Balanced: Senate Fiscal Deal Has $41 In Tax Hikes For Every $1 In Spending Reductions


According to the Congressional Budget Office, the “fiscal cliff” deal passed by the US Senate late last night has $15 billion in spending growth reductions (it’s not cuts as we’ll still be spending more in 2013 than we’re spending in 2012) and $620 billion in tax hikes, both over the course of a decade.

After months of demanding a “balanced” approach to deficit reduction, what we got was $42 in tax hikes for every $1 in spending reform.

What’s more, keep in mind that both figures are decade-long totals. If we take both numbers at face value, ignoring the fact that tax hikes are probably going to slow the economy and thus tax revenues and that the spending cuts (with the history of these sort of deals as our guide) probably won’t ever materialize), we’re talking about an average of $1.5 billion in lower spending and $62 billion in additional revenue.

For a budget that is projected to run a $1 trillion deficit for the fifth consecutive year.

Via TaxProf Blog, here are the specifics of the deal passed last night:

Raise the marginal tax rate to 39.6% on income over $450,000 (joint) and $400,000 (single).
Raise the tax rate on dividends and long term capital gains to 20% on taxpayers with income over $450,000 (joint) and $400,000 (single). The top rate would remain 15% for taxpayers with lower incomes.
Estate and gift tax: $5 million exemption (inflation-adjusted) and 40% rate.
Permanent and retroactive patch for the AMT.
Return of the exemption and itemized deduction phase-outs on taxpayers with income over $300,000 (joint) and $250,000 (single).
One-year extension of 50% bonus depreciation.
Extension of various tax extenders.

Notice that under the deal married couples only get $50,000 in additional income above the $400,000 income threshold for single people. That’s a pretty substantial marriage penalty.

Here’s the vote roll call. Both of North Dakota’s Senators voted for the deal.

Senator Rand Paul called this a “spending bill.”

Rob Port is the editor of In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

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  • Hannitized, Proofs obsession

    Wow, you’re a regular genius.

    Coming up with real spending cuts is going to take time. It just doesn’t happen overnight. You need to be realistic, you never have been.

    But hey, Bacon!

    • Rob

      Right, so let’s just raise taxes now, and we can worry about spending cuts later.

      Just trust them, right?

      • Hannitized, Proofs obsession

        It’s not raising taxes, we never could afford the Bush tax cuts. We should have had spending cuts at the same time, but Bush just spent more.

        This is slowing the bleeding and it’s going to take time to stop it. Be a realist, not an idiot, could do you some good with your credibility.

        Now go have a waffle with extra syrup, lord knows our healthcare system can afford another irresponsible human with diabetes.

        • Rob

          It’s not raising taxes

          Right. We’re not raising taxes. It’s just that some Americans will be paying more in taxes now. But that’s not raising them!

          Because, uh, something, right?

          As for “affording” the Bush tax cuts, revenues went up after they were passed. In fact, 2011 tax revenues were significantly higher than 2001 and 2003 revenues.

          What we can’t afford are the spending increases.

          • Hannitized, Proofs obsession

            You’re playing word game. Bringing tax rates back to where they used to be isn’t increasing, it’s removing the temporary tax cuts, that were designed to be temporary.

            If the Bush tax cuts “increased tax revenues”, why aren’t they working? You play a child’s game of determining causation without the benefit of evidence or fact.

            What we can’t afford are the continued tax gifts to the wealthiest.

          • Proof

            ” removing the temporary tax cuts, that were designed to be temporary” They weren’t designed to be temporary by George Bush or the Republicans. The Democrats forced the sunset clause in there or they would have refused to vote for the tax break at all.

            Get it, Tiny Sociopath? Democrats were reluctant to vote to let people keep more of their own income then, and certainly not to allow those taxes to stay low permanently. Republicans offered a year ago to vote to extend those tax cuts permanently and Dems refused. Big surprise!

