Some people on the political left are losing their minds.
They claim that the fiscal cliff deal was bad for the President and the country because he “caved” on the $250k tax threshold, failed to fight to raise the debt ceiling and did not renew the payroll tax cut. I disagree.
This was clearly a compromise made to maintain consumer confidence and prevent people from drastically tightening their belts, which would likely cause the already weak economy to spiral into another recession.
So, why are some liberals and progressives upset then? Well, many of them wanted our economy to go over the cliff because it would cause all Bush tax cuts to expire; therefore, making it easier to get Republicans to negotiate on a tax cut for people making less than $250k a year.
The defense budget would also be drastically cut. However, what these naysayers forget is that on the domestic side, many of the programs and tax deductions that they love would also be cut as well.
These programs would harm the poor, make college less affordable for students and their parents and would also set the unemployed back even further. Going over the cliff would be another self-inflicted wound to the economy.
Many of the liberals and progressives who wanted to go off the cliff are employed liberals who make enough to cushion themselves from both a tax hike and the expiration of the payroll tax cut holiday, an irony that should not be forgotten.
The deal that Vice President Joe Biden and Kentucky Senator Mitch McConnell struck does several good things that people should be satisfied with—especially college students.
Here are some positive aspects of the deal:
1) Extension of unemployment insurance: Remember when everyone was talking about the unemployment rate and how that was a bad thing during the campaign? Feels like it was decades ago right?
Well the reality is that people are still out of work and the economy is still fragile. Had we gone off the cliff and dealt with the consequences of cliff diving in the 113th Congress, weeks would have gone by and the people not bringing in any income would not have a paycheck to support themselves i nthe interim.
2) Our parents should support this deal because tax breaks that were kept. The college tuition tax credit was saved as part of this deal. This helps families save money to help pay for ridiculously high tuition bills.
3) Green energy was also a big winner in the deal. Many of the tax credits to incentivize switching to green energy were maintained.
Visit the Washington Post for an even more in depth break down of the deal.
The downside is that everyone is going to feel the pain of a smaller paycheck because the payroll tax cut was not extended. Both sides of the aisle thought that continuing this tax holiday was a bad idea for two different reasons.
Republicans did not like it because it would add to the debt. Democrats did not like the cut because it took away from Social Security. In order to shield Social Security, Democrats thought it would be best to let the payroll tax cut expire.
This fiscal showdown is not going to be our last. The next fight involves raising the debt ceiling. You know—the fight over whether we should pay for things we already bought.
This impending fight has much more serious consequences for our economy than the fiscal cliff did. The last time we had this issue our credit rating went down.
Between now and February, Democrats need to explain to the public exactly what the debt ceiling is and remind Republicans who revere President Reagan that Reagan raised the debt ceiling eighteen times.
By contrast, Obama has raised the debt ceiling just three times. Driving home these points would discredit whatever arguments or leverage Republicans think they have.