January 7, 2013 9:37:16 AM
In the wee hours of the first day of the New Year, after most Americans had concluded their celebrations, Vice President Joe Biden and Senate Minority Leader Mitch McConnell reached a deal to avert the fiscal cliff. The deal was then quickly rushed through the U.S. Senate while most people were asleep.
At first glance, this deal solved some problems. It prevented an income tax increase on most Americans, extended the farm bill for one year, and fixed a problem with Medicare that would have resulted in many physicians no longer accepting Medicare patients.
Not until later New Years Day, while America was watching bowl games, did the main flaw in the deal become apparent: It failed to deal with out-of-control spending.
The federal government adds about $4 billion in new debt every day, over $1 trillion per year the last four years and has over $16 trillion in total debt. Despite these facts, the deal actually increased spending and delayed cuts that had already been agreed to and signed into law. It added new subsidies for green energy, Hollywood movies, and Puerto Rican Rum.
The deal did include a promise to look at spending cuts at some indefinite point in the future.
Increasing taxes today while putting off spending cuts until later is a tactic Washington has used for decades. Unfortunately, those spending cuts never materialize.
Cutting spending means dealing with the condition of Medicare and Social Security. Medicare will be broke within 15 years if we do not act to save it for this generation and generations to come. Social Security is not in as much immediate danger as Medicare, but its long term outlook is no less bleak. Exploding health care costs and an aging population are straining the design of these programs built for a different era.
The sooner we act to save them, the less painful the changes. The absolute worst thing we can do is stick our heads in the sand and hope the problem will go away. Simple math says that is not the case.
Cutting spending also means stopping the out of control growth of our welfare programs. Reliance on food stamps has doubled in the Obama economy. Welfare spending of all types has grown to over $1 trillion. A great deal of this money is wasted or obtained fraudulently by abusing massive loopholes in the law. All sides should be able to support common sense reforms that ensure aid is going to those who truly need it. However, anger should not be directed at people who use these programs because they genuinely need a helping hand. The culprit is poorly designed programs that encourage dependency coupled with a weak economy.
A growing economy will help solve a lot of our problems. Stronger growth increases revenue for the government, which strengthens essential programs like Medicare. Furthermore, a strong economy means more people working and fewer people needing to rely on welfare. The best thing that can be said about the fiscal cliff deal is it makes most of the tax cuts put in place back in 2001 and 2003 permanent. However, it is misleading to say that this bill protected the middle class from a tax increase. If you have a job, your next paycheck will be smaller than your last because the fiscal cliff deal included allowing payroll taxes to go back up to 6.2%.
An increase in the payroll tax is both regressive and a drag on economic growth. Comprehensive tax reform making the tax code simpler, fairer, and encouraging to economic growth is still needed.
This vote was a tough choice, and we will have many more in the future. As we face these choices, the American people deserve solutions to our problems, not deals that avoid them.
1. Slimantics: The tragic sadness of 'Me, too' LOCAL COLUMNS
3. Voice of the people: Berry Hinds LETTERS TO THE EDITOR (VOICE@CDISPATCH.COM)
4. Froma Harrop: Trump's long contentious history with health care NATIONAL COLUMNS
5. Leonard Pitts: Making people uncomfortable is the point NATIONAL COLUMNS