Late last night, Congress finally managed to pass a bill to resolve some of the fiscal cliff issues. While this may seem like a major victory for Congress, the President, and the American people, it actually leaves many questions unanswered, and several of the major issues such as the budget ceiling, the extension of the payroll tax deal, and just about any long term issue, still on the table.
However, the fact that any deal was reached is remarkable in itself. Anyone who followed the back and forth of the negotiations this holiday season knows that it was not easy getting to this point. Citizens were outraged, and rightly so, that politicians seemed to be putting their party’s interests before those of the American people, while lawmakers struggled to gain any ground against roadblocks at every turn. Congress managed to create a drama of cinematic proportions before delivering a plan at the absolute last second.
So who were the big winners and losers in the deal? Let’s start with Obama. He was successful in raising taxes on the wealthiest Americans (although not as much as he had originally hoped) and protecting the middle class. This is what he had been promising to do all along, and having claims to validate his support for the average citizen can only help his popularity. The middle class was also a winner in this deal, as they will enjoy permanent Bush tax cuts in 2013. Joe Biden also came out on top. He was critical in making this last minute deal happen, working with McConnell across party lines when it seemed Reid had no further sway.
The losers of the fiscal cliff deal are also becoming apparent. Most obviously, the 1% took a hit with huge tax increases coming their way. While not as high as Obama had originally intended, the estate tax will spike to 40%, and taxes on their dividends will hit 20%. Boehner was also a loser with his “Plan B” failing miserably, and majority leader Reid has little to show for all his effort as well. Interestingly, neither party had a decisive victory over the other, which could point to promising hints of compromise and bipartisan efforts.
Finally, anyone highly concerned with the budget can count this as a loss. The deficit was not decreased and the limit of 16.4 trillion dollars was broken on Monday. Congress plans to address this and other remaining issues in the coming weeks. President Obama has stated they plan to do so “with a little bit less drama, a little less brinksmanship, [so as to] not scare the heck out of folks quite as much.” Yes President Obama, that would be nice.
So here’s to a new year! We can all breathe a little easier knowing that progress has been made, but can expect more drama and deals to come in the next few weeks. In the meantime, even the President returned to Hawaii. We all deserve a little break.