Graham offers a road map off the fiscal cliff
Sen. Lindsey Graham is demonstrating the bipartisan spirit needed to forestall a plunge off the fiscal cliff, and he is doing so at considerable political risk to himself. If Congress is serious about a solution to the pending crisis, its members will head for the half-way point designated by Sen. Graham.
The South Carolina Republican has proposed limiting tax deductions as a way to raise the revenue that Democrats insist is essential to an agreement to halt the pending budget train wreck. If a deal on selective cuts and revenue increases can’t be reached by January, there will serious consequences for taxpayers, federal agencies and the nation’s economic health.
Under a prior agreement for debt reduction, Bush-era tax cuts will expire, and there will be across-the-board budget cuts broadly affecting federal agencies, most notably defense.
Defense Secretary Leon Panetta says the pending cuts in the defense budget would be “devastating.”
Sen. Graham’s plan would avoid direct tax hikes on the wealthy, as sought by the administration. But putting a $30,000 or $40,000 limit on personal income tax deductions would effectively target high earners, and raise a comparable amount of new revenue.
In return, Sen. Graham wants Congress to approve entitlement reform that is necessary to prevent a larger fiscal meltdown in the long term.
By proposing a path away from the fiscal cliff, Sen. Graham has broken with the gospel according to Grover Norquist and his Americans for Tax Reform. The ATR-sponsored no-tax-hike pledge which many elected officials, including Sen. Graham, have signed wouldn’t allow the curtailment of tax deductions sought by the senator.
But neither would it allow for a bipartisan solution to the fiscal cliff.
Sen. Graham has been joined in his call for compromise by fellow conservative Sens. Saxby Chambliss, R-Ga., and Bob Corker, R-Tenn., and Rep. Peter King, R-N.Y.
It’s a welcome recognition that the fiscal well-being of the nation is more important than the ATR pledge, which imposes an inflexibility that, if followed blindly in this instance, could cause another sharp economic downturn.
Abandoning the pledge, however, could have serious political consequences for Sen. Graham, whose conservative bona fides have been questioned by some Republicans in his home state.
In an interview with the Wall Street Journal, published over the weekend, Mr. Norquist noted that Sen. Graham and some of his GOP colleagues who are considering a compromise to avert the fiscal cliff are up for re-election in 2014 and that they “like being senators.” Clearly, Mr. Norquist believes that these tax-pledge backsliders will ultimately back down.
It should be encouraging to South Carolina, however, that the state’s senior senator places the higher priority on avoiding the fiscal cliff and the likelihood of another economic downturn as well as the certainty of a diminished defense capacity.
Meanwhile, his insistence on a commitment to entitlement reform would ensure that underlying debt issues also are addressed. So far, he has raised the possibility of means testing for Medicare and gradually raising its eligibility age as is being done with Social Security.
By demonstrating his willingness to work for a bipartisan accord, Sen. Graham has offered a responsible solution to a major problem that is little more than a month from becoming a painful reality. It may not be the only solution, but it represents the sort of reasonable approach that is required to avoid a crisis that doesn’t have to happen.