Posted by AzBlueMeanie:
Democrats will hold their noses today and swallow the bitter pill of Republican fiscal irresponsibility in exchange for the extension of unemployment benefits for America's unemployed, whom Republicans have been holding hostage in an insurrection by the "two perecenters" for an extension of their tax windfall. This is a shameful day in American history.
Ezra Klein explains:
If you're a deficit hawk, today's Wonkbook won't be easy reading for you. We lead with the tax vote, of course. The $858 billion package does more damage to the deficit than any other piece of legislation passed during the Obama presidency. It's also expected to receive the largest bipartisan majority of any major piece of legislation the Senate has considered in the last two years.
The lame-duck Congress is also likely to pass an omnibus spending bill that's chockfull of earmarks — and plenty of them are going to Republican senators like Mitch McConnell, who've now come out against the practice, and many of them were requested by Democratic senators even after the White House begged them to give up on the earmarks this year. It's not exactly a great sign if you were hoping an earmark moratorium would stick. And nor is it a great sign if you're looking for divided government to be more fiscally responsible. The only thing Democrats and Republicans really seem able to agree on is spending money.
And what will be the consequence of this fiscally irresponsible tax cut for the "two percenters" and reduction of the estate tax for the über-rich? Moody's Raises Specter of U.S. Downgrade After Tax Cut Deal:
Moody's Investors Service, a leading credit rating agency, warned in a report on Monday that the tax cut compromise could imperil the U.S. government's top Aaa rating, though a downgrade remains highly unlikely.
The Moody's report pointed to provisions such as a temporary payroll tax holiday and extensions of unemployment insurance and the Bush-era tax cuts as likely to produce "substantially higher budget deficits," even accounting for an expected boost to economic growth from the deal.
"Unless there are offsetting measures, the package will be credit negative for the U.S. and increase the likelihood of a negative outlook on the U.S. government’s Aaa rating during the next two years," the report said.
The Moody's report also noted the risk that the two-year extension of the Bush-era tax cuts could become permanent, as the issue will resurface in a presidential election year. "A permanent extension of the tax cuts alone (without other measures) could result in a considerable increase in deficits and debt levels unless other measures to reduce deficits are adopted," the report said.
Note to the media villagers: After the experience of the past decade it should be an editorial style rule that the use of the term "deficit hawk" is banned and may not be used in connection with the name of any member of Congress, in particular, Republican members of Congress. Please just stop!