Will Congress Act to Prevent U.S. from Going Over ‘Fiscal Cliff’?
July 1, 2012 - 10:39 am
This seems so gigantically irresponsible that I can’t believe either side is contemplating it.
At the turn of the new year, a slew of tax cuts enacted by the Bush administration will expire while at the same time, sequestration will occur and $1.2 trillion in spending will be cut. There will also be a need to raise the debt ceiling.
Congress can avoid this disaster by working toward a compromise. Alas, observers from both sides of the debate think this will be too hard to accomplish and there appears to be a chance that the lame duck session following the November election will avoid the issues altogether.
Neither Democrats nor Republicans claim this is their preferred option, as it could rattle global financial markets badly and anger their constituents.
But as they circle each other in an ever-more partisan atmosphere they see little prospect for a settlement acceptable to both parties in the lame duck session of Congress after the November 6 election.
That is when they confront the wave of fiscal cliff decisions including how to handle expiration of temporary tax cuts that originated during the presidency of George W. Bush, $1.2 trillion in automatic spending cuts and the need to raise the debt ceiling again.
Some members and partisan strategists are concluding that they might be better off doing nothing.
They would come back in January with a new Congress relatively flush with cash – at least on paper – from the impact of the tax hikes; hit reset and start over to structure a new series of tax cuts. Call them the “Obama tax cuts” or “Romney tax cuts,” depending on the victor in the November election.
The risk of shaking the markets is always there. But they could mitigate that by telegraphing to voters and Wall Street in advance that they definitely intend to write some new tax cuts into law. It could take a couple months, or maybe even all of 2013 and beyond, but they promise they will do it and they promise they will make the tax cuts retroactive to January 1, 2013.
“My preference would not be to accept a lesser solution than you could get in February and March just to say that you got it done before the end of the year,” Senator Roy Blunt, a member of Republican leadership and congressional liaison to Republican presidential nominee Mitt Romney, told the 2012 Washington Reuters Summit last week.
Representative Chris Van Hollen of Maryland, a member of the Democratic leadership in the House of Representatives, said that if Republicans continue to demand a tax plan with breaks for the wealthy, Democrats should “take the question to the American people” in January by allowing historically low rates from the Bush years to expire.
So, because both sides are unable to play in the same sandbox without tearing each other apart, taxpayers, the economy, the markets, and the country take a gigantic whop upside the head.
This is worse than gridlock which, an argument can be made, is not all bad. It borders on negligence. What are we paying these people for if they’re not going to do their jobs?
Perhaps we should withhold their pay — “retroactive to January, 2013″ of course.