So a deal was reached this week that, experts say, temporarily spares the American economy from falling off the proverbial “fiscal cliff.”
With the Jan. 1 deadline looming, Democrats and Republicans in both the Senate and House compromised on President Barack Obama’s campaign promise to raise taxes on the richest 2 percent of Americans. Instead, the income-tax rate on the top 0.7 percent of Americans, individuals making more than $400,000 annually or familes making more than $450,000, will increase.
The deal made permanent the Bush-era tax cuts for the rest of us. (Most Americans, though, still will pay more in federal taxes this year because a 2011 reduction in payroll taxes related to Social Security has expired.)
Saying either side won with this week’s compromise would be inaccurate.
That’s because it did nothing to solve the country’s massive spending problem. It did nothing to relieve the nation’s more than $16 trillion in debt. And it certainly didn’t do anything to resolve our teetering Social Security and Medicare programs.
And the worst of is it that the next “cliff” is just about two months away. That’s when a series of automatic, not-well-thought-out spending cuts go into effect. That’s also about the time that Congress will have to decide whether to raise, yet again, the nation’s borrowing limit. The last debt-ceiling battle led to a lowering of the U.S.’s bond rating.
The fact is, Congress can’t continue to kick the “fiscal cliff” down the road. It must take a bipartisan approach to finding long-term solutions to our very real financial problems.
These temporary “fixes” are taking as big of a toll on the economy as any fiscal cliff will.
They create ongoing uncertainty for consumers, investers, small-business owners and the like – those same people who largely are responsible for driving the U.S. economy.
The 113th Congress was sworn in Thursday. It can secure its legacy by working together to find reasonable solutions to our nation’s many fiscal issues.