Afro Newspaper: Common Sense Can Save us From Fiscal Cliff
This column was originally published in the November 28, 2012 edition of the Afro Newspaper.
As the Congress returns to Washington from the Thanksgiving district work period, our most urgent responsibility is reaching the compromises on taxes, government programs and the national debt limit that will avoid pushing our nation off the “fiscal cliff.”
If ever there was a time for common sense to prevail in Washington, that time is now.
I stand with President Obama in our understanding that we must do everything within our power to bring our national expenditures and revenues closer into balance. We also understand, however, that we must do so thoughtfully and fairly - with a surgeon’s knife, and not with an axe.
These issues were at the heart of this year’s electoral contests, elections in which the American people weighed the Democratic and Republican alternatives. A clear majority of the voters supported the President and his vision.
America voted for a budget strategy of shared sacrifice and shared opportunity – a bipartisan agreement that could chart the course toward both a stronger economy and bringing our national books into balance.
We did not vote for proposals that would balance our national books on the backs of middle class working families, government workers and those of us who are just barely getting by.
In a Nov. 20 address to the Economic Club of New York, Federal Reserve Chairman Ben Bernanke urged Congress and the president to achieve a budget compromise and, thereby, avoid the serious danger of our falling again into recession.
Chairman Bernanke also stressed that Congress must raise the federal debt limit to prevent the government from defaulting on the “full faith and credit” of the United States.
At the same time that we address these immediate economic dangers, he argued, we also must reduce the federal debt over the long run to ensure economic growth and stability.
I am hopeful that my Republican colleagues in the House of Representatives were listening to the chairman’s advice. On balance, that common sense prescription for compromise acknowledges the wisdom of President Obama’s balanced approach to avoiding the “fiscal cliff.”
Both Wall Street and Main Street are apprehensive about the prospect of a general tax increase (beginning on income earned after Jan. 1), while, at the same time, both military and domestic federal programs are sharply reduced. One would have to be an extreme federal budget cutter, moreover, to relish another slash and burn fight over raising the national debt limit.
We have not forgotten that an ideologically driven attack back in 2011 on what previously was a bipartisan perspective toward the debt limit pushed us into this “fiscal cliff” in the first place.
Most Americans strongly support a bipartisan budget compromise – and I agree.
Fortunately, the United States Senate passed the Middle Class Tax Cut Act (S.3412) on July 25 of last year that could – and should – avoid the fiscal cliff in the immediate term, while also serving as a starting point for further congressional action to address our vexing economic issues.
For one year (2013), the proposed Middle Class Tax Cut Act would extend the current federal income tax rates for individuals earning less than $200,000 annually ($250,000 for married couples). It also would extend tax credits important to middle class Americans and avoid expanding the application of the Alternative Minimum Tax.
These actions would protect 98 percent of America’s tax payers from an immediate increase in our taxes. However, for the most affluent 2 percent of our citizens (primarily those who receive the bulk of their income in capital gains), the tax rate would be increased to 20 percent (which still would be less than the rate most Americans pay on earned income).
President Obama has declared that he would immediately sign this short-term proposal on taxes – as soon as the House of Representatives agrees. I would be inclined to support such a practical action by the House, especially if it were coupled with an increase in the federal debt limit and a reasoned compromise on “sequestration.”
As I have repeatedly explained to my House colleagues, the sequestration budget axe forced upon our country by Tea Party ideologues in the 2011 Budget Control Act would be devastating to our economy as we work to grow our way out of the Bush Recession.
Unless the Congress acts to modify the currently scheduled budget slashing, both military and non-military programs will be harmed – and our overall economy as well.
Maryland’s economy would be among those most devastated. On balance, Marylanders receive about $17 billion more each year from our relationship with the federal government than we are paying in federal taxes. An average Marylander is about $4,200/year better off.
As a result, our local economy would be especially vulnerable to sequestration cuts in federal spending. In fact, according to The Center of Regional Analysis at George Mason University, sequestration could translate into the loss of 100,000 Maryland jobs.
We can avoid that fiscal cliff, but only if common sense, and not ideology, prevails.