It may take some time before we know all the details about the legislation passed at the last minute to avoid the so-called fiscal cliff. A few initial impressions:
1. Not only was corporate welfare not pruned, it was actually increased, including billions for Wall Street and a special break for NASCAR.
2. The ugly process exposed a Congress without leadership and without the ability to discharge its most basic functions.
3. If you make $400,000 a year, you’re in the “middle class.” Median household income in the United States: $52,762.
4. Despite his decisive election victory, President Obama showed he was unwilling to face down the extremists within the House GOP. It’s going to be a long four years.
5. Hostage politics will continue. Next up: In February or March, the debt ceiling will be hit and once again paralysis and threats to the social safety net will be used as leverage against a feckless White House.
6. If you want long-term “entitlement reform,” that didn’t happen. And if seniors are expected to work until they are 67 or 70, the jobs aren’t available nor is the affordable health care.
7. Nothing was done on one of the most critical issues to improving the prospects of renewed growth and addressing the jobs crisis: Infrastructure spending. Indeed, when the hostage-taking begins over the postponed sequester, “nation-building at home” will probably be the first casualty.
8. As Andrew Sullivan points out, “The Pentagon now spends more money than it did confronting the Soviets under Reagan or at the peak of fighting in Vietnam. Yep, those are real inflation-adjusted dollars. So why are we hearing nothing in Washington about a huge part of the spending binge that, along with the Great Recession, has bankrupted the country?” Here’s another way to visualize the problem.
9. Some revenue-raisers that would also dampen dangerous behavior never got close: A carbon tax and transaction taxes on Wall Street gambling.
10. For the economy as a whole, the deal at best kicks the can down the road. It does nothing to address joblessness, slow growth, poverty, inequality, declining opportunity, a dearth of startups or the stealth austerity already hurting us. This Congress was the most unproductive in modern history. There’s little reason to expect better from the new Congress. Only the relatively worse problems elsewhere in the advanced world keep debt holders from noticing and acting on our dysfunction.
And Don’t Miss: German economy faces a year of uncertainty || Spiegel
Today’s Econ Haiku:
Just ask the Romans and Brits
Uncle Sam is deaf