT OF 150 countries have more wealth inequality than us.
3. An amount equal to ONE-HALF the GDP is held untaxed overseas by rich Americans.
4. Corporations stopped paying HALF OF THEIR TAXES after the recession.
5. Just TEN Americans made a total of FIFTY BILLION DOLLARS in one year.
6. Tax deductions for the rich could pay off 100 PERCENT of the deficit.
7. The average single black or Hispanic woman has about $100 IN NET WORTH.
8. Elderly and disabled food stamp recipients get $4.30 A DAY FOR FOOD.
9. Young adults have lost TWO-THIRDS OF THEIR NET WORTH since 1984.
10. The American public paid about FOUR TRILLION DOLLARS to bail out the banks.
Bonus for the super-rich: A QUADRILLION DOLLARS in securities trading nets ZERO sales tax revenue for the U.S.” http://www.nationofchange.org/ten-numbers-rich-would-fudged-1353335225
The article linked above provides the backup information and reasoning behin those ten and a bonus numbers that nobody seems to include in this national debate over what the true issues of economic policy entail. The responsibility for this is bi-partisan, since both parties merely represent to different approaches to how to continue the elite in their stranglehold of power in the American System. This is a situation that I think the Founding Fathers might have envisioned, but in giving us the tool of the Constitution, felt the people were those who would have to ensure that their liberties remained in intact.
The question that Americans need to examine is how do they look beyond the propaganda spawned mythology spouted by almost all politicians in this country and come to grips with the real issues that lie below these myths we live by. The “Fiscal Cliff” is a sham and yet we see the most “serious people” in our Nation, like our President play along with it, rather than expose it for the sham it is.
There are deep problems and there are deep divisions in our country that is real and can be agreed with by all. However, the only way to solve these issues is too see what they actually are, rather than solving problems that are chimeric.
Submitted by: Mike Spindell, guest blogger.