Guy W. Farmer: Compromise needed to avoid ‘fiscal cliff’
December 9, 2012
My friend and fellow columnist Sam Bauman is surprisingly sanguine about the looming, year-end “fiscal cliff,” which he describes as a “fiscal slope” with minimal impact on seniors and low-income Americans. I beg to differ, respectfully of course.
“Seniors alarmed by all the dire warnings about a ‘fiscal cliff’ … on Jan, 1, 2013, can relax a bit,” Sam wrote last Tuesday. “Taxes will go up, but over a year-long period, so the initial impact won’t be dire.” The fact is that an average family will sustain a $2,000 federal income tax increase in 2013 if President Obama and Congress can’t reach agreement before Jan. 1, when drastic budget cuts will go into effect. There will be big cuts to the defense budget (some of which are fully justified) and discretionary domestic programs like Medicare and Medicaid. Here in Nevada the impact would be even worse due to other tax increases that would kick-in on Jan. 1.
The nonpartisan Tax Policy Center warns that almost every tax reduction enacted since 2001 will expire, “throwing millions of taxpayers into the Alternative Minimum Tax,” unless a “grand bargain” is reached this month. We don’t have to go over the fiscal cliff, however, if the president and Congress can compromise to achieve a bipartisan solution to the nation’s budget impasse. This would require the president and his fellow Democrats to address out-of-control entitlement spending and congressional Republicans to agree to modest tax increases for families making more than $250,000 per year.
Now I realize that “compromise” is a bad word among far left and far right political ideologues like MoveOn.org rabble-rousers and “no-tax pledge” militants like Chuck Muth and Grover Norquist, whoever he is. But I think President Obama and House Speaker John Boehner should ignore those extreme voices in order to reach an agreement that benefits the vast majority of American taxpayers.
We already have a bipartisan blueprint for such a solution. It’s called the Simpson-Bowles Plan, which was written by ex-Sen. Alan Simpson, R-Wyoming, and former Clinton White House Chief of Staff Erskine Bowles, a North Carolina Democrat. Their plan, released in 2010, called for roughly $3 in spending cuts for every dollar in new revenue, but it was mostly ignored by Obama and congressional Republicans. Simpson-Bowles recommended structural changes to Medicare and Medicaid, a federal salary freeze and major federal work force reductions.
These are reasonable recommendations if we realize that spending on domestic welfare programs rose 32 percent over the past three years to a total of about $1 trillion. The Democrat-controlled Senate Finance Committee estimates that the government spends more than $61,000 on welfare programs for each family below the poverty line ($22,350 per year). In other words, millions of Americans depend on “free stuff” from the government, and that creates an unhealthy entitlement mentality.
Of course nothing is “free,” as those of us who pay federal income taxes know all too well. So it’s time for President Obama and Speaker Boehner to get off the campaign trail and reach a bipartisan agreement to avoid the fiscal cliff. Time’s a wastin’.
• Guy W. Farmer is the Appeal’s senior political columnist.