          • Hannitized, Proofs obsession

            They Bush Tax Cuts were designed to be temporary. Do you have any idea what the Byrd Rule is, you idiot?

          • Thresherman

            “designed to be temporary”? Where on earth did you get that idea? Republicans wanted them to be permanent and the Democrats didn’t want them at all so the “temporary” was the result of compromise not design.

            And while we are on the subject of the left playing fast and loose with history, how about claiming for year after year that the “Bush tax cuts are only tax breaks for the wealthy” and now suddenly if this isn’t passed it will be a “huge tax increase on the middle class”. Those on the left tell so many lies that it is small wonder that they cannot keep them straight.

          • Hannitized, Proofs obsession

            I’m certain your biased version of “reality” ignores any evidence to support your claim, other than right wing mythos that’s frequently passed around on radical right wing blogs, like SAB. But you might do your own credibility some good if you familiarize yourself with the Byrd Rule, then attempt to explain to me how the Bush Tax Cuts could be “designed” to be permanent if there was no chance they could ever be permanent.

          • Bat One

            Actually, there was no “compromise” at all. Republicans made the tax rate cuts temporary in order to avoid a Democrat filibuster that would have killed the legislation entirely (the so-called Byrd rule). The reality is, that in the aftermath of both the bubble burst recession and the 9-11-01 attacks, Democrats were intent on keeping the country in recession and economic malaise in the hopes of winning the 2004 election. And THAT is why the cuts were set to expire after 10 years.

          • Proof

            “They (sic) Bush Tax Cuts”

            The Bush tax cuts were designed to be permanent. Do you have any idea what English words mean, you moron? That means the “intent” by the authors of that bill (i.e. George Bush and the Republicans) was for them to be permanent. The fact that the Party of Fiscal Irresponsibility would not vote for permanent cuts is duly noted.

          • Hannitized, Proofs obsession

            Support your claim with evidence, then explain how it’s possible to make them permanent if they knew about The Byrd Rule.

          • Bat One

            I know fiscal reality is more than a little inconvenient to the illiterati on the Left, but if you are going to suggest that tax rates ought to be where they were before the Bush tax rate cuts, then obviously expenditures should be at the same level too, no?

            In 2000, federal expenditures were 18.4% of GDP. But by comparison, last year, 2012, it was 24.1% and in 2011 it was 25.8%.

            Sorry, but YOU are the one play “word games” and apparently you haven’t a clue about those words’ meanings… never mind the numbers!

          • Hannitized, Proofs obsession

            You make illogical arguments that don’t connect.

            I have already clearly stated that we need to cut spending, but that will take time to figure out where to cut. Every responsible adult knows this. To pretend that the tax cuts weren’t impacting the deficit is both juvenile and economically illiterate.

            You tried to make to discredit my logical argument about not being able to afford the irresponsible Bush Tax Cuts by conflating your straw man that spending should be down to the same levels it was back then as well. But if you think you have created such a fantastic straw man to exhibit your strength, why not take it back to the GDP of the founding of our country? And lets’ not even begin to discuss who is largely responsible for the GDP increase.

          • Bat One

            Hanni, You talking about illogical is like hearing Bernie Madoff or Jon Corzine talking about financial probity and fiduciary responsibility. First of all, the Bush tax rate cuts have nothing to do with our current debt and deficit problems. Fact is, according to the White House website, the total federal deficit for Mr. Bush’s entire second term, from 2005 through 2008, was $1.186 trillion, which is less than the deficit in any one of Obama’s first 4 years in office. And probably less than the deficit in any of the next four years as well.

            Nor does your bleating about taking time to figure out where to cut make any more sense. If anything is a strawman argument – and a piss-poor one – its that. Forgive me for reminding you of reality, the blueprint, a truly bipartisan one, is contained in the report of the Simpson-Bowles commission, the same commission both appointed, and then ignored by the Obama regime. Al Simpson is an impeccably credentialed conservative Republican, while Erskine Bowles is a similarly reputable liberal Democrat. Thus, your “time” argument is bullshit.

