The fiscal cliff

Nothing to be proud of

Barack Obama wrings an 11th-hour deal on taxes from John Boehner and the Republicans, but accomplishes little else

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Readers' comments


Madog Hooson

"For the first time in more than two decades Republicans had voted for higher taxes" How do you figure that? They did not vote for taxes to be higher than they would have been if the law had not been passed, nor did they vote for taxes to be higher than the rates in effect at the time they took the vote.

The tax increase that took effect on Jan 1, 2013, and which this deal mostly repealed, is one that Republicans voted for in 2001. To the extent that taxes rose at all, they rose because of Republican backed legislation of the last decade, not because of this deal.


Obama continues his objective of destroying the greatest economy on Earth.


Another embarrassing no-show for the most partisan president in our history. Spending cuts aren't coming. If there's one thing this President has no experience in or stomach for, it is cutting government spending.

A Reasoned Voice in reply to FrankFurman

And unfortunately, the GOP Congress also has no experience in or stomach for cutting spending.

For all their talk, they are decidedly poor at actually cutting spending. They just spend it on different things and act like that is OK (e.g. the war in Iraq).

And cutting taxes without a commenserate cut in spending (can you say Bush era tax cuts) is just as irresponsible as increasing spending without increasing taxes.


Has America 'lost the plot' over the the concept and purpose of govt taxation of individuals and companies??

Regarding the recent fiscal cliff averting votes in the U.S. Congress's Senate and House of Representatives, dissenting Democratic party Senator Tom Harkin (Iowa) said what has needed to to expressed by the U.S.'s political leadership for over 3-years: -

"(I voted against this bill) because it's so discriminatory. All of the tax benefits that go to rich people and the high-income earners are made permanent.


"To me, that just stands logic on its head.



"SENATOR TOM HARKIN: As I've said before, no deal is better than a bad deal, and this looks like a very bad deal the way this is shaping up.

"(Interviewer): Harkin complains the White House went too far in accommodating Republicans, making Bush-era tax cuts permanent not just for the middle class, but for households making up to $450,000. That's a windfall for the wealthy, who Mr. Obama has long said need to pay more in taxes. Even the president's preferred cut-off of $250,000 is more than generous enough for the Iowa Democrat.

"HARKIN: If you make $250,000 a year, you're not middle-class; you're in the top two percent of income earners in America. Have we forgotten that the average income earners in America are making 25, 30, 40, 50, 60 thousand dollars a year? That's the real middle-class in America..."

Roderick V. Louis,
Vancouver, BC, Canada


The deal is at best fluid. There are elements of uncertainty, nothing to be euphoric about.
Hopefully, the situation will be clearer in a few months' time. (btt1943)

William Donelson

"...but accomplishes little else..."

Wrong. He has significantly increased in-fighting and discord within the Republican party. That's extraordinarily good news, and "on plan" for his second term.

Ah, Nixon must be enjoying a resurgence in Heaven. War waged with out respect of national boundries, all kinds of new govt rules and regs, and your political allies is disarray. Barry Milhouse Soetoro. And Barry gets to spy on everyone and its legal!

TrueLiberal in reply to Medicine4theDead

Are you referring to your own post? Why don't you actually read this magazine and see everyone of my points is true. You may not like them, but that doesn't make them anyless true.

As for The Chosen One, he called himself Barry for almost half his life. Barry's don't win presidential elections.

On the spying on Americans with out a warrant and drone strikes, even on Americans. (The article is a two-fer.)

New regulations released after missing pre-election deadline and only released the Friday before Christmas (Bah-humbug)

And the debacle of a divided Republican party after the fiscal cliff.

On a personal note, I detect a lot of hatred in your writings. I hope you work out your anger and can make more constructive submissions. I know these interactions that lack real contact bring out the worst in people.

Medicine4theDead in reply to TrueLiberal

On a personal note, I detect a lot of ignorance and bigotry in your writing. He is the President who was elected by a majority of The People, so spare us your slurs and lectures about anger. I hope you work out your stupidity and ignorance before making more ignorant comments. Your sources are newsertainment sources that lack a great deal of credibility. In a recent Economist blog, an Economist writer admits that the story and its narrative are more important than the truth. The reason? Don't want to waste time on a story that won't be exciting.

