Examining the “Fiscal Cliff” Agreement

Budget Deal Makes Permanent 82 Percent of President Bush’s Tax Cuts

The American Taxpayer Relief Act of 2012 (ATRA), which President Obama signed into law last night, makes permanent 82 percent of President Bush’s tax cuts. Read more

The Next Act: Further Deficit Reduction Must Include a Mix of Revenues and Spending Cuts

The revenue increases in the new budget deal coupled with the large cuts in discretionary spending that policymakers enacted in 2011, will achieve more than $2 trillion in deficit reduction over the next ten years. That’s a substantial amount, but it’s not enough to stabilize the country’s debt as a share of the economy over the decade ahead. To reach that goal, policymakers will need to produce about $1.2 trillion in additional revenue increases and spending cuts.

Some Republicans leaders have indicated that they will push to achieve the additional deficit reduction entirely through spending cuts, with no further revenue increases at all. If this view holds, then when all of the deficit reduction efforts are tallied together, spending cuts will outpace revenue increases by nearly 5 to 1 — hardly a balanced approach. Read more

Budget Deal Gives New Tax Cut to Wealthy – And Pretends It’s a Tax Increase

The new budget deal delays the across-the-board spending cuts (or “sequestration”) for two months — and covers half of the resulting $24 billion cost through spending cuts and half through tax increases. This 50-50 balance between spending cuts and revenue increases marks an important principle that policymakers should follow in producing the additional long-term deficit reduction that the nation needs. Unfortunately, while the spending cuts in question are real, the tax increase isn’t. It’s fake.

Actually, it’s worse than fake — it’s a new tax cut, primarily for affluent households, that’s being portrayed as a tax increase. Read more

More: Federal Budget Analyses