The “Fiscal Cliff” Deal

The “Fiscal Cliff” Deal

January 4, 2013

We’ve received a number of questions in the past few days about the budgetary and economic impact of the significant budget legislation just enacted by the Congress. Here are some of the most common questions and our answers to them:

Does the Legislation Increase or Decrease Federal Budget Deficits?

That depends on what you compare the legislation with:

Relative to what would have occurred under the laws previously in effect, this legislation will increase budget deficits in coming years. Continue reading “The “Fiscal Cliff” Deal”

Status Update

Status Update

The deal emerging from the Senate is a lousy one. Let me count the ways:

1. Republicans haven’t conceded anything on the debt ceiling, so over the next two months – as the Treasury runs out of tricks to avoid a default – Republicans are likely to do exactly what they did before, which is to hold their votes on raising the ceiling hostage to major cuts in programs for the poor and in Medicare and Social Security.

2. The deal makes tax cuts for the rich permanent (extending the Bush tax cuts for incomes up to $400,000 if filing singly and $450,000 if jointly) while extending refundable tax credits for the poor (child tax credit, enlarged EITC, and tuition tax credit) for only five years. There’s absolutely no justification for this asymmetry. Continue reading “Status Update”