Recommended Reading: Fiscal Cliff Deal

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The lights of the U.S. Capitol remain lit into the night as the House continues to work on the "fiscal cliff" legislation proposed by the Senate, in Washington, on Tuesday, Jan. 1, 2013. (AP Photo/Jacquelyn Martin)

The lights of the U.S. Capitol remain lit into the night as the House continues to work on the “fiscal cliff” legislation proposed by the Senate, in Washington, on Tuesday, Jan. 1, 2013. (AP Photo/Jacquelyn Martin)

Want to know more about the 11th hour deal Congress and the White House reached early Tuesday morning? Here’s a collection of articles explaining what’s in the deal and differing viewpoints on the consequences.

The Fiscal Cliff Deal
by Chris Hellman and Mattea Kramer of the National Priorities Project

As our analysis shows, the deal focused on tax revenue and included a number of changes to the tax code, including a permanent extension of the Bush-era tax cuts on income below $450,000 for families and below $400,000 for individuals.

This deal left major issues unresolved, including the debt ceiling, the automatic spending cuts known as sequestration, and a final version of a budget to fund the federal government in the current fiscal year. Read more »

An Ugly, Ugly, Ugly Deal
by Robert Borosage in Common Dreams

The most ominous part of the deal is what was left out. The deal makes no provision for lifting the debt ceiling. It postpones the sequester (automatic cuts in domestic and military spending) for only two months. It is a smaller deficit reduction package than that originally sought by the president. It therefore sets up the right-wing House zealots to hold the economy hostage once more, while demanding deep cuts in public services (known as cuts in domestic spending), backed by a media frenzy about deficits. And while Social Security, Medicare and Medicaid escaped unscathed in this deal, they will be the prime targets in the coming debate. Read more »

“Obama’s Tax Deal a Victory for His Base—and the Country”
by Matthew Rothschild in The Progressive

I was frankly surprised that Obama didn’t give more ground, since he had signaled a willingness to do so.

I wasn’t surprised, though, that the super-rich got a big part of what they really wanted: which is a huge break on the estate tax.

If there hadn’t been any deal, the wealthiest Americans upon their deaths would have been able to give their heirs only $1 million tax-free. Now they’ll be able to give their heirs $5 million tax free, as they were able to last year (though the rate on anything above that will rise from 35 percent to 40 percent).

That’s one Bush tax cut for the super-rich that survived virtually intact.

And that’s the one they cared about most. Read more »

Perspective on the Deal
by Paul Krugman in The New York Times

[W]hat are the two sides really fighting about? Surely the answer is, the future of the welfare state. Progressives want to maintain the achievements of the New Deal and the Great Society, and also implement and improve Obamacare so that we become a normal advanced country that guarantees essential health care to all its citizens. The right wants to roll the clock back to 1930, if not to the 19th century. Read more »

The cliff deal is better than it looks
by E.J. Dionne, Jr. in The Washington Post

Of course, there was much wrong about how Congress, particularly the House of Representatives, dealt with the best-known deadline in recent political history. A better deal was available weeks ago. But in the end, some very important and positive things happened.

Democracy, in its messy way, worked. An election had a real impact on public policy, moving it in a more progressive direction. Thus, for the first time since 1990, a significant number of Republicans voted to raise taxes — and they raised them most on the very rich. House Speaker John Boehner allowed a bill to become law on a vote in which far more Democrats (172) than Republicans (85) said “aye.” The old rule that Republicans would allow floor action on only bills that could pass with GOP votes was swept away, at least this time.

The cliff deal made our tax code more progressive. The top income tax rate is back up to 39.6 percent. Capital gains taxes, cut repeatedly since the 1970s, were raised. Consider: The provisions enacted Tuesday night combined with the tax hike in the Affordable Care Act mean that capital gains taxes will now be 18.8 percent for couples with annual incomes of more than $250,000 and 23.8 percent for couples earning over $450,000.

True, Democrats caved in by failing to tax dividends as ordinary income, as they used to be. Capital gains should also be taxed as ordinary income, or, at the least, at around 30 percent. But is this progress? The answer is yes. Read more »

“It’s Not About the Deficit”
by Robert Reich in American Prospect

So if the ongoing war between Republicans and Democrats was really over those future budget deficits, you might expect Republicans and Democrats to be focusing on ways to hold down future health-care costs.

They might be debating how to make the cost controls in the Affordable Care Act more effective, for example, or the merits of moving to a more efficient single-payer system, as every other advanced country has done.

But they’re not debating this, because the federal deficit is not what this war is about.

It’s about the size of government. Tea Party Republicans (and other congressional Republicans worried about a Tea Party challenge in their next primary) want the government to be much smaller. Read more »

‘Cliff’ Deal is a Decent Start for Low-Income Americans
by Greg Kaufmann in The Nation and on

If you had told me in recent months that on January 2, 2013, we would have unemployment insurance extended for a year, an improved child tax credit and earned income tax credit extended for five years and no cuts to food stamps (SNAP), Medicaid or Social Security — I would have told you that you were out of your mind.

I understand that the criticism coming from the left about this deal is based largely on where things stand for the next round of negotiations, and also a concern that the deal didn’t raise sufficient revenues to avert substantial cuts down the road. But I’m troubled by the lack of attention being paid to how this deal benefits the more than one in three Americans living below twice the poverty line — earning less than $36,000 annually for a family of three, and the 46 million Americans living below the poverty line (less than $18,000 annually for a family of three). Read more »

And from our Group Think feature, here’s a roundup of recent perspectives on the fiscal cliff, written before the deal went down.

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