I'm writing this on the morning of Jan. 1, 2013. The fiscal cliff has (possibly) been averted--The Senate has finally negotiated a deal, far from a grand bargain. (It has yet to pass the Congress, but, pundits say, most likely will.) Should we be ecstatic? No. We fell over the so-called cliff last night. This morning we find ourselves on a precipice fifty feet or so below the one we fell from. The abyss still looms beneath us.
Before I say a few words about the agreement, I want to make my position clear. I consider myself a pragmatist; I am no ideologue. I try my best to view the political mess in the United States with impartial eyes, not jaundiced ones. That said, I readily admit that at present my view is more or less in accord with the view of Democrats, since the Republicans have moved so far to the right
One of the most serious problems in the United States, as I see it, is the inequality of wealth. One percent of the population has about 40% of the wealth; half the population has only one percent of the wealth. Income inequality has risen in most countries, but not like it has here. (In the United States, the top one percent has a net worth 288 times that of the median; in Germany, for instance, where income inequality has also risen, the top one percent is less than ten times richer than the median.) If this inequality continues, not to mention if it continues to increase, our democracy will be seriously threatened. Do we want the rich to live in gated communities, islands in a sea of poverty, with each side terrorizing the other, as they do in some Latin American countries? Already, America is no longer the proverbial "land of opportunity" where hard work is sure to guarantee one's passage from poverty to wealth. Upward mobility is much more likely to occur in other industrialized countries than in the United States. Our once shining identity is getting very rusty.
I don't expect life to be fair. Those more endowed with talent and opportunity should--if we want growth to continue--and will be very much richer than those less talented and less lucky. When the income inequality becomes so great, however, as to threaten our democracy, we're in trouble. And I do believe that is what is happening now.
The bipartisan agreement raises taxes to 39.5% from 35% for individuals earning more than 400,000 and couples earning more than 450,000. (Remember both groups will be paying the lower rate on the first 400 thousand or 450 thousand, respectively. Yes, the one percent will be paying more, but I don't think this will change the statistics much. (Since the Great Recession ended in 2008, 81% of the recovery went to the wealthy; this will probably continue.)
Unemployment insurance will continue for another year; this is good but will not improve inequality much either.
The Alternative Minimum Tax will be fixed permanently--This tax was passed to prevent the wealthy from lowering their taxes too much via numerous deductions. However, it was never corrected for inflation, which has resulted in its current application to many middle-class tax payers, which the law never intended to do. This will help, but inequality will probably continue to rise.
The estate tax will rise to 35% (from 30%) on estates more than $5 million--The Democrats wanted it to rise to 45%. Higher estate taxes help prevent the propagation of wealth from generation to generation, thus helping to level the playing field somewhat and thus encouraging upward mobility. In my opinion, the 35% rate is too low--even the 45% rate is too low.
The worst part of the deal is that it is not a deal. The 110 billion in cuts, half from defense and half from domestic programs, is merely postponed. That means in two months a deal must be reached or the cuts begin in earnest. It is almost a sure thing that President Obama will make cuts in Medicare and Social Security, thus assuring that inequality will continue.
Republicans have won the debate. When Democrats try to address inequality, the Republicans accuse them of class warfare, when, in fact, that is precisely the war Republicans have been waging. Most Americans believe that the current crisis is one of national debt, when it is in fact a job crisis and, thus, an inequality crisis. Republicans claim to be budget hawks, but the cuts they recommend are only those that would make inequality worse. Regarding taxes and defense they are budget chickens, always intent on making the current pecking order worse.
What does the conservative within me--that person does exist--have to say? There is a debt problem, but this problem should not be addressed while the economy is so weak; things, as experience has shown, will only be made worse. However, the sad fact remains that in times of prosperity one ignores the changes that should be made.
How does the view look, now that this stop-gap arrangement has given us a slightly better perspective? Yes, our ditzy lawmakers have made us feel slightly less dizzy--but the firm ground on which we should be walking on is still hundreds and hundreds of feet below.
Before I say a few words about the agreement, I want to make my position clear. I consider myself a pragmatist; I am no ideologue. I try my best to view the political mess in the United States with impartial eyes, not jaundiced ones. That said, I readily admit that at present my view is more or less in accord with the view of Democrats, since the Republicans have moved so far to the right
One of the most serious problems in the United States, as I see it, is the inequality of wealth. One percent of the population has about 40% of the wealth; half the population has only one percent of the wealth. Income inequality has risen in most countries, but not like it has here. (In the United States, the top one percent has a net worth 288 times that of the median; in Germany, for instance, where income inequality has also risen, the top one percent is less than ten times richer than the median.) If this inequality continues, not to mention if it continues to increase, our democracy will be seriously threatened. Do we want the rich to live in gated communities, islands in a sea of poverty, with each side terrorizing the other, as they do in some Latin American countries? Already, America is no longer the proverbial "land of opportunity" where hard work is sure to guarantee one's passage from poverty to wealth. Upward mobility is much more likely to occur in other industrialized countries than in the United States. Our once shining identity is getting very rusty.
I don't expect life to be fair. Those more endowed with talent and opportunity should--if we want growth to continue--and will be very much richer than those less talented and less lucky. When the income inequality becomes so great, however, as to threaten our democracy, we're in trouble. And I do believe that is what is happening now.
The bipartisan agreement raises taxes to 39.5% from 35% for individuals earning more than 400,000 and couples earning more than 450,000. (Remember both groups will be paying the lower rate on the first 400 thousand or 450 thousand, respectively. Yes, the one percent will be paying more, but I don't think this will change the statistics much. (Since the Great Recession ended in 2008, 81% of the recovery went to the wealthy; this will probably continue.)
Unemployment insurance will continue for another year; this is good but will not improve inequality much either.
The Alternative Minimum Tax will be fixed permanently--This tax was passed to prevent the wealthy from lowering their taxes too much via numerous deductions. However, it was never corrected for inflation, which has resulted in its current application to many middle-class tax payers, which the law never intended to do. This will help, but inequality will probably continue to rise.
The estate tax will rise to 35% (from 30%) on estates more than $5 million--The Democrats wanted it to rise to 45%. Higher estate taxes help prevent the propagation of wealth from generation to generation, thus helping to level the playing field somewhat and thus encouraging upward mobility. In my opinion, the 35% rate is too low--even the 45% rate is too low.
The worst part of the deal is that it is not a deal. The 110 billion in cuts, half from defense and half from domestic programs, is merely postponed. That means in two months a deal must be reached or the cuts begin in earnest. It is almost a sure thing that President Obama will make cuts in Medicare and Social Security, thus assuring that inequality will continue.
Republicans have won the debate. When Democrats try to address inequality, the Republicans accuse them of class warfare, when, in fact, that is precisely the war Republicans have been waging. Most Americans believe that the current crisis is one of national debt, when it is in fact a job crisis and, thus, an inequality crisis. Republicans claim to be budget hawks, but the cuts they recommend are only those that would make inequality worse. Regarding taxes and defense they are budget chickens, always intent on making the current pecking order worse.
What does the conservative within me--that person does exist--have to say? There is a debt problem, but this problem should not be addressed while the economy is so weak; things, as experience has shown, will only be made worse. However, the sad fact remains that in times of prosperity one ignores the changes that should be made.
How does the view look, now that this stop-gap arrangement has given us a slightly better perspective? Yes, our ditzy lawmakers have made us feel slightly less dizzy--but the firm ground on which we should be walking on is still hundreds and hundreds of feet below.
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