Collapse

Looking only at the rapidly plummeting threshold for defining "affluence," one assumes the economy must be crashing even harder than we feared it might this year.

Only just back in December, we were having this argument over where to draw the line of affluence with regard to tax policy.

In the months before the election, and in the weeks after his victory, Obama had a clear position: The Bush tax cuts for income over $250,000 were ending. He would not sign any extension, and if Republicans refused to extend tax cuts for income below that level, he would hold them responsible for it until they did.

Now, by all accounts, Obama is prepared to extend the Bush tax cuts up to $400,000 a year. Or maybe more. As of Friday, Obama had told Republicans they could have the tax cuts extended on income up to $400,000 if they would accept the estate tax rising from its Bush-set rates. As of last night, Democrats were conceding the estate tax plus the higher exemption on tax rates, which had risen to $450,000. And Republicans still hadn't agreed to it! Why would they, when Democrats keep hurling money at them? By midnight, Republicans might be getting the Saturday Night Live version of Obama's offer ("a 1% raise on the top two Americans — just two people").

Obama pushed the line up to $450,000 from $250,000 after a long series of arguments appeared in our increasingly elitist and out-of-touch press complaining that a $250,000 per year income was really not all that wealthy.    Because the President eventually agreed, the new consensus definition of affluence came in at somewhere around $400,000 in annual income as recently as this January.

Since then, something has changed dramatically.  I don't know if it's the sequester, or maybe the stricter NFL salary cap, or uncertainty over the fate of the bridge tolls, but something has apparently sent the economy into free fall. 

How else does one account for the fact that only three months later we're looking at an entirely different sort of affluence threshold?