Lessons to be Learned!
We just passed a tax increase so we can have more spending. It was hardly what we were promised, nor did the Middle Class get a tax cut. While tax rates remained the same, their overall taxes went up... The average Joe and Jan will see their taxes go up at least $1000 a year, and when that first pay check comes in, they will find their paycheck a little lighter. This is just a down payment for the coming Obama expansion of the entitlement state.
If you own a small business, you will see a tax increase. If you are an investor, your taxes will go up. If you are rich, you will be taxed more, and if you are member of the Middle Class, guess what, you are now being taxed more. The only good news is that capital gains only went up to the 20% range and with Obamacare taxes added, the wealthy will pay a 23.8% rate on investments and dividends, far less than originally proposed. When you die, those you leave behind will not be hit with as big as tax hit as it could have been. But the dead will still see their tax increase.
Of course, Senators found enough tax subsidies for their business friends. (Can someone explain to me how these Hollywood types tell the rest of us that we need higher taxes but they managed to get their tax breaks? I guess tax incentives do matter.)
Wall Street Journal noted hopefully, “If there is a silver lining to this fiasco, it is that this may be the high-water mark of Mr. Obama's redistributionist tax agenda. The President has had unusual leverage over Republicans because he just won re-election and because taxes were going to go up even if they did nothing. The GOP wanted to avoid the blame for not sparing the middle class from the higher rates.
If there is one lesson, it is this, there will be no grand bargain with Barack Obama. Wall Street Journal summed this up by noting,
But we hope the GOP has learned, after two failed attempts, that Mr. Obama is not someone with whom it can do a "grand bargain." Even as the Senate deal was taking shape, Mr. Obama gave a speech literally taunting Republicans for agreeing to raise tax rates. He also made clear that the price of any future spending cuts or entitlement reform will be another tax increase. He doesn't want to reform government. He wants to expand it and destroy GOP opposition to his agenda in the bargain.
The economy continues to limp along and may survive despite Obamanomics simply because the push from the oil and natural gas revolution and because there are enough entrepreneurs who can stay one step ahead of bureaucrats and the taxman. The key issue is how much more tax and regulation shocks the economy can survive. If nothing else, nothing coming out of Washington will lead to growth and will continue to stall the recovery.
The final lesson is that the Republicans made their deal with the devil, but they have no more deals to hand Obama. From this point, it is Obama's economy and the Republicans need not assist in any more suicidal deals that will not help the economy but could hurt the Party.