            Finally, please explain, or at least try your best, why if tax rates should be at the pre-Bush tax ratecut level, how federal spending should not be at a similar level. Please consider that if you try to rationalize or excuse out of balance levels of spending, the result is more deficits – deficits which your side wrongly states we need to address with higher tax rates.

            I know this is complicated, what with English words and numbers, and concepts too, but do try not to be too much of a hypocrite. If you insist that raising tax rates is the way to fix the deficit, then neither the current deal nor the so-called “Buffett Rule” that Obama was pushing even come close. So either you’re in favor of raising everyone’s taxes, and raising them one helluva lot higher, or you aren’t really serious about the nation’s finances in the first place.

        • Proof

          “we never could afford the Bush tax cuts”

          Spoken like a true socialist! How is allowing people to retain more of what they earn something that “we cannot afford”? The only way for your sentence to make any sense at all, would be to assume that the government owns all that we make, and it cannot allow the people to keep any more and still have enough for its own profligate spending, waste and fraud.

          • realitybasedbob

            The truth is out there, poof, just waiting for you to find it.
            Good luck.

          • Proof

            Poor benighted Nutterbob! You can’t tell a spending problem from a revenue problem, OR your arse from a hole in the ground!

          • realitybasedbob

            Don’t worry, poof, your secret is safe with us.

          • Proof

            Your’s isn’t. You keep parading your ignorance in front of God and everybody.

          • Hannitized, Proofs obsession

            I can’t help you understand balancing an account, but I can tell you that it’s a fact that the The Bush Tax Cuts were designed to be temporary. That’s what passed, wasn’t it?

          • Proof

            We’ll just put “designed” as yet another English word that you are totally clueless as to the meaning. And since at least a portion of those tax cuts have now become permanent, with this Congress, are you going to argue that it was not by “design”? That’s what passed, wasn’t it? The design has come fully to fruition* for at least a portion of the cuts. It just took 12 years.

            *You can look that up. When you start using it in a few weeks, you can claim I copied you, as usual.

          • Hannitized, Proofs obsession

            What was passed then is not the same as what is passed now. But of course you have no evidence to support your claim how The Bush Tax Cuts were designed to be.

            Post them.

          • Proof

            A mountain of evidence over five years has not convinced you that “camp” is not short* for “campaign”. I do not intend to spend the next five years trying to teach you the meaning of the word “design”.

            *Although, you are short for a troll. Still carry that umbrella in case the ants need to take a whiz?

          • Hannitized, Proofs obsession

            So in other words, you’ve got no evidence to support your claim. Don’t worry, everyone knows you didn’t.

          • Proof

            Your projection and delusions of adequacy are once again, duly noted.

          • Hannitized, Proofs obsession

            And there it is; your defeat declaration.

          • Proof

            You keep thinking that, Wee Willie if it helps you sleep at night! Has anyone ever told you you argue about the stupidest things? You may stupidly quibble about the meaning of the word “design” if you wish. I cannot stop you from makings stupid arguments, however I am not compelled to prolong them. Had you ever made anything other than ‘a fool of yourself’, you might have noticed that design typically precedes implementation.

            The fact that the bill could not be implemented as it was designed by its Republican authors, was because of the intransigence of the Party of Tax and Spend. (D- In Your Wallet) Nothing more. Knock yourself out arguing otherwise. Claim victory a few more times, too. Someday, maybe even you will believe it?

          • Hannitized, Proofs obsession

            Um, no, that’s NOT why your claim has no fact to it. The reason your claim has no facts associated with it is two fold.

            One: The Byrd Rule would prevent any bill that causes a deficit to increase for 10yrs from passing.

            Two: The Republicans part who is bent on increasing the deficit knew the Byrd Rule prevents any such irresponsible plan from being permanent.

            You could “design” a time machine, but we all know you would start knowing it could never work.

          • Onslaught1066

            Byrd Rule?

