There is no fiscal cliff.
Yes, I know it sounds insane. But despite the equivocating, fear-mongering and hysterics occurring on Capitol Hill, the expiration of the Bush tax cuts is not the financial apocalypse Democrats are trying to claim. By their own standards, the expiration of the Bush tax cuts should be a good thing for the country.
Why? It’s merely a return to the Clinton rates. And as we’re constantly reminded, the Clinton years were economic Valhalla.
There’s certainly a growing financial crisis, but it has nothing to do with the coming expiration of the Bush tax cuts and automatic budget cuts.
It has everything to do with Obama’s hypocrisy on spending and deficit levels.
When Obama was merely a candidate, he called Bush’s spending, which led to a $9 trillion deficit, “unpatriotic.” Apparently, pushing that number to $16 trillion in less than four years isn’t.
And as if that burgeoning number wasn’t enough, Obama’s serious solution unveiled this week to pull us from the economic brink is $1.6 trillion in tax increases on “millionaires and billionaires” over the next 10 years. Let’s not forget those evil $250,000 a year millionaires who just won’t pay their fair share. This number is double what he proposed during the campaign. What’s worse about this grand bargain is that it makes no concessions to spending cuts — merely a promise of looking for future savings of a paltry $400 billion in Medicare and other entitlement programs. Remind me how well that promise worked for Ronald Reagan? Oh, that’s right; it didn’t.
Apparently those numbers are acceptable because, as Nancy Pelosi reminded us this week, Congress worked to institute utterly draconian cuts of .07 percent last year. How could we possibly cut any more?
Finally, showing a blatant disregard for federalism, the deal gives Obama virtually unlimited power over the debt ceiling. He proposes to ban limits on the debt ceiling. Now, in his benevolence, he allows Congress to pass a resolution blocking debt ceiling increases, but gives himself the power to veto that resolution, which can only be overridden by a two-thirds Congressional override.
That’s not unconstitutional in the slightest.
Yes, raising taxes on the super wealthy polls well. But don’t be deceived by the bromides; this isn’t just an income tax raise. Obama’s plan also includes a hike of the inheritance tax on estates over $3.5 million — which even some Democrats have been hesitant about — and a tax on regular-income dividends. Again, this is a measure the Senate did not even consider. Obama has also proposed getting rid of the charitable tax donation.
So yes, maybe letting the Bush tax cuts expire for high income earners isn’t that bad.
But that’s not the whole deal.
There are massive tax increases hidden in this proposal, and they don’t just affect upper income earners. Because trickle down economics is indeed more than just “fairy dust,” this will affect everyone: business owners may be forced to lay off workers in order to keep their doors open, consumers’ dollars won’t go as far, charities, etc.
Historically, revenues increase when taxes are lowered; It happened when Kennedy and Reagan lowered tax rates. And yes, even when Bush — whose only concern was lining the pockets of his fat-cat Wall Street pals — instituted his tax cuts, and the tax base expanded.
It’s the fiscal cliff, or Tax-maggedon. Either way, the result is pretty grim unless serious budget cuts are worked out. And Obama’s laughable deal — which includes more stimulus spending and axing the debt ceiling — shows just how seriously he’s taking the budget crisis, which is not at all, hence the market crash that followed this election.
And that’s why Republicans need to hold firm and go over the cliff, proving once and for all just how reckless the Democrats are when it comes to economic policy. Remember, in the past they praised the economic policies under Clinton. Now their return is being painted as a sort of doomsday scenario.
It is Obama who is responsible for this showdown. Republicans have put forth serious proposal after serious proposal, have been shot down and met with asinine proposals. Now is not the time to back down on principles.
Katherine Revello is a second-year journalism and political science student