After narrowly missing the fiscal cliff, the President went out of his way to thank the Senate and Congress for getting things done.
Granted, it wasn't an Academy Award speech, but it could have been given the performance he delivered as he congratulated everybody from his "extraordinary" Vice President Joe Biden to Harry Reid, Nancy Pelosi and even Speaker Boehner.
It was quite a spectacle really, but puuuulleeeassssse…now for the back- room details.
Behind the scenes, there was plenty of f-bombing, poison pilling and grandstanding leading up to the deal – and that was before the members of Congress and the Senate actually got serious with their usual ultimatums followed by earnest- looking sound bites and posturing.
And for what?…
According to Washington, they not only prevented the nation from going off the fiscal cliff, but also did lots of good things for America. Whether that's true or not depends on your perspective.
Given the fact taxes have increased for 77% of Americans thanks to payroll tax changes, and another $4 trillion stands to be added to the deficit, that's debatable.
But what gets me really riled up is the amount of pork contained in the bill.
For a bunch of lawmakers who were supposedly so busy and so involved in "negotiations," they were remarkably productive when it came to special interests.
Take a look at what else was packed into this sausage according to various sources including Fox News, ABC, the Washington Post and, of course, the US government itself:
- $46 million for motor speedways that allows NASCAR track owners to deduct everything from the bleachers to concession stands and track maintenance, too – zoom, zoom;
- $199 million worth of tax breaks for rum makers and rum production – big liquor must be sponsoring the post- deal parties or cocktail hours on the Hill considering that's a $13 per gallon kickback;
- A 10% tax break for everybody who buys an electric scooter or car up to $2,500 max – evidently Oregon, Washington and Nevada didn't get the memo. All three states are looking to add additional per- mile taxes for anybody who doesn't stop at a gas station. So much for fuel efficiency incentives;
- $15 million in tax breaks for movies filmed in America and $20 million if they're filmed in low- income regions. According to US News, that's a "Hollywood incentive that costs the country about $430 million to maintain." Remember to say "cheese" when you send in your taxes;
- $59 million in tax breaks for algae growers who are trying to turn green slime into bio-fuel. Seems to me that if it were viable technology, the government wouldn't need to "invest" but would be content to spend hopelessly large sums of money via contracts instead – remember $400 hammers? Or Solyndra?
- And finally, my personal favorite, a $9 billion tax break for big banks and manufacturers related to "active financing." Never heard of it? Don't feel bad. Active financing is a special transaction tax break that specifically allows multinational companies to avoid paying U.S. taxes on foreign earnings if those profits resulted from "actively" financing a deal or activity on foreign soil. Not surprisingly, big businesses claim it helps them be more competitive abroad which is why – ta da – it's been extended for another year, even though the special provision which was enacted in 1997 was never supposed to be made permanent. – Guess it's good to capitalize on a loophole you helped create, eh fellas?
More Fiscal Cliff Madness
And it doesn't stop there.
The bill contains all sorts of other things, like a provision to subsidize coal on Indian lands in the interest of alternative energy, and an extension that enables tax-free financing for the redevelopment of lower Manhattan, now euphemistically called the "Liberty Zone." Originally intended to be a 9/11 reconstruction tool, it's resulted in high- rise luxury apartments and even, according to the Washington Post, Goldman Sach s' new headquarters.
Cracking down on tax cheats who are already in prison, tax breaks for taking mass transit…they're all in there.
All of this is patently absurd. No, scratch that…it's an unmitigated disaster and no wonder. According to Utah Senator Mike Lee, they only received the bill six minutes before voting on it. "Not one single senator who voted for this bill had read it," he observed.
Perhaps they're taking a cue from the Nancy Pelosi school of management when she quipped that we needed to pass Obamacare to "find out what's in it."
Sadly, if you think this is entertaining, stay tuned. I can hardly wait to see what our leaders will cram into the debt ceiling debate 60 days from now.
By the way, you want to read the 153 Page American Taxpayer Relief Act of 2012 as it's formally known for yourself, click here
Related Articles and News:
- Money Morning:
Fiscal Cliff Deal Averts the Crisis… But Now What?
- Money Morning:
Five with Fitz: What to Expect If We Go Over the Fiscal Cliff
- Money Morning:
The Fiscal Cliff's Biggest Surprise Could Be a Rising U.S. Dollar
- Money Morning:
The Fiscal Cliff Is Set To Clobber The Middle Class With Nearly 50% Tax Rates
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs The Geiger Index, a reliable, emotion-free guide to making big money and avoiding losses, and High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.