The Good, The Bad, and The Ugly

The Good

Yes the fiscal cliff deal had some good parts to it. First off, the Democrats were thanked of the floor of the house for finally acknowledging that the Bush tax cuts benefited more that just the rich. For years that's all we heard about the tax cuts. Secondly, the Bush tax cuts for most everyone have become permanent. no more wondering if and when they expire. Businesses can now plan their expenses regarding payroll which they could not do before. The Alternative Minimum Tax has been fixed. I don't know a great deal about this but I know Congress was fixing it every year so from what I understand, it has been fixed for the long term.

The Bad

There is bad stuff in the deal that we need to talk about. First off was the tax increase on individuals making more than $400K and couples making over $450K. That sounds like a lot of money and it is if it belonged entirely to the tax payer. Have you heard of a Sub-Chapter S Corporation? That is a small business entity where the corporate taxes are paid by the people who own the business. I used to be an owner of such a business so I know how it works.

For example, let's say Bob Smith started a small business and he set it up as a Sub-Chapter S corporation because he wanted the protection of the corporation. Since he is the only share holder, he must pay the corporate taxes on the profit of the corporation as if the profit was all his own income. When the tax rates are low, there is more money to return to the business to help it grow, maybe hire more people and thus help grow the economy. That was the entire point of the GOP opposing tax increases on the "rich".

The next bad thing is the extension of unemployment benefits. What! How can I say that!? I believe that continued unemployment benefits makes the recipient less motivated to go and look for work. I am close to retirement and I have always worked except for very brief periods. I never applied for unemployment, I got my ass out there and did what I had to do to provide for me and my family. I found work.

The Ugly

How the fiscal cliff deal evolved and was resolved is the ugly. We knew it was coming. We knew the last time we (Congress) kicked the can the last time. I blame both parties for this. Obama said any deal needed to have a balanced approach of both tax increases and spending cuts. That is not what happened however. $1.00 of spending cuts to every $41.00 of tax increases is hardly balanced.

Why can't we have the negotiations on C-Span where we all can see how it is being done? Why can't we see for ourselves who is holding up the resolution to the problem and who is working to get done what is best for the country?

What's Next?

The debt ceiling debate is next. The GOP's last chance to do something about the enormous spending problem we have. Sure to be another ugly process.