This artwork by Michael Osbun relates to the failure of Congress to curb spending that continues to amass debt.
Michael Osbun, Tribune Media Services
"Minnesotans are sick of political brinksmanship and want Democrats and Republicans to come together to get things done. That's why I will continue to work on a comprehensive debt-reduction plan that balances revenues and spending cuts."
-U.S. Sen. AMY KLOBUCHAR, D-Minn.
Editorial: The real fiscal cliff likely looms ahead
- Article by: EDITORIAL BOARD
- Star Tribune
- January 2, 2013 - 9:04 PM
The fiscal-cliff deal passed over New Year's fell far short of the smart, strategic deficit-reduction agreement that the American people wanted -- and deserved.
After having more than a year to develop a long-term plan to carefully stabilize the nation's fiscal condition, the outgoing Congress and President Obama's administration did the bare minimum at the last possible moment to prevent the economy from taking a nosedive off the cliff's self-imposed combination of tax hikes and spending cuts.
Bipartisan but mostly Democratic majorities in the Senate and House took the relatively easy but necessary step of preventing steep income tax rate hikes from taking effect for most people. The end of the 2 percent payroll tax holiday will still take a bite out of paychecks, however.
Making the Bush-era tax rates permanent for all but those who earn $400,000 a year or more individually ($450,000 for families) will blunt the fiscal cliff's abrupt austerity and give businesses and taxpayers certainty about their tax obligations.
Extending unemployment benefits, as well as preventing Medicare payment cuts to doctors, also will help stabilize the economy in the short-term. Minnesota's two U.S. senators, as well as four members of its House delegation -- Republican John Kline, and Democrats Tim Walz, Betty McCollum and Keith Ellison -- cast adult votes to pass this legislation and protect the fragile economy.
Still, this economic package comes at a high cost. The Congressional Budget Office estimates that enacting the deal rather than facing the cliff's across-the-board tax increases and spending cuts will add $4 trillion to the nation's deficit over the next decade.
Asking relatively few people to contribute more to the existing cost of government doesn't inspire confidence about the hard choices ahead. The reality that President Obama and policymakers decided to punt for two months rather than craft a sensible alternative to the cliff's deep spending cuts underscores those concerns.
So does the lack of progress made over the past year on finding bipartisan solutions to the vexing issues -- tax reform, reducing defense spending and reining in Medicare spending -- that are critical to long-term debt reduction.
"We didn't go off the cliff, but neither did we do anything important to solve our long-term problems," said former Minnesota Republican Rep. Bill Frenzel, noting that the fiscal cliff was put in place after the 2011 debt-ceiling fight to force policymakers to solve festering fiscal issues.
"And now we march into the debt-ceiling question again. ... I'm very nervous about what may come of this. If we couldn't get it together to deal with the cliff, I don't see how we're going to do it for the debt ceiling."
After narrowly avoiding one manufactured economic crisis, the country likely faces another one at the end of February, when the nation is expected to exhaust measures to avoid breaching its legal borrowing limit.
Throughout history, Congress has routinely raised the limit, with the exception being 2011, when the nation's credit was downgraded after House Republicans used it as leverage for spending cuts.
If Republicans recklessly leverage the debt ceiling again, the resulting political standoff over it and the postponed spending-cut decisions could result in what budget experts are calling the "true fiscal cliff."
Obama and Congress inexcusably missed a critical opportunity for a grand-bargain debt deal. They owe voters a final resolution to the fiscal-cliff drama -- not a sequel.
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