So, I’m not going to pretend like this isn’t a surprise, but while you were drinking away 2012 and, consequently, not paying attention to the more useless organizations in your lives, including Congress, they passed a measure to prevent America from going over the Fiscal Cliff, a combination of automatic tax hikes, expiring tax cuts and the supposedly unavoidable renewal of absolutely and completely necessary government spending that was timed to explode onthis exact moment by Nancy Pelosi and Barack Obama two years ago. But while the Democrats supposedly understood that Congress is incapable of doing any actual work ahead of a deadline, the Republicans apparently still felt confident that their inability to function as human beings was merely a side effect of the campaign season and not a hindrance to effective negotiations with a winning party under the threat of an ironclad deadline and a public relations disaster.
And so, America, we have the Grand Bargain that Saved Our Country and Raised Taxes on Everyone. A short primer.
- The income tax rates will be kept pretty much the same for everyone making less than $400K by themselves or $450K as a family, unless you decide to use some of your meager income to invest, in which case, your capital gains rates will hike up to around the same percentage they were when everyone stopped investing in the first place.
They’ve also patched up the Alternative Minimum Tax, which was formed during the Nixon era and somehow never reformed when the dollar started being worth less. Blame all the crack-smoking in the 1980s because that certainly wasn’t anyone‘s fault in DC.
- Despite the powerful White House Twitter effort to save #my2K, which ended up confusing the hell out of everyone because they thought they would be getting a free $2000 per month from the government or something, the payroll tax holiday has ended and everyone making less than about $115,000 will see their taxes go up about $2000 per year.
- Undoes Clinton-era Medicare reforms, which limited how much Medicare will pay to doctors because – and this is key – Medicare is completely flush with cash. Or something.
- Delays the supposedly mandatory defense cuts known as “sequestration” for two months until Congress can get it’s act together and delay the cuts again.
- Extends unemployment benefits for anyone who has been out of work for approximately five years, which is apparently not a rare occurrence in the economy this deal is supposed to save.
- Phases out a bunch of personal and itemized deductions for people who need personal and itemized deductions.
The bill also contains “spending cuts” that amount to about $1 in cuts for every $41 in spending the same bill proposes, amounting to an approximate savings of $1.5 billion per year. Which means, if you were to, for example, commit to not drinking $3K worth of tequila over the next decade while also spending $30K on tequila, you would be more responsible than Congress, aside from the obvious threat of liver damage. Also, the First Family costs us $1.4 billion per year.
So you do the math on how effective you think that savings will be, especially when you figure that the rich will probably pay their “fair share” this year and then find a really good tax attorney or stop doing business altogether like Warren Buffett, who saves lots of money by pretending he has no income.
If you’re curious about some of the other incredibly essential items that Congress found necessary to creep into a must pass by midnight bill, let’s run them down, shall we?
- Despite repeated pleas from Hollywood to raise taxes on the rich, who I suppose they didn’t consider to include themselves, the Fiscal Cliff bill contains a $430 million perk to Hollywood to “encourage domestic film and television production.” And while it limits personal deductions for people who own their own small businesses, it allows movie producers to expense up to $15 million of the cost of their essential American projects;
- $331 million to railroads, in case your state and local government is as responsible with their spending as the Federal government is;
- $222 million in return grants to taxpayers in Puerto Rico and the Virgin Islands;
- $70 million in grants to NASCAR;
- $4 million in grants to “electric motorcycle makers” because nothing says “helping save the American economy” like giving money to people who will make products not a single American will willingly buy;
- $59 million to people who grow algae for the purpose of possibly converting it into a biofuel that only the United States government will ever purchase, likely at an incredibly inflated rate;
- Congressional approval to the city of Salem, Massachusetts, allowing them to call themselves the “Birthplace of the National Guard;”
- A bunch of post office naming provisions, because everyone knows those are top priority;
- A provision naming someone to the Board of Regents of the Smithsonian;
- A provision designating Mt. Andrea in California as a public recreational area;
- And an extension of the law that lets Blockbuster Video, which pretty much doesn’t exist anymore, record your informed, written consent to rent video tapes through an electronic means.
So, America, you lost your payroll tax holiday, but you gained a new Regent for the board of the Smithsonian! And other stuff! And if you were one of those lucky people who got out of college and decided to be a professional algae grower just in case algae ever came in handy or was targeted for a green subsidy by the Federal government in order to fund the production of an overly expensive subsidized biofuel, well your day has come.
Now don’t you wish you’d majored in something different in college.