Phony-baloney tax cuts, a delay in spending reductions, an increase in the deficit and lots more work to be done — Heidi Moore at The Guardian details the fiscal cliff solution that isn’t.

Though the Senate allowed the Bush-era tax cuts to rise for people earning $450,000 and more, Americans began paying higher taxes through their paychecks Jan. 1 because Congress let the payroll tax lapse, raising the levy from 4.2 percent to 6.2 percent. The cost amounts to $1,000 per year for people earning $50,000 annually.

Additionally, the spending cuts that were threatened by the so-called fiscal cliff have been kicked down the road two months, to a deadline that coincides with the time the U.S. will hit its debt limit.

“The result: the new fiscal cliff will have even higher stakes,” Moore writes, “as the U.S. could spend the next two months wrestling with even greater potential economic disaster, and a more dire impact on the markets. Now, it’s not just some spending cuts that are on the table; it’s the full faith and credit of the U.S. government.”

— Posted by Alexander Reed Kelly.

Heidi Moore at The Guardian:

As for the deficit, that will actually grow under this deal, partly because the tax cuts now don’t apply to many of the rich. When the president aimed for $250,000 in income and above for tax hikes, that encompassed about 2% of American taxpayers. But the new $450,000 threshold covers less than 1% of Americans. That means less money to cut the deficit, and more coming in spending cuts – very likely, to important government programs.

And lastly, the bipartisan nature of the deal is something that is unlikely to last after the House meets to talk about it this New Year’s Day. Whatever joy the Senate has with its 89-8 landslide agreement achieved at the ungodly hour of 2.07am, news channels featured an endless stream of Republican lawmakers in the House of Representatives talking about their unlikeliness to vote for the deal. One of them compared his plan to vote against the deal to dying in honor on a battlefield.

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#deficit#entitlements#fiscal cliff#payroll tax#spending#tax cut