The Bush administration brought the Economic Growth and Tax Relief Reconciliation Act in 2001 (EGTRRA 2001), they brought the Job and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA 2003). These two actions were heralded as being the best opportunity to spur growth in a sagging (sic) economy. He took office in January 0f 2001, he had a $450 billion budget surplus; the economy was stable but was showing some signs of slowing. This in and of itself was not bad after eight steady years of growth, the US and the world had to catch up. This is simply part of the market fluctuation of ebb and tide. The Bush 43 administration did not want to have anything to do with a decline of the economy; they wanted fast and furious growth.
The Relief Act of 2001 was designed to give the wealthy a hefty payday, a tax reduction of 4.9%. The graduated tax rate in 2001 for the wealthiest in the nation was 39.9%. This reduction would total approximately $2.5 trillion over the period of the administration. Another way to view this, the wealthiest in America earned $250 billion dollars a year at the tax payers’ expense. The President argued that there would be a $5+ trillion budget surplus during his administration and the money should be returned to the people. He just happened to give the biggest share back to the Wealthiest 5%. He further argued that the tax cut would stimulate the economy and grow jobs.
The attacks of 9/11 further created a drain on the economy. The response of the administration was to increase defense spending (Military Industrial Complex) by 107%, and Increased the number of economic regulatory governmental employees by over 91,000. This was to take a very sweeping toll upon the American economy causing severe deficits to follow.
Then in 2003 with a further sagging economy, the administration needed to shore up the tax reductions of 18 months earlier. They needed to fix and modify the loopholes and allow for off-shoring transactions, further the need to reduce tax effects on dividends and capital gains.
These two acts, along with slurry of other misguided steps by the Bush administration created the bellwether of actions to come that Neo-Conservatives would care little for. Two unfunded wars, ongoing tax reductions that benefited the wealthiest of this nation, an onslaught of deregulation of financial organizations all tied to offer the opportunity to obtain private government contracts that assured the payroll and ‘profits’ that big commerce could not obtain upon their own. These government contracts were paid from our government’s treasury.
The last and most important point to clarify is that the Bush Era tax relief efforts were designed with a “Sunset Date”. Sunset Dates are written into legislation for a few different reasons. One is to allow legislation to be used for a specific temporary purposes, such as; stimulating the economy, directing
So how did we get to the “Fiscal Cliff”?
The Fiscal Cliff as it is termed was fabled about 20 months ago when the President and Congress could not come to an agreement on raising the ‘Debt Celling’. This was in part related to a few other matters such as: allowing the Bush (43) era, EGTRRA 2001 and JGTRRA 2003 tax relief programs to expire, and also the spending cuts which will be implemented should they not agree on legislation to resolve. The term itself was coined by Ben Bernanke, Chairman of the Federal Reserve when he was addressing the potential of severe economic strife for the nation of Congress did act in a responsible manner.
So as we now know, Congress and the President are still, extremely separated on direction, economic policy and what is in best interest of the nation and the people. The debt ceiling issue will continue to be a wrangling point, but it will be used in hostage taking manner, similar to positions that the Congressional Leadership has tried to apply in previous negotiations.
It is my opinion, and there are others that agree with my position, that Social Security is one of the golden rings that the GOP wants for the very wealthy bankers and elite investors within this nation. If they (GOP) are able to wrest control of the future Social Security Investment for “Wall Street”, well they will make profits of unimaginable growth at the expense of the people and also ‘Privatize’ guaranteed investment funding by the American Treasury for “ever”.
But, the battle over the fiscal cliff was made very clear by the GOP this month, they announced very clearly that they are ‘working for the wealthiest’ in this nation. They negotiated solely on behalf of the wealthiest to not return to pre- 2001-2003 tax rates. Even though the rate was returned on those earning above $450,000 the reductions and modifications of the EGTRRA and JGTRRA are still in place and, they, (the wealthiest) still have greatly reduced their taxable liability through those legislative changes.
I do not foresee any improvement in negotiations for the future. I envision much more stalemate, gamesmanship and inaction by the Congress. We have observed Europe’s growing financial crisis. We have observed first-hand the failures of deregulation of financial institutions, waste of public funds on so called privatization, under-capitalization of lending projects for not properly valuing and inflating of costs, lack of “Economic Growth” , removal of liquid capital (cash) from global markets, and lastly the biggest failure of all; severe budget austerity. You may only cut so much before you strangle an economy and by all appearances, that is what is taking place in Europe and the United States. Keep people poor and working to survive and they will not cause problems and leave the wealthy alone to do their financial thing without encumbrance.