Should we be relieved the ominous fiscal cliff has been averted? Not really. Very little was accomplished late New Year's Day, when the House passed a deal that primarily avoids big tax increases and retains unemployment benefits but doesn't address the debt ceiling limit, the ballooning federal deficit or the fate of sequestration cuts. For the most part, the action by Congress just kicked the can further down the road, setting up the nation for a couple of more doomsday showdowns on Capitol Hill in the months to come.
What little was included in the legislation that passed doesn't accomplish much. Tax rates were held down for Americans making less than $400,000 a year (or $450,000 per couple), but the payroll tax holiday expired so the irony is nearly everyone will see a 2 percent tax increase, or about $1,000 a year on a $50,000 salary. On top of that, no spending cuts were in the bill, meaning spending will actually increase by $4 trillion over the next decade. In fact, the $600 billion in new revenue from increased taxes on the wealthy won't cover the estimated deficit for even a single year in the coming decades, according to the Congressional Budget Office.
Yes, we avoided going over the fiscal cliff, but little has been averted. Get ready for more political brinksmanship to come.