The fiscal cliff is coming, the fiscal cliff is coming!
Some people are running around like Chicken Little, thinking the world will come to a grinding halt if we go over the trumped-up ‘fiscal cliff’.
I should rephrase that: the GOP wants you to believe that the world will end…on December 31st.
Yes, the “sequestration cuts” to federal spending would do significant damage to our fragile economy. Just this morning, the NH Labor News posted an article that highlighted the potential dangers to the aviation community if sequestration happens. Simply put, thousands of people could be furloughed or forced out of their jobs.
If everyone agrees that sequestration is terrible, why is Congress not doing anything about it? Why hasn’t House Leadership proposed an amendment to delay the cuts? They have done this countless times to other bills.
Yesterday I took part in a phone interview with former Congressman Perriello and Jeff McLynch. The call was organized by The Action, a collaborative project of New Hampshire Citizens’ Alliance for Action and Granite State Progress.
Congressman Tom Perriello (D-VA) stated that the House Leadership could very easily take each one of these ‘fiscal cliff’ issues (taxes, sequestration, deficit reduction) individually. Of course, House Leadership doesn’t want to do that because it would weaken their bargaining power. If they separate the problems – or, heaven forbid, actually try to solve the problems – then Speaker Boehner and his team would not be able to hold the middle class hostage to try to get tax cuts extended for the ultra-wealthy. (Remember how they held the economy hostage during the December 2010 unemployment benefits crisis and the August 2011 debt ceiling crisis?)
Congressman Perriello said that the current conversation in Washington is not about deficit reduction, it is about preserving low tax rates for the ultra wealthy. If House Leadership were truly concerned about the deficit like they say they are, then they would be encouraging us to go over the “cliff”. (If the laws default on January 1st, that would immediately restore revenue and begin reducing the debt.) Obviously, that is not what is happening.
According to Jeff McLynch of the New Hampshire Fiscal Policy Institute, if we continue the ‘Bush Era Tax Rates’ then by 2019 more than two-thirds of the National Debt will be caused by these tax cuts.
Here are the two sides’ bargaining positions, according to Congressman Perriello:
- President Obama is asking for $1.8 trillion in new revenue.
- Speaker Boehner says he is working toward a goal of $800 million. Speaker Boehner is proposing to eliminate tax exemptions to raise revenues. But according to McLynch, that would lead to only $350 million in new revenue. That’s a far cry from $1.8 trillion.
The GOP Plan would reduce or eliminate tax exemptions that help low-income families, including the Earned Income Tax Credit and the Child Tax Credit.
In New Hampshire alone, the Earned Income Tax Credit applied to 77,000 working families. (See what the numbers are for all states) These tax credits were designed to help children and their families stay out of poverty. Is the GOP planning to increase welfare and Food Stamp spending if they eliminate these tax credits?
While the President wants the wealthy to pay a little more, Speaker Boehner wants the middle class to pay a lot more. This is unacceptable. The middle class should not have to take it in the shorts to preserve tax rates for the wealthy.
Congressman Perriello knows this. He said, “the only way to reach the $800 million in new revenue without raising rates is to take more from the middle class.”
Speaker Boehner needs to get off his high horse and either agree to the higher rates or stand up in front of all Americans and tell them that his obstinance is forcing the lower and middle class families to pay more.