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Wicker: Lame Duck Congress Must Prevent Disastrous ‘Fiscal Cliff’

Massive Tax Hikes, Drastic Defense Cuts Are Unacceptable Consequences

Monday, October 22, 2012

The absence of leadership from President Obama and Senate Democrats has left many of the country’s most pressing problems unresolved.  Two major issues – preventing huge tax hikes and replacing debilitating defense cuts – need action before the end of the year.  

Rather than consensus, political posturing by Senate Majority Leader Harry Reid has pushed tough decisions to the final hour – irresponsibly allowing the fate of our country’s financial future and millions of American jobs to hang in the balance.  Despite a grim economic forecast, recent reports indicate the President is willing to use his veto power to force tax hikes. 

 Crippling Tax Hikes

Worries are rising among families and small businesses about whether they will face a hefty tax increase next year.  According to the nonpartisan Tax Policy Center, nearly 90 percent of Americans will be affected by higher rates, and the average rise per household would be about $3,500.  Tax hikes have an adverse impact on economic growth.  Job creators who want to hire and invest are discouraged by persistent uncertainty in Washington. 

Putting our country on sound fiscal footing is a priority that should be taken seriously and with timely and careful deliberation.  The fact that Senate Democrats have neither passed a budget in more than three years nor a single appropriations bill this year reveals the majority party’s failure to address the government’s spending problem.  Moreover, when presidential leadership was needed, the White House rejected proposals offering meaningful budget savings and ways to address the biggest drivers of federal spending. 

Rising to the Challenge

It is important to remember that the automatic, across-the-board budget cuts known as sequestration are part of a drastic fallback plan that was never supposed to happen.  Sequestration would be particularly devastating to our national defense.  We must ensure our military is the best-equipped and most professional fighting force in the world.  Unless the defense cuts are changed, our military readiness to deter threats and defend our priorities would be compromised.  America would be left with the smallest Navy since World War I.

 A Looming Recession

The stakes are high as the so-called “fiscal cliff” of tax hikes and meat-ax cuts quickly approaches.  If Congress does not act to change existing policy, the impact would have a disastrous effect on the economy.  The Congressional Budget Office has warned that another recession is imminent, and credit rating agency Moody’s has threatened to downgrade America’s credit rating – an action already taken by Standard and Poor’s last year. 

A credit downgrade is a significant setback because it represents shaken confidence in the U.S. government’s ability to pay its bills.  A drop in confidence could prompt higher interest rates – increasing payments on the federal debt by tens of billions of dollars – and further complicate the debt crisis.

Preventing the “fiscal cliff” from burdening Americans and wrecking the economy should be at the top of the agenda during the lame duck session of Congress between Election Day and the start of a new congressional calendar in January.  With bipartisan cooperation, we can avert disaster and begin the process of lasting budget reform.   

October 2012 Weekly Columns