With the presidential election behind us, the political playing field shifts to the rapidly approaching“fiscal cliff”---the combination of automatic across-the-board spending cuts and the expiration of a whole host of tax cuts set to take effect Jan. 1, 2013 as a result of 2011’s Budget Control Act (BCA).
Last week, NTU was joined by 22 other organizations who share the goals of reduced spending and lower taxes, in sending a letter beseeching Congress to honor its commitment to cut the sequester’s $109 billion in spending and continue to stave off tax hikes.
With a 16 trillion dollar and growing national debt, it is absolutely imperative that Congress take sensible steps to reduce the nation’s spending, and the BCA’s $1.2 trillion in deficit reduction over the next 10 years is as good a place as any to begin that process. Although some argue that the cuts to defense would put the nation's national security at risk, it is worth noting that the requested reduction in military spending under the BCA is only 10%, or in dollar amounts equivalent to the defense budget of George W. Bush in 2007. Not exactly draconian, and still preserving plenty of revenue to ensure the U.S.'s safety is not jeopardized. However, NTU and the other signers left the door open to altering the ‘across the board’ approach to the sequester cuts and urge reductions to other parts of the budget.
The slightly lesser portion of the cuts under the BCA come from non-defense spending (examples include education, food inspections and air travel safety), which would sustain a mere 8% cut.
Equally as vital to putting the U.S. on a fiscally sustainable path is a continued commitment not to raise taxes, including preserving the Bush Tax Cuts for all income levels. Allowing these to expire would result in higher income taxes for 90 percent of the population, with the average household seeing their taxes rise an astounding $3,500 per year. Investors would also sustain a hike in the capitol gains tax and a higher dividend tax, among other alterations to the code whose net result is taxpayers being forced to fork over more of their earnings to Washington.
It is obvious to fiscal conservatives and taxpayer advocates that significant changes must be made in the way that Washington taxes and spends in order to return our nation to fiscal soundness. The hastily approaching “fiscal cliff” offers Congress an opportunity to begin the tough work of downsizing spending, while honoring commitments they have made to not raise taxes on families.