"As Jay Rosen, an NYU journalism professor who understands everything, has explained at great length for years, the media is biased in favour of excitement."

Nice try though Uncle Joe.

TrueLiberal in reply to Medicine4theDead

Barack was the transformational leader that the world and Americans loved who promisd Hope and Change. Barry is the Chicago Pol who showed up for work that didn't meet anyone he couldn't tempt with sweethart legislation or chastise with a well written teleprompter speech. He went from Demigod to demagogue. The fact that less people voted for him the second time around just shows that more people see, the less they like.

The Economist is newstainment? I wonder what the mods and editors here would think of your opinion of their publication?

I will agree with you that the 24 news cycle has forced people to fill time with fluff and is a major cause of the left slant in the news. It is easier to do a story full of emotion than to fill it with facts.

Are you referring to Joe Stalin?


The lefties have hijacked the media and Baracking has been quite successful augmented by the 140 character limitation of twitter and the attention span of BO's followers. Unfortunately the leftist message is very conveniently populist and appealing for short-termist thinking.

Perception v. reality on the GOP v. Dems view of a fair economic system.
GOP = selfish, want to hold onto their take and not help others
Dems = those who are selfless and just want to help out "ordinary folk" by making sure everyone pays their "fair share"

GOP = Values accountability. Realizes that a system where participants are incentivized to fund a kitty to be dispensed to others is rife with abuse by those who receive it and corruption by those who dole it out. Fostering a system of self-dependency with proper incentives, ironically, is more selfless for society as the focus is on the LABOR and PRODUCTIVITY v. counting the benefits of that labor to be split amongst those who argue hardest for it. The market, while not perfect, is the best measure to ensure that "doing your fair share" will equate to "getting your fair share".
Dems = while it feels selfless, creating dependency of one group of people on another group is quite the opposite. Putting increasing amounts of power into the public sector to make choices on reallocation to "do what's best" with other people's money hollows out the sources of that money.

What was missing from this entire debate? Raising taxes on the rich was a crusade by the president. IT DOES A VERY SMALL %AGE TOWARD SOLVING THE SPENDING V. REVENUE IMBALANCE despite all of the fanfare. The president, despite all of his rhetoric, will be forced to make at least some spending concessions to get the green light on the debt ceiling and it should be that way. Structural reforms on entitlements to bring the programs into the 21st century are absolutely necessary. Life expectancy in the US in 1935 was ~62yrs old, today it is ~79yrs old and yet normal retirement age only moved 2 years. This is but one example, but it is time to deliver a very difficult message to constituents. Easing it in with grandfathering, etc. is perfectly reasonable, but some courage by the dems to face facts are necessary after what was, without any question, a compromise by the GOP in round 1: fiscal cliff negotiations. 41:1 in tax hikes to spending cuts so far if you're keeping score while adding $4trn to the deficit over 10yrs.

So in hindsight was soaking the "rich" really the problem?!?

Not only is that a giant pile of crap, it is a long winded pile of crap that no one but you wants to read. Markets are a delusion you tell yourself to justify your derision of others. Markets require honesty and transparency to work, in case you forgot or never actually read The Wealth of Nations. Neither honesty or transparency exist in any market so spare us the speeches that are basically fairy dust and unicorn farts. You sound like a child. Funny, you think the government makes people dependent, yet you have clearly become dependent on the "liberal media" to blame all your poor decisions on.

"Neither honesty or transparency exist in any market..."
-Correct, they don't. But the market consists of people making the best decision for themselves, no? So you may call it the market, but indeed it is fundamentally a question of think for yourself or let the government do it for you. Do you believe the government to be more efficient, honest, and transparent than the market? Thinking in absolutes is a sign of intellectual immaturity, thus using the argument that markets aren't perfect to make a case for the government is pedestrian.

-I am not sure where I referred to any decisions here and if I was making any, I have no idea how you could construe said decision to be based on the "liberal media".

