Cliffside drama: Despite the angst, Washington left too much undone
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Seldom has so much drama in Washington delivered so little.
Between Friday afternoon and Tuesday night, political wrangling played out behind closed doors in the White House, the Senate and the House of Representatives over how to spare Americans two dreaded consequences, both of them creations of President Barack Obama and Congress -- the expiration of the Bush-era tax cuts and the imposition of deep federal spending reductions. After it took three days for the Obama administration and the Senate's Republican minority to reach a deal, the Republicans who control the House needed a day to grouse and moan about the plan before 85 of them ultimately joined 172 Democrats in passing it.
For all their trouble, what the nation got was permanent adoption of the Bush tax levels, except for households with at least $450,000 in income (their rate, only for income above that level, will rise from 35 percent to 39.6 percent); an end to the two-year cut in the Social Security payroll tax (with the 4.2 percent rate returning to 6.2 percent); an extension of tax breaks for lower-income families; an increase in the estate tax rate, from 35 percent to 40 percent, on wealth above $5 million of inheritance; restoration of extended unemployment benefits; and new rules on the alternative minimum tax, which, due to creeping inflation, had begun to affect not-so-affluent households.
That sounds like progress on many fronts until people remember that the threatened expiration of the lower tax rates and the across-the-board spending cuts were designed to focus the government's attention on reducing its annual deficit ($1.1 trillion in fiscal 2012 alone) and national debt ($16 trillion) in a sensible, orderly fashion. But all that the New Year's jousting accomplished, according to the independent Committee for a Responsible Federal Budget, was a deficit reduction of $650 billion over 10 years by not extending all the tax cuts.
If you put more stock in the analysis of the nonpartisan Congressional Budget Office, the package will actually add $4 trillion of debt over the next decade by not letting the automatic tax hikes and spending cuts take effect.
The reason so little was achieved is the president and Congress failed to address the spending side of the equation. To keep that sword from falling on the country, they did what Washington does best, kick the can down the road. That means that, to avert one fiscal cliff, elected officials will soon face three -- raising the debt ceiling by the end of February so the nation can pay its bills, passing a continuing resolution to fund the government and addressing the automatic spending cuts now set for March.
With so much left undone, and still subject to interminable debate, it's hard to applaud the modest progress of the last few days. The United States indeed has a dysfunctional government. Normally, Americans would look forward to the next election, but we just had one.
First Published January 3, 2013 12:00 am