Massive Tax Hikes, Drastic Defense Cuts Are Unacceptable Consequences
Theabsence of leadership from President Obama and Senate Democrats has left manyof the country’s most pressing problems unresolved. Two major issues –preventing huge tax hikes and replacing debilitating defense cuts – need actionbefore the end of the year.
Ratherthan consensus, political posturing by Senate Majority Leader Harry Reid haspushed tough decisions to the final hour – irresponsibly allowing the fate ofour country’s financial future and millions of American jobs to hang in thebalance. Despite a grim economic forecast, recent reports indicate thePresident is willing to use his veto power to force tax hikes.
Crippling Tax Hikes
Worriesare rising among families and small businesses about whether they will face ahefty tax increase next year. According to the nonpartisan Tax PolicyCenter, nearly 90 percent of Americans will be affected by higher rates, andthe average rise per household would be about $3,500. Tax hikes have anadverse impact on economic growth. Job creators who want to hire andinvest are discouraged by persistent uncertainty in Washington.
Puttingour country on sound fiscal footing is a priority that should be takenseriously and with timely and careful deliberation. The fact that SenateDemocrats have neither passed a budget in more than three years nor a singleappropriations bill this year reveals the majority party’s failure to addressthe government’s spending problem. Moreover, when presidential leadershipwas needed, the White House rejected proposals offering meaningful budgetsavings and ways to address the biggest drivers of federal spending.
Rising to the Challenge
It isimportant to remember that the automatic, across-the-board budget cuts known assequestration are part of a drastic fallback plan that was never supposed tohappen. Sequestration would be particularly devastating to our nationaldefense. We must ensure our military is the best-equipped and mostprofessional fighting force in the world. Unless the defense cuts arechanged, our military readiness to deter threats and defend our prioritieswould be compromised. America would be left with the smallest Navy sinceWorld War I.
A Looming Recession
Thestakes are high as the so-called “fiscal cliff” of tax hikes and meat-ax cutsquickly approaches. If Congress does not act to change existing policy,the impact would have a disastrous effect on the economy. TheCongressional Budget Office has warned that another recession is imminent, andcredit rating agency Moody’s has threatened to downgrade America’s creditrating – an action already taken by Standard and Poor’s last year.
Acredit downgrade is a significant setback because it represents shakenconfidence in the U.S. government’s ability to pay its bills. A drop inconfidence could prompt higher interest rates – increasing payments on thefederal debt by tens of billions of dollars – and further complicate the debtcrisis.
Preventingthe “fiscal cliff” from burdening Americans and wrecking the economy should beat the top of the agenda during the lame duck session of Congress betweenElection Day and the start of a new congressional calendar in January. With bipartisan cooperation, we can avert disaster and begin the process oflasting budget reform.
