Congress has a plan, or at least has arranged the steps, for dealing with the country’s deficit and debt problems. Come the end of the year, lawmakers will send all of us over a “fiscal cliff.” Among other things, cuts in income, dividend and capital-gains taxes will expire. Defense and domestic spending will be whacked. All told, the approach would reduce the country’s debt by a projected $8 trillion during the next decade, the federal budget in balance by 2016.
A good thing? The word “cliff” points to the likely pain, breaks and bruises.
The Congressional Budget Office reported last week that in 2009, Americans paid the lowest federal tax rate in three decades, an average 17.4 percent. That points to the room available for raising taxes. More, the Obama White House hardly proposes going to excess on higher taxes….
A strong case can be made for an even split of spending reductions and tax increases, including a step the president has eschewed, taxing capital gains as ordinary income. As it is, Republicans have been sharing their fears about defense reductions (part of a deal they brokered). Spare defense, and other priorities, such as education, research and parks, are vulnerable. These factors highlight why a careful balance must be struck, putting first the recovery, anchoring long-term deficit reduction and avoiding the hazards of a fiscal cliff.
— Distributed by The Associated Press