On Tuesday the Republican controlled House passed the Senate Amendments to House Resolution 8, which puts in motion the McConnell-Biden deal to avert the "fiscal cliff." The only problem is it won't avert anything. While the House GOP voted against the proposal by nearly a 2 to 1 margin, it was the overwhelming Democrat support that passed the measure, 257-167. It seems that nearly a third of Republicans in the House were shaking in their boots as the Democrats warned that they would not consider the bill again in the new Congress, many Republicans thought that if they didn't take the deal it would have effectively killed the deal and perception is that it would have brought about a negative market reaction.
No one in this bill sees a tax cut. In fact, The Wall Street Journal indicates that taxes will increase on nearly 77% of households in America. While the bill indefinitely (yeah right, until they decide otherwise) extends marginal tax rates on families that earn less than $450,000 and individuals who earn less than $400,000, extends unemployment insurance benefits (as if they needed it), raises the top capital gains and dividends rates to 20 percent, and also includes a host of other tax provisions and goodies (of course), such as:
1. There’s a provision extending a tax policy related to Puerto Rican rum.
2. And a tax credit for 2- and 3-wheel electric vehicles.
3. Something having to do with Diesel Fuel.
4. An extension of some special rules for the film and television business.
5. A gift to the car-racing world.
6. Help to asparagus farmers.
Additionally, with all the whining from Hollywood people about how they agree that they should pay more in taxes, get this. Breitbart.com reports:
Section 317 of the freshly approved legislation includes an extension for "special expensing rules for certain film and television productions." Congress first enacted production tax incentives favorable to the domestic entertainment industry in 2004, and extended them in 2008, but the deal was meant to expire in 2011.
The fiscal cliff deal extends the tax incentives through 2013--even as payroll taxes rise on ordinary Americans.
The original tax incentive applied to productions costing less than $15 million to make ($20 million in low-income areas). The 2008 extension applies to all films, up to a deduction of $15 million (or $20 million in low-income areas). The incentive is especially generous to television series; it applies to each TV episode.
Hollywood players routinely beg the government to raise their taxes so they can pay their "fair share."
Yet the industry moves new productions to places where existing tax breaks help its bottom line. That means plenty of shows and films are shot in states like New Mexico, which feature highly favorable tax rates, as well as destinations north of the border with similar perks.
Rep. Dave Camp (R-Mich.), chairman of the tax-writing Ways and Means Committee, cast the bill as one that would cement in place the George W. Bush-era tax policy and create a bridge to comprehensive tax reform.
"I rise today to urge what a colleague from Georgia called a 'legacy vote' — making permanent the tax cuts Republicans enacted back in 2001 and 2003," Camp said. "I couldn't agree more and let me say why — because we are making permanent tax policies Republicans originally crafted.
"This legislation settles the level of revenue Washington should bring in. Next, we need to make the tax code simpler and fairer for families and small businesses."
Camp's counterpart, ranking Democrat Sandy Levin (Mich.), hailed the precedent-breaking move of House Republicans to back higher tax rates.
"This legislation breaks the iron barrier that for far too long has prevented additional tax revenues from the very wealthiest," Levin said. "It raises $620 billion in revenue by achieving the president's goal of asking the wealthiest 2 percent of Americans to pay more while protecting 98 percent of families."
Opposite of either of the two mentioned representatives above, Congressman Darrell Issa (R-CA) likely spoke for most of the Republicans who voted against the bill saying, " "I'd like to be speaking for this bill, but I can't. I would like to vote for this because I do vote for lower taxes, but the other day in conference, one of my colleagues pointed out that in fact you're spending the money; you're taxing our future generation."
Issa is exactly correct. Additionally, does everyone remember that guy that was touted as "Mr. Conservative" that a recent GOP presidential nominee took as his VP? A Mr. Paul Ryan? That's right, that "conservative" guy that voted for TARP, the auto bailout, making sure everyone is covered by insurance in America, the NDAA, and whose budget didn't actually do anything to bring the budget into balance. Yes, that guy. He voted for this "deal" and it has no spending cuts in it! I don't think any consideration should be given to him for Speaker of the House in the new Congress. Additionally Eric Cantor doesn't get my support either.
Republican Justin Amash (R-MI) said on Monday, "This deal INCREASES spending. It's more of the same irresponsible & reckless behavior we've come to expect from Congress."
In addition, House Speaker John Boehner voted for it too. No surprise there.
Five Republican Senators voted against the amendment to be added to HR 8 on Monday. They are Sens. Marco Rubio of Florida, Mike Lee of Utah, Rand Paul of Kentucky, Chuck Grassley of Iowa and Richard Shelby of Alabama.
The names of the Republicans who voted for a deal in which they are never going to get any measly "spending cuts," which aren't real cuts anyway, can be found here. Keep in mind that though the current tax rates stay in place, no one is getting a tax cut. In fact, in the long run, Rep. Issa is telling us the truth. The truth is that Congress just kicked the can down the road and the debt will continue to increase each year.
President Obama appeared in the James Brady Press Briefing Room at the White House to react to the House vote at 5:20 PM EST.
“A central promise of my campaign for President was to change the tax code that was too skewed towards the wealthy at the expense of working middle-class Americans," Obama said. "Tonight we’ve done that.”
“Thanks to the votes of Democrats and Republicans in Congress," he continued. "I will sign a law that raises taxes on the wealthiest two percent of Americans while preventing a middle-class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America.”
Dr. Gary North sums up what will happen. He writes,
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"The can will grow by another $1 trillion in fiscal 2013. And 2014. And 2015. The day will come when the can will be too big to kick. Then those who kicked it on New Year’s Day will either change their tune or be kicked out of office. Kicking the can is not the foundation of leadership. It is the foundation of future replacement."