In a simple answer: higher spending and an increased deficit. No, wait, you say, the Democrats fought and fought for higher revenue from the wealthy so we should be seeing a reduction in the deficit. They’re paying their fair share! LOLLZZZ!@!
Well, a select few individuals have sniffed out the truth that went on within the halls of Congress. It dates back to late July of 2012. Let’s take a quick time-machine jump back there. The Senate Finance Committee chairman, Max Baucus (D-MT) announced that his committee would craft legislation to extend many of the expiring tax credits for various industries. You should have seen the traffic on K Street (a.k.a. Lobbyist HQ) trying to get downtown to the Senate buildings. Various firms and former politicians were hired and they did their job. The net result was a bill that extended 50 tax credits that left the committee after a 19-5 vote passing it. The bill was largely ignored then, as the Republican-led House wasn’t going to take it up. So it sat on the steps of Capitol Hill.
Fast forward to the contentious fiscal cliff negotiations and the drive by the Democrats and President Obama to get more revenue by raising taxes on the wealthy. During the negotiations, it appears that the White House insisted that the Baucus bill provisions be part of any deal that gets done. The White House has yet to comment on this after being reported by a number of sources. Here are some of the tax credit extensions:
- $78M in accelerated tax write-offs for NASCAR track owners (Stabenow, D-MI)
- $222M in rum tax rebates
- $222M for businesses located on Indian Reservations
- $430M estimated for Hollywood studios to write off the first $15M for production costs incurred in the US, $20M if it is in an economically depressed area (Dodd)
- $12B for wind production tax credits that favor the likes of GE and Siemens who make wind turbine parts
- $2.2B for biodiesel and “renewable diesel”
- $59M for algae-based fuels
- $7M for consumers who buy plug-in motorcycles
- $650M for manufacturers of energy efficient appliances (again, GE, etc.)
- $154M for energy efficient home builders
The committee voted down a provision to list the corporate interests that receive the tax breaks on a government website in a 14-10 vote.
Now, step back and let’s do some math. The increased taxes on the “wealthy” affected those earning $400K or more ($450K for joint filers) which is estimated to raise $620 billion over 10 years. The tax credit extensions are estimated to be worth $68 billion in 2013. So $68 billion in “missed revenue” through tax credits and $62 billion in new revenues leaves me looking at a $6 billion reduction in revenues.