You may have saw coverage of a deal struck and passed as to the fiscal cliff and how Democrats and Republicans compromised over the big issues facing our Federal Government today. You may have also heard Korean pop sensation Psy’s Gangnam Style song repeated Ad nauseam despite a potential of a bleeding from your ears. Neither of these events have accomplished anything significant.
Washington Times reports that the deal the Senate passed actually had $330.3 billion in new spending for the next decade. It’s hard to tell from the news what kind of spending increases or cuts were made in the final version the House passed but it is very safe to say there were no significant cuts made. It is also safe to say taxes are greater in 2013 than they were in 2012. The big tax compromise raises taxes on individuals making over $400,000 a year and families making over $450,000 a year. In other words: The one percent.
Unfortunately, since this deal was reached the automatic spending reductions (reducing past plans to INCREASE spending) for defense and other programs (known as the ‘sequester’) do not go into effect. Another great travesty among many is that unemployment benefits are extended yet again for another years’ worth of pay for people not working or contributing to our GDP.
Well there may be one good thing that came out of this. We can finally stop calling the tax rates ‘Bush tax cuts.’ The repetitive mantra (at least this one) is over! A two to one democrat to republican ratio voted for the House bill which some news are calling good bipartisan support.
The big problem still kicked down the road is the debt ceiling which we will be debating again in two months. A repeat of Summer 2011 seems likely as our leaders seem to enjoy repeating past mistakes.
We will continue to expect a stagnant economy at best as well as a consistent ramp-up of quantitative easing programs. The world will not fund all of our debt anymore, we must print it out of thin air.
The Dow after opening jumped 200 points on the news of the deal. The dow is still 800 points from its all time high of 14,164 from Oct 2007. We should very much expect a new high perhaps this year from all the inflating the Federal Reserve has been and needs to be doing to keep our debt flowing. Those unaware will actually think the economy is doing better when in reality we’re very much worse off, at least the average person, for high level bankers maybe you would be better off.