Congress Ushers in 2013 with a Resolution to Push the Economy to the Brink

The bill title is H.R. 8, American Taxpayer Relief Act of 2012. At one point the title changed to the Job Protection and Recession Prevention Act of 2012 , in an effort to hammer home the message Congress had set up such a poison pill with tax increases and budget cuts at the same time it would send the economy into recession. The Senate vote was 89 to 8 with 3 not voting and the House final vote was 25 to 167 with almost all Democrats voting for the bill.

capital buildingPast the final hour the House finally passed a bill to avert the fiscal cliff. The Senate had passed the legislation in the wee hours of New Years Day and after much brew ha-ha the House allowed an up and down vote on the Senate bill. We have listened to months and months of squabbling, bringing the economy to the brink over a very simple final result that could have been passed months ago.

The bill title is H.R. 8, American Taxpayer Relief Act of 2012. At one point the title changed to the Job Protection and Recession Prevention Act of 2012 , in an effort to hammer home the message Congress had set up such a poison pill with tax increases and budget cuts at the same time it would send the economy into recession. The Senate vote was 89 to 8 with 3 not voting and the House final vote was 25 to 167 with almost all Democrats voting for the bill.

After final passage, President Obama immediately came out to the podium to make it clear Congress could not hold the debt ceiling hostage. Many Republicans in the House are now threatening to not raise the debt ceiling which Obama said is not up for debate. Thus, the opening salvos of Congressional battle number two have sounded and the next political bloodbath where civilians are wounded is clearly the requirement to raise the debt ceiling. The end result of last debt ceiling hostage crisis was to only lower the United States credit rating and make America in general look silly. House leader John Boehmer issued a statement on their intent to cut America's social safety net, that's Medicare and social security. Battle number three is clearly being laid out and once again American citizens are in the crosshairs.

Now the focus turns to spending. The American people re-elected a Republican majority in the House, and we will use it in 2013 to hold the president accountable for the ‘balanced’ approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt.

Congress now moves to spending cuts legislation and the never ending drum beat is to attack social safety nets and reduce social security benefits.

It is now official. The biggest threat to the United States economy is Congress and Republicans have vowed to keep this up all year.

The spin rooms are now in full production on the fiscal cliff aversion game of chicken legislation just passed. Politicians on both sides of the isle amplify the bill kept most people's taxes the same and extended unemployment benefits. They conveniently leave out what else was passed.

The Tax Policy Center is analyzing the bill and show taxes will still increase for 77% of Americans, yet the reason is the expiration of the payroll tax cuts. The Wall Street Journal also used TPC's analysis but we don't know where they are getting their figures from. The increase in 77.3% of people's tax bill by quintiles is $1,025 according to TPC. Only 0.7% of tax earners will see an increase in by the actual changes in rates and levels.

The new legislation would allow the top income tax rate to rise to 39.6% for couples making more than $450,000 (singles making more than $400,000). It also would raise top tax rates on investment income to 20% from 15% for those households. The deal also would reinstate limits on personal exemptions and itemized deductions that existed in the 1990s, for couples making more than $300,000 (singles making more than $250,000). It also raises the estate tax top rate to 40% from 35%.

What is not talked about in the bill is the numerous gifts to corporations. Matt Stoller amplified some of them:

1. Help out NASCAR - Sec 312 extends the “seven year recovery period for motorsports entertainment complex property”, which is to say it allows anyone who builds a racetrack and associated facilities to get tax breaks on it. This one was projected to cost $43 million over two years.

2. A hundred million or so for Railroads - Sec. 306 provides tax credits to certain railroads for maintaining their tracks. It’s unclear why private businesses should be compensated for their costs of doing business. This is worth roughly $165 million a year.

3. Disney’s Gotta Eat - Sec. 317 is “Extension of special expensing rules for certain film and television productions”. It’s a relatively straightforward subsidy to Hollywood studios, and according to the Joint Tax Committee, was projected to cost $150m for 2010 and 2011.

4. Help a brother mining company out – Sec. 307 and Sec. 316 offer tax incentives for miners to buy safety equipment and train their employees on mine safety. Taxpayers shouldn’t have to bribe mining companies to not kill their workers.

