The U.S. Treasury secretary on Sunday pitched “a very good mix of tax reforms that raise a modest amount of revenue on the wealthiest 2 percent of Americans.”
But when did $1.6 trillion become “a modest amount of revenue”?
And when will the Obama administration and Congress spare a wary nation — and a jittery economy — further dread by at last reaching a truly reasonable accord to avert pushing America off the “fiscal cliff”?
That treasury secretary, Timothy Geithner, predicted in television interviews Sunday that the deal will get done in time.
But that deadline is now a mere four weeks away.
As part of the 2011 legislation that raised the federal debt ceiling, automatic tax increases and across-the-board spending reductions — both of major proportions — are scheduled to go into effect at this year’s end. The only way to avoid that double whammy: Congress must pass a new budget compromise that President Barack Obama is willing to sign.
Fitch Ratings sounded the alarm anew Monday, issuing a statement pointing out the danger the fiscal cliff poses to not just the federal but to the state governments as well.
As Laura Porter, managing director of the credit rating agency, put it: “The risk that the fiscal cliff presents to the overall economy is the biggest concern for state credit, as state revenue systems quickly reflect changing economic conditions.”
Of course, political conditions are in play, too. During his victorious re-election campaign, President Obama repeatedly advocated raising taxes on incomes of more than $250,000. Thus, he can fairly claim public support for his approach.
Yet during last year’s debt-ceiling negotiations, the president sought $800 billion in new tax revenue over the next decade. Now he’s doubled that asking price to the “modest” $1.6 trillion over that period. That hardly sounds like a spirit of compromise.
House Republican leaders, including Speaker John Boehner, took a counter-offer to the White House on Monday. It includes spending cuts, entitlement reforms and $800 billion in new tax revenue, not by raising income-tax rates, but by capping some deductions and closing some loopholes.
Mr. Obama, though, has not left campaign mode. During a Friday speech at a Philadelphia-area toy factory, he fired this zinger at GOP lawmakers’ refusal to accept his proposal:
“That’s sort of like the lump of coal you get for Christmas. That’s a Scrooge Christmas.”
Hmm. If Washington keeps playing Santa Claus on the illusory notion that “the rich” can pick up its free-spending tab, the serious short-term hazard of the fiscal cliff will look like a sleigh ride compared to the long-term financial train wreck to come.
To address that much larger peril, a growing number of congressional Republicans are insisting on deeper spending cuts and entitlement reform in exchange for yielding on a revenue boost.
Unfortunately, Secretary Geithner echoed the administration’s so-far adamant position Sunday on ABC’s “This Week.” Mr. Geithner said that while the president wants to work with both parties to “strengthen Social Security for future generations,” the reform mission should be undertaken “in a separate process, so that our seniors ... don’t face the concern that we’re somehow going to find savings in Social Security benefits to help reduce the other deficits.”
In other words, let’s just keep kicking the entitlement-reform can down the road.
South Carolina Sen. Lindsey Graham is among the Republicans who have shown political courage in their willingness to support tax-revenue increases.
In return, though, they’re asking for more substantial spending reductions — and those overdue entitlement overhauls. They’re still waiting for the Democrats, including the president, to meet them in the middle.
Sunday on CBS’ “Face the Nation,” Sen. Graham said the Obama plan “doesn’t remotely deal with entitlement reform in a way to save Medicare and Medicaid and Social Security from imminent bankruptcy.” Instead, “it raises $1.6 trillion on job creators that will destroy the economy, and there were no spending controls.”
Sen. Graham added: “My side knows we lost the election, and we’re willing to put revenue on the table that will get some political heat for people like me.”
However, he rightly warned: “A hundred percent of Americans are going to lose everything we know as America if we don’t fix entitlements. We’re becoming Greece because of out-of-control entitlement spending.”
And with every passing day, we’re coming closer to the fiscal cliff.
Our elected officials in Washington have an immediate duty to save us from that self-inflicted menace.
But if they don’t also reform unsustainable entitlements and significantly curb federal spending, we will eventually suffer a fiscal disaster far worse than tumbling over that looming cliff.