I hope you and your loved ones had a wonderful Christmas yesterday. Christmas is a time to remember the birth of Our Savior a little over 2000 years ago. It’s a time to be grateful for all the blessings we have. It’s a time to be with our families.
Now many of us are back at work. And I expect to be called back to Washington, probably tomorrow, to continue the effort to resolve the issues surrounding the so-called fiscal cliff.
Here’s where things stand.
We have divided government. Democrats control the Executive Branch. Democrats control the Senate. Republicans control the House. As a result of the election last month, there will be a few more Democrats in each house after January 3rd when the new Congress is sworn in, but not enough to significantly change the balance.
We have a huge National Debt (more than $16 trillion) hanging over our heads. This is a result of decades of overspending (not under taxing, I would argue.) As part of an agreement to raise the debt ceiling about a year and a half ago, and as a result of the so-called super committee’s failure to come to more reasonable cuts in spending, automatic cuts in spending (sequestration) will kick in on January 1st, about a week away.
Coincidently, at the same time, January 1st, the so-called Bush tax cuts expire. This would result in everyone’s federal income taxes going up. (Ten years ago, when the Bush tax cuts were passed, Republicans wanted to make these tax cuts permanent, so they wouldn’t expire. Democrats didn’t want to cut taxes at all. The compromise at the time was, okay, we’ll allow the tax cuts to occur, but they’ll expire in ten years, unless they’re extended.) We’ve reached the end of that ten years.
President Obama and the Democrat-controlled Senate are insisting on raising taxes on “the wealthy,” (those with income of $250,000 per year or more – approximately 2% of Americans) or they’ll let taxes go up on everyone. Republicans argue we have a spending problem, not a taxing problem, and we ought not raise taxes on anyone.
Last week, Speaker John Boehner attempted to convince enough Republicans in the House to support what he called a “Plan B.” (Expecting virtually no Democrats to support his plan, it was necessary to acquire significant Republican support.) Plan B would prevent income taxes from rising on anyone earning less than $1 million per year. (This is 99.81% of Americans.) Income tax rates would go up on .19% of Americans, from 35% to 39.6%.
Speaker Boehner was unable to secure enough support from his Republican colleagues in the House, so he canceled the vote which was scheduled for last Thursday, and sent the House home till after Christmas. (The irony is both President Obama and Harry Reid said they would not support Plan B, so it wasn’t clear where it would have gone anyway.)
The important thing to remember is that even if Republicans completely caved in to President Obama’s wishes to raise taxes, the additional revenues would only fund government spending for about 8 days! So please repeat after me, “WE HAVE A SPENDING PROBLEM, NOT A TAXING PROBLEM!”
At this point, it’s not clear how all this is going to play out. As I’m sure you know, I oppose raising taxes on anyone. However, unless an agreement is reached, taxes will automatically go up on everyone. So it’s a Catch-22.
In addition, if we go over the so-called fiscal cliff, we risk another potential downgrade in our bond rating, a collapse of the stock market, and another recession, among other things. Of course, we risk all these things if we continue to refuse to deal with our $16 trillion plus debt, although a little more gradually (like the frog in the pot of ever-warming water.)
Anyway, that’s what I’ll be working on in Washington on your behalf over the upcoming days and weeks. As always, I’m open to your input at any time.
God bless you and your family.
