Fiscal Cliff Tax Deal Was a Con

Republican leaders were taken to the cleaners

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Charles Krauthammer summed up the so-called "fiscal cliff" deal nicely. I will indent his quote for emphasis.

"Complete surrender on everything."

In fact, it cannot get much worse. Washington, if you can believe it, kicked the can down the road yet again on spending cuts, even though cuts were already promised to take place based on an earlier 2011 agreement to raise the debt limit by $2 trillion. 

[ See a collection of political cartoons on the fiscal cliff.]

Now, there will be many who argue that a bad deal is better than no deal. But the hard reality, one that grassroots Republicans will have to come to terms with, is that their leadership failed. Spectacularly. In the end, Republicans were taken to the cleaners and that might have devastating consequences going into 2014.

According to the Congressional Budget Office, the deal cuts only $15 billion in spending, while simultaneously increasing tax revenue by $620 billion—a 41:1 ratio of tax increases to cuts in spending. Of course the so-called "cuts" are actually caps. In other words, in the real world we got a $620 billion tax increase for essentially zero spending cuts.

Viewed from another angle, the spending over the next 10 years against the amount of revenue raised is astronomical. If the numbers I am looking at are correct, the revenue raised over 10 years is approximately $600 billion dollars and the amount of spending over the 10 years is approximately $40 trillion. To put that in perspective, if the government could count the entire 10 years of revenue in one year, it still would not balance the budget for that one year.   

[ See a collection of political cartoons on the budget and deficit.]

The American people were conned, tricked in a New York back alley shell game, manipulated by our commander in chief. "As I've demonstrated throughout the past several weeks, I am very open to compromise," President Obama said. He continued, "[b]ut we cannot simply cut our way to prosperity."

Yet, the deal managed to pay for Puerto Rican rum, more handouts to the film and television industries (no doubt a thanks for carrying the president's water), money for the car-racing world, and more subsidies for every child's least favorite vegetable, asparagus.

To House Speaker John Boehner's credit, he is now telling fellow Republicans that he is done with private negotiations with President Obama. First, it is a complete waste of time. Second, with the bias in media coverage, it doesn't really help establish what is actually occurring. Case in point: in the last dismal round, it was clear that Republicans are not the bullies they are made out to be, but rather timid to a fault. The speaker is correct to go directly to the American people whenever possible.

[ See a collection of political cartoons on Congress.]

The deal also provided no "basis for meaningful improvement in the government's debt ratios over the medium term," said Moody's Investor Service. The rating agency again threatened a possibility of a downgrading of America's AAA rating. The rater made clear that the deal did nothing to solve our, you guessed it, spending problem. 

Veronique de Rugy eloquently elaborates:

This deal fixes exactly nothing. The nation is on a fiscal collision course, and the only thing Washington could do is raise taxes on a few rich people—a symbolic measure that won't raise much revenue, and won't reduce the size of government today or tomorrow. In fact, it will make it easier for the government to keep on growing.

[ See 2012: The Year in Cartoons.]

We are watching the willful, wanton, and reckless conduct of our leaders. We have done nothing to fix the main drivers of our spending: Social Security, Medicare, and Medicaid. It is not going away, we will have another fight in the coming months.

I might be angry at the deal, but at heart I am an optimist and I believe that the truth will get out. Citizens will react against the profligacy of Washington and, indeed, are already gearing up for the debt limit battle (my personal favorite example is Bankrupting America's " Talk is Cheap, Overspending is Not").

Republicans were taken to the cleaners, it cannot happen again. The American people deserve the truth and action on our spending crisis. The clock is ticking.