The “fiscal cliff” deal approved by the Senate in a 89-8 vote early this morning, and which is under consideration by the House of Representatives today, punishes work and rewards unemployment.
The deal fails to renew a payroll tax holiday that had been in effect for two years, with the result that working families could see their tax bill rise by up to $2,000. Meanwhile, the deal extends unemployment benefits for a full year–and as economist Robert Barro has demonstrated, longer benefits lead to higher unemployment.
Effectively, Washington has decided to create new penalties for work, and new incentives for staying home.
The Business Insider also points to the regressive nature of the “fiscal cliff” deal, in that payroll taxes will rise on working families while households that rely on dividend earnings have avoided a large tax increase.