            Oh, Right!


          • two_amber_lamps

            “They call me ‘The Pork King,’ they don’t know how much I enjoy it.”

            –Robert C. Byrd

      • borborygmi

        They are our elected officials. We keep sending them back and hoping a different outcome. Of course our Representatives are good its the other guys that is bad.

    • tony_o2

      There are 365 overnights in a year. We’ve been running a deficit of over $1Trillion for how many years?? Don’t tell us that they just don’t have time….

    • Proof

      “Coming up with real spending cuts is going to take time. It just doesn’t happen overnight. ”

      I’m glad that even the most hypocritical among us noticed that. Now, for the ADD impaired, candidate Barack Obama, in 2008, said he was going to go through the budget line by line in order to identify waste that could be cut. For those still learning to use the “big boy potty” in Honolulu, those would be “spending cuts”.

      Now, Hanni Boo Boo, if you can pry your lips off Obama’s arse for just a second or two, please tell us why after nearly five years, Obama needs to take more time to identify spending cuts?

      The Democrat controlled Senate hasn’t passed a budget in three years, either. If the Modern Party of Fiscal Irresponsibility (D-Obamaville) had done what they had promised and that which they were required to do by the Constitution, those cuts could have already been identified years ago.

    • Roy_Bean

      “You need to be realistic, you never have been.”

      My words exactly when it comes to democrat spending.

      • Hannitized, Proofs obsession

        You think you have a grasp on reality? What exactly did you think was being spent during 8 years of Bush? Democrat spending?

        • Roy_Bean

          That’s a fair question. Here’s a fair answer.

          • two_amber_lamps

            Hanny-Tranny = CRUSHED


  • Randy G

    Move over Greece, there is a new bankrupt country in front of you.

  • Neiman

    It is asinine in the extreme to talk about spending cuts at all or spending cuts taking time, when at 41:1 ratios of increased taxes to sort of cuts, it testifies to no cuts in spending at all. Yes, let us get it straight and stop lying to ourselves – there are no spending cuts at all, if I cut back my sweets (I am a sweetoholic) by $1.00 a month and increase my other spending by $41.00, I have not cut a damn thing. it is a delusion, a deliberate, self induced delusion.

    Let us also be honest with ourselves, Obama and the Democrats will perhaps promise cuts, even massive cuts over time at some point; but as they cannot be binding on any future Congress; and, as the sole justification for people being elected to office is to spend our money and as the Democrats will always find compassionate reasons to raise more taxes and increase costs, let us face facts – there will NEVER be any real budget cuts and their only hope is to tax everyone into poverty and that demands even more federal spending, anyone that believes short of a depression or a revolution there will ever be any budget cuts believe in fairies.

    The people spoke and they have by Electing Comrade-Chairman Obama (Chavez) made a conscious decision to make this into a European Socialist State type nation and out of selfishness and fear, they will not demand change until like Greece we are in the streets burning down our government, demanding they maintain the Welfare State at any cost, even totalitarianism.

  • Waski_the_Squirrel

    Any tax increases should be balanced by at least equal amounts of true spending cuts. I would prefer more cutting and less tax, but I think that in the short term, both will be the best compromise. I would also love to see the tax code simplified: take out a lot of the deductions and exemptions.

    As another article that I read today noted: Reagan and one of the Bushes also agreed to a combination of tax increase and spending cuts (with the ratio much higher on the cut end). The increases happened, but the cuts never did.

    Government doesn’t like spending cuts, and this deal shows that the Republicans are not as serious about spending cuts as they like to claim to be.

  • borborygmi

    We had a balance between spending cuts and tax hikes if we would have just went over the cliff. A bit of a meat axe approach but you still had cuts and still had hikes.

  • LibertyFargo

    wow… sucks to be in the top 77% of households…

    Good thing we’re sticking it to all them “rich” people…

  • banjo kid

    In 2013 the dims will find a way to eliminate the dollar in cuts also.