While members of Congress are busy patting themselves on the back for managing to extend a tax cut for two months, we should not lose sight of how this was paid for. Check this out from Huffington Post.
Although House Majority Leader Eric Cantor (R-Va.) has repeatedly insisted there are no large differences between what the two parties want, there are. When senators gave up on trying to reach a yearlong agreement before Christmas, it was because they could only agree on how to pay for about $100 billion of the $200 billion total cost.
And the only pay-for that both sides really embraced was raising $36 billion by levying fees on bank transactions with Fannie Mae and Freddie Mac, a funding source that will take a decade to cover the cost of the two-month extension.
So, a two month tax cut will be paid for over a ten – year period by adding to the cost of a mortgage for the upcoming generation. It’s a good thing they didn’t extend the cut for the full year, that would have taken sixty years to pay off. But hey, they did a darn sight better than in 2011, that tax cut wasn’t paid for at all … bazinga!
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