Fiscal Cliff 2: The Sequel
Casual observers might think Congress and President Obama fixed the fiscal cliff in January. The truth is, they only extended the process for two months, and the curtain is about to rise on yet another round of high-stakes fiscal drama.
The last-minute legislation passed on New Year’s Day was a belated-but-welcome move that avoided what could have been devastating economic consequences by preventing income tax hikes for most Americans and settling issues like capital gains and estate taxes. But lawmakers punted on the equally important question of federal spending cuts, and the package did nothing to raise the federal debt ceiling.
The two-month extension Congress gave itself to make the hard decisions on spending is now almost up, and the point at which our national debt will exceed the current $16.4 trillion borrowing cap will be reached any day now, putting the government on the brink of default for the second time in less than a year. By the end of this month, Fiscal Cliff 2: The Debt Ceiling could be playing on an all-news channel near you.
Unfortunately, a sequel to the fiscal cliff is a show we’d rather skip. Retail sales and the one-in-four U.S. jobs supported by the retail industry already paid the price when worries over the looming tax hikes and spending cuts undermined consumer confidence during the crucial holiday season. America doesn’t need another manufactured crisis that causes consumer confidence to falter. We need to get past the debt ceiling without the drama.
For the sake of our nation’s economy and the millions of Americans who still need a job, it’s time for Washington to set politics aside and simply do the work that needs to be done. The Administration and Congress need to deal with these issues in a way that truly gives American consumers and employers the certainty they need to get on with the business of growing our economy and creating jobs.
That means raising the debt ceiling well ahead of the deadline — not because further borrowing is the answer, but because failure to do so is likely to send the ratings agencies and markets once again into panic mode. And it also means making significant cuts in the profligate federal spending that has gotten us into this situation.
What it does not mean, however, is raising taxes. With President Obama and House Ways and Means Committee chairman Dave Camp (R.-Mich.) both promising to undertake comprehensive tax reform this year, the U.S. tax code should not be a tool for quick-fix solutions to long-term problems.
Our fragile economy is still struggling to recover and there is still much to do. In January, Congress and the Administration did what was easy. Now is the time to do what’s right.