First and foremost is avoiding the “fiscal cliff” we’re hurtling toward (it’s also referred to as “Taxmageddon”). That’s necessary to prevent a recession. And it must be done before the first of the year.
“The Congressional Budget Office (CBO) forecasts a recession for 2013,” the Heritage Foundation reports. “This recession is not yet inevitable. Though Congress has recessed until mid-November, President Obama could and should immediately call it back to finish its bare minimum tasks for the year. At no time this year has President Obama made the resolution of Taxmageddon a priority, and in this he has joined with Congress in a conspiracy of inertia. But time remains to change course, to prevent the recessionary job loss and wealth destruction threatening the nation.”
There are several elements to the fiscal cliff. First and foremost is the expiration of the “Bush tax cuts.” Both parties agreed, during the campaign, that at least the tax cuts for the middle class should be extended.
The only real disagreement was over the cuts for those earning higher incomes. There’s room for compromise here. A deadlock and inaction would be disastrous, so both sides should take what they can get, and agree.
“Unless Congress acts by the end of the year, more than 26 million households will for the first time face the AMT, which threatens to tack $3,700, on average, onto taxpayers’ bills for the current tax year,” the Washington Post reports. “Because those people have never paid the AMT, they have no idea they are in its cross hairs — put there by a broader stalemate over tax policy that has kept Congress from limiting the AMT’s reach.”
That’s not all. Next year, a payroll tax “holiday” is set to expire, and neither party has objected. It will mean a real tax increase on the middle class — from about $1,000 per year on the median income, to
thousands more for higher-level earners. Congress, rightly concerned about the solvency of Social Security, seems poised to quietly allow the holiday to expire. But this is a terrible time for it. The $120 billion it would suck out of paychecks would do little to help Social Security (which needs systemic reform) but much to depress middle-class purchasing power.
And we haven’t even gone into “sequestration,” the agreement the administration made with Congress to cut spending across the board, if $1.2 trillion in more targeted cuts weren’t made by the deadline of Nov. 23, 2011. They failed, and now those cuts — distasteful to both sides — are set to be enacted.
We can’t afford to go over this cliff. The campaign is over. It’s time to get to work.