By making most Bush tax cuts permanent, he (Obama) gave away the massive bargaining chip he could have used to protect safety net programs in the next negotiating round. Now, thanks to his pre-emptive capitulation, austerity advocates hold all the cards.
While the deal extends unemployment insurance, this temporary relief is overwhelmed by massive, permanent gifts to the super-rich. Estate taxes have been repealed for all but the wealthiest 0.1 percent with a whopping $10.5 million per couple exemption. The agreement also locks in low capital gains and dividends rates of 15-20 percent, ensuring that billionaire bosses everywhere will pay lower tax rates than their secretaries.
Among new corporate favors, the deal retained one of the loopholes that multinational firms are using to dodge taxes on their foreign subsidiaries — an incentive to export jobs that cost us $1.1 billion in 2012. Meanwhile, vulnerable workers are hit with a big increase in Social Security payroll taxes, as rates revert to 2010 levels.
The fig leaf Obama provided to cover this surrender is a token tax increase on wealthy households earning over $450,000 per year. This marks a brazen retreat from his promise to raise taxes on those earning over $250,000, a meager reform to begin with in a tax system already rife with favors for the rich.