Our nation is in a serious fiscal crisis. Unemployment has been above 7% since February 2009 and in September of this year our national debt surpassed $16 trillion. In the last 3 years alone, we have added $5.4 trillion to our unsustainable debt. Operating on huge deficit spending has become the norm in Washington, and our most important social safety net programs, like Medicare, are threatened by imminent bankruptcy.
You can’t turn on the news lately without hearing about the threat that the United States is in jeopardy of falling off the “fiscal cliff.” The fiscal cliff has become the buzz term for the many fiscal issues our government must resolve before the end of this year, like tax cuts that are set to expire, new taxes that are set to take effect, fiscal provisions that are set to sunset and deep automatic spending cuts that are set to take place.
It is my sincere hope that Republicans and Democrats can come together to find a balanced and bi-partisan solution
to these problems. Partisan gridlock in Washington is posing a grave threat to our future and our economy, and I believe that our hardworking taxpayers and small businesses deserve more.
It’s time that we work together to solve the looming tax hikes that will hurt our already struggling middle class families and businesses, the skyrocketing national debt that is threatening our prosperity, and the automatic deep spending cuts that will devastate our armed forces and national security.
Below I have provided you with an outline of some of the serious situations involved in the fiscal cliff. I hope that it will help you get a deeper understanding of the fiscal cliff and where I stand on the issues.
What is the fiscal cliff?
The “fiscal cliff” has become the popular shorthand term used to describe the conundrum that the U.S. government will face at the end of 2012, when the terms of the Budget Control Act of 2011 (BCA) are scheduled to go into effect and the terms of last year’s tax deal are set to sunset. If you remember, the BCA was a law that was put in place last year to solve the debate over raising the debt ceiling, and last December Congress struck a deal with the Senate and the Administration allowing the Bush Tax Cuts to be extended for one year. Basically, the fiscal cliff is a combination of implementation of the terms of the BCA and the expiration of the one-year tax deal from last December.
When is the deadline to avert the fiscal cliff?
January 1st is the deadline to avert the tax hikes and spending cuts that are set to take effect.
What problems does Washington need to resolve to avert the fiscal cliff?
Among the laws set to change at midnight on December 31, 2012, are:
What is the current status and where do I stand?
- The end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers)
- The end of certain tax breaks for businesses
- Shifts in the alternative minimum tax
- The end of the tax cuts from 2001-2003 (“Bush Tax Cuts”)
- The beginning of taxes related to President Obama’s health care law
- The expansive spending cuts, known as Sequestration, agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect. Over 1,000 government programs - including the defense budget and Medicare are in line for "deep, automatic cuts”
- Under Sequestration, the defense budget would be cut an additional $55 billion per year from the levels established in Budget Control Act. That would mean an additional $492 billion in cuts on top of the $487 billion already being implemented. In total, over $1 trillion from the base budget would be cut over the next ten years.
Last week, the President released his plan for fixing the fiscal cliff issues. Unfortunately, this plan included no real serious spending cuts but rather plans to raise taxes by $1.6 trillion over a decade and more than a $100 billion in fresh stimulus spending. The Obama Administration has yet to address our unsustainable spending, deficits, and debt.
Despite speaking with both Treasury Secretary Timothy Geithner and President Obama, House Speaker John Boehner says he’s “disappointed where we are -- disappointed what's happened over the last two weeks.” Speaker Boehner went on to say that, “the president’s tax increase would be another crippling blow for small businesses, while doing little to nothing to solve the bigger problem of debt."
I agree with Speaker Boehner. We cannot tax and spend our way to prosperity. Any balanced plan to avert the devastating effects of the fiscal cliff early next year must include significant cuts in spending and substantive entitlement reform, and House Republicans remain the only ones in Washington who have put forth a plan which includes both. Republicans are open to discussing ways to obtain new revenue, while democrats continue to rule out any sensible spending cuts. Democrats continue to advocate for tax increases on small businesses in lieu of the spending cuts that are needed to close our deficit—a position that would cost American jobs.
Republicans have made a new offer
in the fiscal cliff negotiations, a balanced approach of significant spending cuts and new revenues from tax reform with fewer loopholes and lower tax rates. This is another attempt to jumpstart substantive, good faith negotiations toward a bipartisan solution that can be enacted soon, a stark contrast to the unserious proposal the White House put forward last week.
We must do everything possible to avert the fiscal cliff and ensure that 2013 is the year we actually solve our nation’s debt problem through tax reform and entitlement reform. A balanced approach to solve the fiscal cliff is essential to our economic growth.