Failing to reach an agreement would send everyone’s income tax rates up to what they were under the Clinton administration. There would also be across-the-board federal spending cuts that would affect social programs and defense alike. Already the military is making preparations for a worst-case scenario.
The truly ridiculous aspect of all this is Congress created the problem as a self-imposed penalty if its bipartisan negotiating team — the so-called “Super Congress” — failed to come up with $1.2 trillion in spending cuts over a 10-year period.
On Friday, House Speaker John Boehner met with reporters and reported that nothing had happened. “This isn’t a progress report,” he said, “because there’s no progress to report.”
Vice President Joe Biden then laid down the White House terms — the top two income tax brackets must go up. Oh, and none of this coming to Congress to raise the debt limit. President Obama wants the authority to do that.
Republicans are adamant that top brackets should not be increased and that revenue increases can be found by closing loopholes, especially for the wealthy. That, they say, would raise about $800 billion in revenues over 10 years. The GOP plan offered last week would cut spending by $1.4 trillion over that period reducing annual Social Security increases and by raising the eligibility for Medicare from 65 to 67.
Obama has said that he won’t sign a deal that doesn’t require the wealthy to pay their “fair share,” which is, at best, a subjective term, but one that he has decided means a 39.6 percent tax rate for top earners who are now paying 35 percent. The second highest rate of 33 percent would be raised to 36 percent under the president’s plan.
The Democrats have tried to force the Republicans’ hand in calling for them to pass and extension of the Bush administration’s tax rates for 98 percent of U.S. wage earners. GOP lawmakers have not done that, knowing that it would weaken their overall support for their position. Once that measure passes, those who have their tax break will lose interest in the issue, one that Republicans contend will hurt small business owners who create most of the nation’s jobs.
About the only movement that has occurred has been the percentages of tax hikes on the wealthiest. Boehner on Friday did not rule out the possibility altogether and Biden said the White House was willing to negotiate those rates.
Meanwhile, there is evidence Americans are starting to get concerned about this stalemate. And when they get worried, they stop spending. That causes businesses to react, which leads to lost jobs. We just got out of that vicious cycle, and now Congress and the White House are creating a new recession out of what can only be described as stupidity.
Obama and the party leaders in Congress all need to collectively blink. They need to check their egos at the door and actually do the work we sent them up to Washington to do.
A successful deal will require an all-of-the-above approach. Tax loopholes will need to be closed. Top wage earners are going to see a tax increase. There will have to be significant federal spending cuts, and those will include popular programs. Simply raising taxes won’t address the problem.
But under no circumstances should the White House be given the ability to raise the national debt limit whenever it sees fit. That is too much authority to have without the check and balance of the Legislature.
Washington needs something we’re in short supply of — statesmanship. Instead, so far we’ve been stuck with brinksmanship on both sides of the aisle, and the brink is getting uncomfortably close