The fiscal cliff/sequestration deal that was approved on Jan. 1, added more deficits and debt to the federal budget that anyone could have imagined while raising taxes and allowing other tax breaks to expire. And again, both political parties are to blame for this disaster.
This entire mess was supposed to be about reducing deficits and eventually, debt, not adding to it. The deal raised taxes on those making more than $450,000, so the president got part of what he wanted and the GOP was able to protect households on the upper level - folks who make more than most of us but in a lot of cases are not millionaires.
At the same time, the president and Senate Democrats loaded the thing up with more spending including changes to the AMT, business tax breaks for rum producers and Hollywood, unemployment benefits, and other giveaways. The CBO reports that the votes just taken add $3.9 trillion in deficits to the $9+ trillion expected during the next decade, for a grand total of more than $13 trillion in deficits by 2023, approximately.
Since the debt will soon be at $17 trillion, the federal government will be at $30 trillion in debt in just 10 years, assuming nothing is done to offset those debt levels. This amounts to about $100,000 in federal government debt for everyone man, woman, and child who is a citizen living in the United States right now. These numbers don't include entitlement and pension obligations that are expected to be in the $90 trillion range very soon.
And let's be clear - none of these actions will create any new jobs because, as I've written before a number of times, the long-term job problems aren't about more federal government spending, more education spending, or anything else. The federal government is spending more than ever before, in actual dollars. The long-term unemployment problem is about globalization, free trade, and to a lesser extent, technological advances that have increased worker productivity. It's not about "making millionaires and billionaires pay a little more" - it's about you needing to make $30K a year to get by while people in China and India will do the same job for $1K a year in corporate costs.
Well, the Democrats got what they wanted and most of the GOP went along with it. You'll see, it won't work ... and things are going to get worse.
In two months, all parties are expected to sit down and start ironing out potential spending cuts. And the entire nasty nonsense-go-round will start again, keeping everyone in perpetual campaign mode.
The Democrats say they have $1 trillion in cuts over 10 years on the table but that is a drop in the bucket when staring at now $13 trillion in deficits and $30 trillion in debt. At the same time, the GOP wants spending cuts but aims a lot of them at the elderly and the poor. The "spending cuts" proposed by Democrats aren't cuts at all; they are reductions in the level of potential increases, meaning it's mostly word play; the GOP won't touch their blessed military spending even though Japan and NATO have no known enemies and we can no longer afford to be the police of the world.
Yes, the drawdown of the wars is in the savings everyone is projecting and that's real, but it's not enough. Everyone needs a true education about what is going on, especially when staring at the pension and entitlement obligation and the size and scope of the federal government while considering that there are layers of local, regional, and state governments doing much of the same work.
So here's the big question for the future: What happens when people sit down and realize that taxes have been raised on the rich, the wars have been drawn down, and there's still a massive hole and people are still out of work? That will be interesting to see.