Fiscal Cliff Averted

The WSJ has an article on the last-minute swerve away from the so-called "Fiscal Cliff."

So Congress has passed a bill to avoid the tax cliff, hallelujah. This is the way to look at it if you have a pre-Copernican view of politics where Washington is the center of the economic universe. The better way to see it is that the tax bill on the private, productive part of the economy is now coming due for President Obama's first-term spending and re-election.

The Senate-White House compromise grudgingly passed by the House is a Beltway classic: The biggest tax increase in 20 years in return for spending increases, and all spun for political purposes as a "tax cut for the middle class." But taxes on the middle class were only going up on January 1 because the politicians had set it up that way, manufacturing a fake crisis. The politicians now portray themselves as scrambling heroically to save the day by sparing the middle class while raising taxes on small business, investors and the affluent.

The nearby table shows the taxes that are going up this year. The best that can be said is that Senate Republicans managed to moderate the increase in the death tax from what it would have been, and to spare some upper middle-class families from even higher taxes by raising the income threshold for the new 39.6% top rate. But even those families will still see their taxes raised because couples making more than $300,000 will begin to have their deductions and exemptions phased out as their income rises.

Go to the link for more bad news....