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Now you see it. Now you don’t. You’ve watched it for months. Now, suddenly it’s gone. Where did it go? No one knows. How did President Obama and the US Congress do that? The simple answer is sleight-of-hand prestidigitation.
Please don’t misunderstand. The magic was not in making the Fiscal Cliff disappear. The magic was creating the illusion that the US economy would fall off a cliff in the first place. Heck, most Americans still don’t know what the Fiscal Cliff was. So why do they believe its disappearance is a good thing? That is an easy question to answer. Because the Magician-in-Chief said so, just before he flew back to Hawaii.
The average American (and Brit) most likely thinks that Fiscal Cliff was about cutting the $16.4 trillion national debt. That only goes to prove that the legislative legerdemain on Capital Hill is able to fool the majority just about as much as Barry Sotero’s birth certificate. The truth is that this cliff had nothing to do with addressing the already out-of-control and ever-increasing national debt.
For those who thought that they were getting a tax cut . . . Surprise! No one is getting a tax cut! Santa Claus came to your house on Christmas Eve. He already on his well-deserved vacation, waiting at the Honolulu airport for President Obama who is going back to his monthly vacation. Santa won’t be back for another 356 days. In the meantime, everything that comes from the White House or Capital Hill is illusions.
Here’s another surprise: 77% of Americans will get a tax increase! It doesn’t get much better than this! A two-year old ‘tax holiday‘ on the worker’s portion of payroll taxes has vanished. That means that every worker’s tax contribution will increase by 2%. Oh wait, it really doesn’t hurt everyone. Payroll tax is only paid on the first $110,000 of income. So, if you make less than $110,000 your payroll taxes go up. For those who make, say, $200,000 or more, it’s no big deal. They will still not be paying taxes on anything over $110,000. “But I thought only the wealthy were going to be taxed.” Yeah, you’re going to need a dictionary of magic terminology. The word you need to understand right now is “misdirection.”
Now here is the “good news” from the disappearance of the Fiscal Cliff:
- The debt ceiling was not addressed. That means that a new Fiscal Something-or-Other will be coming in the next few months.
- The fact that nothing addressed the critical debt ceiling issue may mean that the likes of Standard & Poor may cut their ratings for the US. And that could happen sooner rather than later.
- The bill extended $59 million in tax credits to growers of algae and asparagus. Don’t ask why.
- Race track owners (cars, not horses or greyhounds) will be allowed to deduct more than $40 billion per year for maintenance of their facilities.
- The bill continues to bless the film and TV business by allowing $15 million in tax credits for filming in the US and $20 million for filming in low-income areas.
- In a scheme that is more complicated that we have time or space to tell, the bill gives Puerto Rico and the Virgin Islands some $480 million in tax breaks to support rum production. How’s that for a tropical punch?
- The bill offers tax incentives to mining companies to purchase safety equipment and train employees in safety measures. You’d think the mining companies would do that anyway.
- The bill provides some $165 million in tax incentives to railroad companies to maintain their tracks.
Some Fiscal Cliff eh?
Now here’s the news you really want to know: The Dow finished up 308.41; the NASDAQ was up 92.75, and the S&P 500 was up 36.23. Go figure.
