So Here's the Real Truth

Ezra Klein is a progressive wonk who inhabits MSNBC and the Washington Post. He represents the too smart by half segment of progressive thought the is certain that it knows more than anyone else about what ought to happen in the country. Today, Klein is celebrating the failure of the Super Committee and says that that failure together with Congressional gridlock puts the progressive Democrats in total control. After all, there are two big events that will go ahead in January of 2013 if no other agreement is reached. The first of these big events is the expiration of the Bush Tax Cuts. Upon that expiration, the tax rates will return to where they were under Bill Clinton. To Klein, that would be just peachy; just imagine, the tax bill for America will go up by over $4 trillion during the following decade. Of course, the problem is that over 80% of the increased taxes will hit the middle class. Remember all that bombast from Democrats about how the Bush cuts were just a tax cut for the rich? Well they were lying. Over 80% of the cuts went to the middle class. If the tax cuts expire, the middle class will get hit hard. Klein has no problem with that happening, but he does say that Obama thinks that it would not play well politically.

The second event coming in 2013 is the automatic imposition of cuts to domestic and defense spending. Each of these will get hit with a reduction of $60 billion per year. Klein likes these cuts too since they hit defense hard but do not reduce entitlement spending. Of course, even Obama's secretary of defense has said that these cuts would be disasterous. Progressives like Klein do not care.

Klein left out a few other events that will be triggered either in 2012 or 2013. The first of these is the drastic drop in reimbursements from Medicare to doctors unless the so called doctors' fix is enacted for another year. Imagine what will happen to doctors who see Medicare patients when their income gets cut by nearly 50%. How many of these doctors will just stop seeing medicare patients?

The second event is the return of the Alternative Minimum Tax at levels that will hit almost everyone who pays taxes in this country. How will folks who earn $75,000 react when their taxes get raised to the 26% level? It will not be pretty. Nor will the damage done to the economy as all that tax revenue gets sucked out of consumers' pockets.

The third event is the end to the payroll tax holiday of 2% put in place for one year in 2011. Most families will suddenly be paying an additional one thousand dollars in taxes. It is safe to say that most will not like it.

Klein, of course, does not mention these or other events because they will not be to the liking of progressives, yet gridlock would cause them all to occur. My guess is that we will see some sort of overall bargain for all of these items. If nothing is done, the AMT, the doctors' fix and the payroll tax holiday will all come crashing on the country in just seven weeks.

My guess is that Klein may not be so much in favor of gridlock as we move forward. I expect that the GOP will put forward a bill that deals with all three of the 2012 items but which also takes care of the 2013 ones as well. That will let the Democrats choose. Klein needs to remember that those who live by gridlock, die by gridlock.