Leading up to the January 1 fiscal cliff deadline, advocates for workers, the poor, and the elderly were eyeing nervously the compromises offered by the president. On the table were onerous options like raising the eligibility age for Social Security and Medicare, or reducing cost of living adjustments for retirees. Many advocates were saying, “No deal is better than a bad deal!”
In the eleventh hour Congress struck a very bad deal that—while going easy on the rich and corporate elite—set the stage for taking a wrecking ball to the social programs that working people rely on.
Rich people can breathe a sigh of relief. Their taxes are going up slightly, but only on income over $400,000 a year. So much for the $250,000 threshold promised by Obama on the campaign trail. And these generous Bush-era rates were permanently extended. To top it off, the estate tax for the fabulously wealthy was set at levels far below what prevailed before the Bush tax cuts.
Meanwhile, every worker will get a 2 percent pay cut as the Social Security payroll tax goes up. This is needed for funding the system, but it should have come from currently untaxed income over $110,000, or from employers.
Under the deal big business will make out like the bandits they are. Corporate tax break extensions add up to $205 billion, and include goodies like credits for railroad companies for maintaining their own tracks and subsidies for Goldman Sachs headquarters.
Federal workers will not fare so well. They have already been forced to donate $103 billion to deficit reduction in the form of pay freezes and increased pension contributions, and they now face possible furloughs and lay-offs as agency budgets are immediately cut to make up for the delay in reaching a final solution.
Working folks cannot breathe easy because social programs were not gutted this time around. For the much-hyped “compromise” dealt with the tax question without getting the fat cats to pony up. Now corporate lobbyists and politicians in both political parties will be beating the drum to slash Social Security, Medicare, and Medicaid in order to achieve trillions in spending cuts.
Looks like its time for working folks to hit the streets!
Also see: The deficit vs. income inequality