Fiscal cliff deal seen as “breakthrough” on some issues

In an extraordinary session Tuesday night the House voted 257 to 167 to approve a Senate-crafted agreement to avoid the so-called “fiscal cliff” on New Years Day.

Labor and its allies see the agreement as a breakthrough since, for the first time in two decades, Congress has hiked taxes on the rich. The tax hike on the rich will yield more than $700 billion over ten years.

In addition to ending the Bush income tax cuts on those making more than $400,000 per year and leaving in place tax cuts for the broad working-class majority, the agreement, at least for now, is being hailed because it does not cut Social Security, Medicare or Medicaid benefits and because it extends unemployment benefits for a year.

“A strong message from voters and a relentless echo from grassroots activists over the last six weeks helped get this far,” declared AFL-CIO President Richard Trumka this morning, just a few hours after the vote.

Republicans ended 20 years of opposing tax cuts on the wealthy, wrote Politico. “It’s a significant concession in the aftermath of Mitt Romney’s November defeat and a potentially existential moment for a party that has prided itself on a defiant and dogmatic dislike of tax increases.”

The victory on the issue of taxes is seen, however, as far from complete.

Of major concern to working-class families is the end of the temporary payroll tax cut (taken from the deductions for Social Security). For lower and most middle income families the payroll tax increase they will feel later this month is as high as or higher than what they will get in income tax savings.

An article in the New York Times pointed out that a household earning $50,000 in 2013, roughly the national median, will avoid paying about $1,000 more in income taxes – but pay about $1,000 more in payroll taxes.

Labor leaders feel that there are a number of other critical areas in which the message of the peoples’ movements is clearly not reflected in the deal.

“Lawmakers should have listened even better,” said Trumka. By extending the Bush tax cuts for families earning between $250,000 and $450,000 a year and by making permanent Bush estate tax cuts exempting estates valued up to $5 million from any tax, you have, in effect, $200 billion in additional tax cuts for the top 2 percent.”

Labor and its allies are also warning that, on the downside, the deal paves the way for more Republican “hostage taking.”

“The deal simply postpones the $1.2 trillion sequester for only two months and does not address the debt ceiling, setting the stage for more fiscal blackmail, at the expense of the middle class,” said Trumka.

“It sets up the right wing House zealots to hold the economy hostage once more,” said OurFuture.org’s Robert Borosage, “while demanding deep cuts in public services, backed by a media frenzy about budget deficits. And while Social Security, Medicare and Medicaid escaped unscathed in this deal, they will be the prime targets in the coming debate.”

“Instead of moving to address our nation’s real jobs and investment crisis,” said Trumka, “our leaders will be debating a prolonged artificial fiscal crisis.”

Trumka committed the labor movement to a “continued fight for a fairer, more progressive tax system and to protection of Social Security, Medicare and Medicaid.”

The deal to avoid the fiscal cliff was brought to the House floor less than a day after its passage in the Senate and approved in the House 257 to 167, with 85 Republicans joining 172 Democrats in voting for it. Voting no were 151 Republicans and 16 Democrats.

Interestingly, Speaker John Boehner, who never participates in roll calls, voted in favor. Rep. Eric Cantor of Virginia, the GOP majority leader, and Rep. Kevin McCarthy of California, the number three Republican, voted no. Rep. Paul Ryan, the budget chairman and former GOP vice presidential candidate, supported the bill.

Photo: President Barack Obama winks as he arrives to make a statement regarding the passage of the fiscal cliff bill in the Brady Press Briefing Room at the White House in Washington, Tuesday, Jan. 1, 2013. (AP Photo/Charles Dharapak)