We're back on the edge of a fiscal cliff and the battle rages on!
The two parties are again pressed to address fiscal compromise, facing a deadline to prevent several potentially damaging things from happening in an already fragile economy -- and the rhetoric is flying.
Though many pols give the impression, in their cautiously worded statements, they believe the parties can come together to avoid the financial impasse that would cause damage to the economy and recovery. They're reluctant to play their hands for fear of exposing an irretrievable vulnerability.
Who's going to win this fiscal battle?
More than likely, it won't be 'the people.' It never is! And, depending on the outcome, some of the politicians won't survive either.
Democrats were given a mandate which should strengthen their negotiating position, one they should leverage immediately. Obama was given the same mandate but, again, appears to be foolishly considering compromise with intransigent Republicans.
Though taxes are an important part of our fiscal well-being, the rift is not just about taxes.
Democrats have been given a unique opportunity to pass legislation that will help the nation and begin healing the middle-class and our economic malaise.
That mandate does not include, as the voters have made abundantly clear, changes to our social net programs -- Social Security, Medicare, or Medicaid -- which saved our asses from another Great Depression.
Conversely, Republicans need to be extremely cautious about holding these socially acceptable programs hostage in any fiscal negotiations. These programs will have to be adjusted, but not today, and not as part of our current fiscal stalemate.
As the 'fiscal cliff' looms, due to expirations of many fiscally important programs, legislators should be working hard to find a balance that will move the country forward.
Discussions will vary from increasing revenues to spending cuts, reforming the tax code to extending the Bush tax cuts, and closing loopholes to the hazards of sequestration.
As the two sides return to the bargaining table the discussion should first embrace what the country needs and how they can, together, achieve that. They must weigh the significance of each issue on the economy and the short- and long-term effect each aspect will have. Republicans need to understand that their stance on most issues have caused the greatest suffering to the nation as a whole. But, discredited ideologies will, invariably, get in their way.
The Tea Party, combined with an already rigid and uncompromising Republican cadre, makes reasonable negotiations near impossible. Their scorched-earth policy holding important aspects of a healthy nation hostage can no longer be tolerated. Nearly every one signed an unpatriotic pledge which limits their ability to govern and marries them to a single-minded philosophy.
The Bush tax cuts have cost us dearly and the extension of the top two brackets since the original sunset in 2010 has added $140 billion to the deficit. Overall, the tax cuts for the top 2 percent, who have done nothing to stimulate a flagging economy, has added $840 billion to our stifling deficit. The loss of revenue since President Obama took office has added nearly $280 billion to our debt.
Republicans argue that raising taxes during a slow economy could further slow our recovery. That is partially true. Raising taxes on lower incomes (those below $250,000) would adversely affect those that are most vulnerable. But raising them on the rich would cause little or zero effect on the economy. Closing loopholes carries with it the same problems that rate increases would.
We need viable and verifiable actions to determine the benefit of anything Congress does. It is difficult to trust Congress to make fair and equitable decisions because they lie to the American people consistently and irreverently.
Republican phraseology is equally frustrating in these struggles between good and evil, between wealth and despair, between greed and fairness. They talk a lot but say nothing! Use of terms like: 'closing loopholes' 'broadening the base' 'job creators' 'tax reform' 'revenue neutral' 'entitlements' and 'balanced budget' are only distractions. None are backed up by solid commitments to improving either the economy or the deficit. They are vacuous talking points designed to get the general public to drop their guard.
We can't allow Republicans to hold the economy hostage nor the Democrats to negotiate away safety produced by our sound social programs. The public must demand vigilance and unwavering strength from the President and Congressional Democrats to protect the economy and the social safety nets from deterioration.
Letting all the Bush tax cuts expire would generate increased revenue but throw the economy back into recession and eventually cause an increase in the deficit. In the short-term it would increase unemployment and poverty. Government would then have to step in and provide money to avoid a deeper recession.
Other taxes and funding for programs are due to expire that would adversely effect low income and middle-class earners. They include: the payroll tax and the alternative minimum tax, the end of federal unemployment assistance, and many other vital programs for the poor, elderly, and disabled.
So, the 'fiscal rift' is real, and potentially destructive.
It has become a clash of ideologies between one that caused the fiscal nightmare we've found ourselves facing -- one that wants to see the economy fail to regain political power -- and one that's attempting to continue the slow recovery and battling to overcome the intransigence.
The solution is simple!
Extend the Bush Tax Cuts for the lower brackets while raising the two upper brackets. Extend all programs that will help low-income and middle-class Americans: the payroll tax cuts, the alternative minimum tax, and federal unemployment assistance.
On the other end, reduce upper-level tax credits or come up with a progressive minimum tax on incomes over one million dollars. Raise the capital gains tax to 20 or 25 percent. Raise interest income and tax carried interest to regular tax rates. Fix the Estate Tax to better reflect a fair and equitable taxation on inheritances.
Let's do some spending cuts, too, starting with the Department of Defense. The $50 billion required in the sequestration is a good starting point. Surely a program that can't find over $2 trillion that has vanished into thin air could easily eliminate $50 billion a year. And useless, overly expensive programs like Homeland Security and the TSA could find 20 percent reductions in their bloated and unnecessary budgets. Cutting Big Oil subsidies would bring another $4 billion a year in savings.
We could immediately eliminate corporate loopholes which would raise their effective tax rate above the paltry 12.1 percent they paid in 2011. And we could repatriate their foreign profits at a fair rate instead of the 8.75 percent being pushed by Congress. A reasonable rate would boost revenues immediately.
Eliminating Planned Parenthood and Big Bird not only doesn't make sense but is a drop in the bucket compared to the outrageous things Republicans are trying to protect. Likewise, raising the retirement age on both Social Security and Medicare makes no sense when there are simpler ways to extend the life of both. Congress still owes Social Security $2.6 trillion.
What we need to bring to the table for these negotiations is honesty, fairness, and a profound responsibility to the American people to eliminate the uncertainties and solve our fiscal problems.
Otherwise, America will remain gridlocked and "adrift."