Please do some homework before you spew out nonsense.

If there isn't honesty or transparency then it isn't the best decision now is it? And there in lies the problem. Government too is a market: a political market. Yes government is far more accountable than the private sector. Go to and witness the corruption and incompetence of the private sector that makes special exercise shoes that do nothing but twist ankles. Ironically the government created the Internet you are whining about it on.

A company has a product recalled = private sector is bad. Government gives grants to research that helps to contribute to the creation of the internet=government is good.

Wow, you've enlightened me with your very rigorous *empirical evidence.

(*"Empirical research" of a similar quality proves that the presence of rogue policemen/women mean all police are bad, corrupt politicians [yes, they really do exist] indicate they are all have ill intentions, clearly the presence of rogue traders, investment bankers, and money managers makes Wall Street the pinnacle of evil, the presence of charities that embezzle money makes them all bad, etc.---nonsense)

"A company" That is hilarious. Try thousands and thousands of companies. How many people have died from meningitis? You were obviously too lazy to see how many recalls there are. You clearly don't read about economics. Assuming they are all bad is called the lemon rule. Because you don't know if a company or product is good or bad due to the fact that there isn't transparency and honesty; therefore, you have to assume everything is a lemon. It isn't my fault, sorry. It's the markets fault for being a failure.

D. Sherman

Did we all just fall down a rabbit hole? A year ago, it was received wisdom amongst all Democrats and most of the pundits that the hated "Bush tax cuts" must be eliminated. If anyone expressed doubt about the inherent evil of the Bush tax cuts, they might as well have been expressing doubt about global warming. Democrats everywhere campaigned against the Bush tax cuts with more certainty and uniformity than Republicans campaigned against gay marriage.

Mr. Obama got re-elected, the Democrats held the Senate and a funny thing happened on the way to repeal: First the "Bush tax cuts" became the "Bush era tax cuts". Then contrary to all of last year's campaign rhetoric, Mr. Obama began campaigning to continue almost all of the "Bush tax cuts", renaming them as the "middle-class tax cuts". We even got to see a topsy-turvy world in which Mr Obama repeatedly used is considerable conversational skills to badger the Republicans into extending nearly all of the Bush tax cuts. He retained, as a point of pride perhaps, a small increase in the tax rate for the highest bracket, but basically he was campaigning, against Republican opposition, for renewal of the Republican tax cuts that the Democrats heretofore claimed to hate.

Kurt Lessing

I wonder when the Chinese will be pissed off by that spectacle and pull the plug.

TrueLiberal in reply to Kurt Lessing

Owe the bank a billion and they own you. Owe the bank a trillion and you own them.
Not exactly true, but any tanking of the debt would reduce the value of all their holdings too. The noose around America's neck is tied around the ankles of Chinese Politburo.

adistantview in reply to TrueLiberal

but you must remember that China does not hold the bulk of US debt - I read somewhere recently that Japan holds slightly more that China (9 vs 8% of US bonds overseas?), and then there are all the petrostates holding oodles of US$
it depends on whether enough of them can afford a bit of a haircut in their investment portfolios, not just China.


No mention of the pork in this bill. Pork for Hollywood, pork for ethanol, pork for green, pork for all of the connected wealthy folk.

What the Economist also doesn't seem to get is that the problem isn't with the politicians in American and Europe, the problem is the people. The people are stupid and will vote for their party every time no matter how ruinous the vote is. As long as they keep getting their pork and the politicians keep borrowing from the future to pay for the crappy growth today, the people are happy.

This is why the Democrats are winning in the US. The republicans promise austerity and the Democrats promise free money forever. Whom would you vote for if all you cared about what pork? The Democrats are headed for a major fall unless they let the Republicans take the blame for the coming austerity. The republicans are too stupid to just let the Democrats keep digging the hole.



How big of a deficit reduction package is the President expecting? The $600 billion in extra revenue just agreed to would suggest $2.4 trillion in spending cuts. Assuming, of course, that the goal is to achieve the optimal 1:4 ratio that the Economist referenced a few years back when the austerity craze began.