5. Subsidies for Goldman Sachs Headquarters – Sec. 328 extends “tax exempt financing for  York Liberty Zone,” which was a program to provide post-9/11 recovery funds. Rather than going to small businesses affected, however, this was, according to Bloomberg, “little more than a subsidy for fancy Manhattan apartments and office towers for Goldman Sachs and Bank of America Corp.” Michael Bloomberg himself actually thought the program was excessive, so that’s saying something. According to David Cay Johnston’s The Fine Print, Goldman got $1.6 billion in tax free financing for its new massive headquarters through Liberty Bonds.

6. $9B Off-shore financing loophole for banks – Sec. 322 is an “Extension of the Active Financing Exception to Subpart F.” Very few tax loopholes have a trade association, but this one does. This strangely worded provision basically allows American corporations such as banks and manufactures to engage in certain lending practices and not pay taxes on income earned from it. According to this Washington Post piece, supporters of the bill include GE, Caterpillar, and JP Morgan. Steve Elmendorf, super-lobbyist, has been paid $80,000 in 2012 alone to lobby on the “Active Financing Working Group.” 

7. Tax credits for foreign subsidiaries –  Sec. 323 is an extension of the “Look-through treatment of payments between related CFCs under foreign personal holding company income rules.” This gibberish sounding provision cost $1.5 billion from 2010 and 2011, and the US Chamber loves it. It’s a provision that allows US multinationals to not pay taxes on income earned by companies they own abroad.

8. Bonus Depreciation, R&D Tax Credit – These are well-known corporate boondoggles. The research tax credit was projected to cost $8B for 2010 and 2011, and the depreciation provisions were projected to cost about $110B for those two years, with some of that made up in later years.

The cost of this corporate welfare is available via the Joint Committee on Taxation. We won't hear about cutting corporate welfare in any deficit reduction scheme for as we can see, corporations just got quite a haul under the cover of not cutting wage earner's taxes further and avoiding a recession.

The CBO scored the bill and it increases the deficit by $4 trillion by reducing revenues $3.64 trillion over 10 years. We won't hear about corporate welfare being most of that cost though in the press. The business tax extenders added $63 billion to the deficit in 2013 alone. The individual tax extenders, on the other hand, only added $5.9 billion in 2013.

Some other aspects of the bill are long term health care was repealed. Make no mistake, we will see more of these past the eleventh hour Congressional shenanigans and it's not even about real deficit reduction. There are a host of real policies which could reduce the deficit and not touch America's earned benefits such as Medicare and social security. We'll be writing about such deficit reduction proposals, yet the never ending political pundit hypnotize and mesmerize drone will be the same old song. The messaging is mind boggling, all to convince the populace for the good of the country, they should sign up for personal financial ruin.

Happy New Year and welcome to 2013, the year when the world's largest economy is held hostage. Politicians from gerrymandered districts backed by special interest corporate donors are out to make sure America suffers more of these Congressional histrionics. Austerity will be chanted and demanded while corporate welfare will be expanded, come hell or high water. That is the Congressional rallying cry and their new year resolution.

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Comments

Politicians' and big corp.'s resolution was to stay corrupt

And they are off to a great start. My guess, they'll have no temptation to break their resolutions in 2013 or 2014 or 2015 . . . Love those big corporations and their low friends in high places taking our money and enjoying corporate welfare while not doing a damn thing for us (still waiting for jobs from anyone, even fake happy talk, but it's gone) and blasting "entitlements" for everyone else. NASCAR and Goldman subsidies will improve our lot, I'm sure of it. Dig deep, I'm sure every other bankster or big corporation got sweet deals because that's why politicians create these last-minute deals to "save us," it's the best time for lobbyists to insert thousands of breaks and thefts before anyone can read anything (or at least give them cover for the outrages - "how could we read it, we needed a deal quick, and this was the best we had") especially millionaires and their dozens of staff members posing as public servants paid specifically to do exactly that. 2013, same as it ever was. Can I sleep for another 365 days and read the same exact story and outrages only updated to 2014 with only minor changes to the players? Sure I could, that's the good thing about predictable criminality.

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