How Bad is the New Year’s Eve Deal to Avoid the Fiscal Cliff?

Tim Noah makes the case that is so bad that we should kill it. Tim also provides an update from Sam Stein and Ryan Grim:

The preliminary fiscal cliff deal being negotiated by Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden would achieve up to $790 billion in revenue over the next decade. Some of that money would be offset by extensions of tax credits and other stimulative policy, leaving roughly $715 billion in debt reduction over that same time period. Because the revenue is counted over a decade, much depends on a variety of inexact assumptions, which is why the White House calculation of the total revenue raised by the deal is only $600 billion … Under the framework, the Bush-era tax cuts would be extended permanently for individuals at $400,000 and joint filers at $450,000. A second Senate Democratic source familiar with the state of play confirmed those details. The top rate on ordinary income would go back to 39.6 percent and raise an estimated $370 billion in revenue over 10 years. The same thresholds would be applied for capital gains and dividends, with the top rates in that case going up to 20 percent -- a concession to Republicans (the rate on dividends was set to return to 39.6 percent) but not far from the president's position during the campaign. Left unaddressed, at the moment, are the $1.2 trillion in sequestration-related cuts that will be triggered on Jan. 1. The parties are arguing over how long to stave off the cuts, and whether and how to offset them.

So what if we do not get as much 10-year deficit reduction as some had hoped? Wasn’t the real concern how much immediate austerity we would get without a deal? The progressive complaint that the deal will not raise tax rates on those making between $250,000 and $450,000 under this idea that the “Bush-era tax cuts would be extended permanently”. Of course, the 1981 tax cuts were supposed to be permanent too but that didn’t prevent the 1993 tax increase. I realize how difficult it was for President Clinton to get that bill through Congress. And the current Republicans are even more stubborn than the Republicans some 20 years ago. But isn’t that why we have elections? The choice now is either this less than hoped for deal or to fall over the fiscal cliff and duke this out in the new Congress, which doesn’t appear to be that different from the outgoing Congress.