Joe Marlowe

The Economist writes:

"Mr Obama’s hardball tactics made a grand bargain hard enough;..."

Oh, please.
By defining the middle class as being anyone who earns less than $ 400,000?

What planet has the writer been on for the last four years?

The GOP has systematically blocked every attempt by the Obama administration to do anything constructive, in the belief that by being pig-headed they could destroy the Obama presidency.

They failed on November 6.

About 150 of them in the House are still in denial.


The truth is... Republicans ONLY scream "bipartisan" when they are not holding all the cards! As soon as the Republicans have any control over the outcome of a situation, they are completely and undeniably "partisan."
People will continue to say what they will about Obama, but I think he is a much needed dose of reality! The rich cannot continue to take from this country (make millions/billions), and then push the debt off on the lower income households!
Will ANY bill/solution be perfect? Of course not. When has it ever? At least the rich know that the country is not as dumb as they believe after feeding such bull that their previous tax breaks would produce "jobs." What jobs? The few "minimum wage" jobs that people are sadly trying to support their families on?
Don't tell them to get an education though to pull their family up out of poverty anymore though because THAT would mean the end to their dreams of returning to (what some believe) is a watered down version of slavery!


I don't understand why there isn't more outrage over the end of the payroll tax cut. To me this is a tax increase on the middle class which everyone promised wouldn't happen. Furthermore, I think it is falsely advertised as a small increase ($1,000 increase for a $50,000 income, equating to 2%). However, if that wage earner paid 20% in Federal Taxes (Income+SS) that $1,000 would equate to an increase of 10% in taxes. Am I missing something?

Gary C in reply to Otho

Was allowing the payroll tax to return to 6.2% something the republicans or the democrats pushed for?
If the republicans wanted to let payroll tax cuts on workers expire but wouldn't let tax cuts expire on income over $250,000 they're definitely not looking out for the middle class. Even if the democrats pushed for the end of the payroll tax cut and the republicans were only willing to accept this middle class tax increase it shows the republicans' tax priorities.


"The deal raised almost as much money from the rich as Mr Obama had first sought, and he made no meaningful concessions on spending in return."

Now that's leadership.

When is Barry going to figure out that this isn't a game of Gotcha! and actually lead?

Once again we have a last minute bill full of pork that no one reads before voting on.

I picture one of the internet memes with a portrait of a scowling Jefferson titled "Government: You are doing it wrong."

Did I pee in your Wheaties? You are following me around the Economist in the middle of the night posting over the top, hateful personal attacks. Would you have been happier if I said John Adams or the great Republician Abraham Lincoln.

Jefferson a parasite? Am interesting look into your view of humanity if people say 'Jefferson' and you say 'parasite'. What hatred and dim view of humanity lurks in your heart?


And of course there was also the pork that got included in the bill, too. It is true there is still an urgent need for further reforms to reduce the long term debt. That should probably include some combination of higher tax rates on the middle class or cuts in benefits (such as raising the retirement age). However, let's not forget that the biggest single driver of future deficits is due to health care. Unless we reform that further, the US will continue to waste both public and private funds on the the most-expensive health care system in the world, which only delivers mediocre returns (e.g., as measured by life expectancy or infant mortality).


Actually, this was an excellent way to divide up the two chores of raising taxes and cutting spending. First came the raise in taxes on the wealthy, giving the president his tribute for having won the election. Now the new congress can discuss cuts in spending, without the tax- raising monkey on their backs. This will be a vicious fight for sure, but it has to end in a compromise whereby many programs are trimmed, including defense. At least the president has a slightly friendlier congress this time, if only for two years.

The Economist has always called for a spending cut/tax raise ratio of about 3:1. So taxes have been raised by 60 billion dollars annually. The spending cuts will, I predict, come to about 200 billion, thus satisfying the wishes of The Economist. So why are you so glum?

While only a start on the reduction of the deficit, ample printing of money and a booming economy pushing up tax collections should reduce it and the total debt, in GNP terms, substantially by the time Mr. Obama leaves office.



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