Last February, Federal Reserve Chairman Ben Bernanke — addressing the House Financial Services Committee — described “a massive fiscal cliff of large spending cuts and tax increases” set to occur at the very start of 2013.
The temporary payroll tax cut? Poof. Gone. If it’s not extended, taxes go up by $95 billion.
The estate tax cap? Gone. You think a lot of people are hit by the death tax now? Over the fiscal cliff, 10 times as many people are going to feel it.
The patches on the Alternative Minimum Tax? Gone. You might as well call it the wealth tax. Four million people pay it now. Thirty million over-the-cliff taxpayers would have to fork over money in 2013.
The expanded tax credits? Gone.
The payroll tax holiday? Gone.
Lower income tax rates under President George W. Bush? Gone. And according to the Tax Policy Center, 90 percent of U.S. households are going to feel it.
Over the next 10 years, America is looking at $7 trillion worth of tax increases and spending cuts if we careen over the fiscal cliff.
And let’s talk about those cuts. They’re across the board — defense and non-defense programs. Do we really want to gut defense spending now? Ever? Certainly military spending can be executed more efficiently, but those decisions have to be made using the measured discipline of a surgeon’s scalpel, not the ham-fisted swing of an across-the-board meat ax.
How do you think Fort Gordon would fare under that ax?
The fiscal cliff started getting excavated as far back as 1985 with the Gramm-Rudman-Hollings Deficit Reduction Act. It was designed to trigger automatic, across-the-board spending cuts if Congress’ budget spending exceeded its annual budget resolution.
But that trigger never has been pulled. Members of Congress, ever eager to bring home government pork, just kept raising the budget resolutions’ spending caps year after year.
Then there’s Obamacare — the White House’s “answer” to the health-care crisis. In 2013, Obamacare imposes a surtax on salaried income over $200,000 ($250,000 per couple); and a surtax on all investment income received by folks getting more than $200,000 per individual and $250,000 per couple. That includes capital gains and dividends income.
All of this amounts to some $500 billion — and it’s the largest tax hike in U.S. history.
People have compared this move toward the edge of the
fiscal cliff as “kicking the can down the road.” That’s inaccurate. Playing kick-the-can actually is kind of fun.
What America is facing fiscally is a disaster.
This lack of certainty is sure to make the stock market more jittery. Skittish business owners — think retail, restaurant and industrial areas — will be more reluctant to hire. They might even let more people go.
All of this is not a revenue problem. Heaven knows the government is getting enough of our revenue. It’s a spending problem.
Consider: In the past few years, we’ve seen a needlessly lavish stimulus. We’ve seen bailouts. Eligibility requirements for
social entitlements and unemployment benefits have been expanded.
According to Rick Manning of Americans for Limited Government, federal spending has gone up 30 percent. No wonder too many people in Washington, D.C., are clamoring for more of our money!
Joining in is billionaire Warren Buffett, who in recent days has been advocating a “minimum tax” on the super-wealthy “1 percent,” which he describes as fair. That top 1 percent, by the way, earns 16 percent of all U.S. income but pays 37 percent of all federal income taxes. How much more “fair” does Buffett want to be before the 1 percent go penniless?
The mainstream media’s drumbeat in their fiscal cliff coverage is for Republicans to cave in to tax hikes. They’re demonized and pestered about it seemingly from every reporter on the planet. So why aren’t these same reporters asking Democrats about changes to America’s bloated entitlement programs — Social Security, Medicare and Medicaid?
With entitlements including Obamacare, federal spending rises to 24 percent of America’s gross domestic product. It’s that stubborn adherence to big spending that’s powering the momentum toward the fiscal cliff.
And halting big spending is what’s going to stop it.