Congressional Democrats and Republicans remain divided in reaching an agreement with President Barack Obama to avoid the fiscal cliff scheduled to take effect Jan. 1.
The president proposes that income tax rates should rise on individuals earning more than $200,000 a year and families making more than $250,000, or the top 2 percent of Americans. Doing so would push the federal income tax rate back to the Clinton-era level of 39.6 percent.
In campaign-style speeches, Obama this week urged supporters to call their representatives to insist that reducing fiscal spending should not be unfairly placed on the middle class.
Conservatives have two schools of thought in responding to Obama, said Republican Dave White of Deer Creek, an owner and COO of Sawyer Media. One thought supported by Congressman Tom Cole, R-Moore, is to accept the tax increase on the top 1 percent of earners as a compromise, White said. House Republicans would have to break from their Grover Norquist pledge not to increase taxes.
“Democrats feel like all they really need to do right now is get us to acquiesce on the tax increases on the top earners. That’s not true,” White said. “I believe we have leverage over Democrats, and particularly Obama, in what his legacy is going to be for the second term. We need to stick to our guns.”
White said he doubts that Obama wants his legacy to be a double-dip recession with more years of high unemployment and no growth.
U.S. Sen. Jim Inhofe, R-Okla., introduced a bill before the presidential election with a solution to avoid the fiscal cliff, he told The Edmond Sun. Obama keeps talking about raising $1.2 trillion with the tax increase, Inhofe said.
“This president through his own actions has $5.3 trillion in deficits which is from his own budget,” Inhofe said. “So why should this be difficult? The answer is, it’s not.” Inhofe proposes raising $2.7 trillion additional revenue without defense cuts.
Inhofe calls on growing the economy the way President John F. Kennedy did in the 1960s and President Ronald Reagan did during the 1980s.
“Undo some of Obama’s agenda such as his getting rid of work requirements for welfare that has resulted in a growth of programs like food stamps,” Inhofe said.
Inhofe said The Sequestration Prevention Act that he authored would do the following:
• Repeals Obamacare & Block Grants Medicaid (saves $1.1 trillion). Following U.S. Rep. Paul Ryan’s approach, this will reduce Medicaid spending by $1.2 trillion and will hand over the management of the program to the states;
• Reduces Non-Defense Discretionary Spending to FY2006 levels (saves $952 billion);
• Freezes Non-Defense spending at FY06 levels through FY2017; allows 2 percent annual increase thereafter;
• Block Grants Food Stamps (saves $285 billion); repeals the current Food Stamp program and creates a block grant program that is scaled back to a lower level. It allows states to design and manage their own programs;
• Reduces the federal workforce by 10 percent through attrition (saves $144 billion);
• Enacts Medical Malpractice Tort Reform (saves $74 billion); caps non-economic damages at $250,000; caps punitive damages at $250,000 or twice the amount of economic damages, whichever is more;
• Repeals funding of climate change and global warming related activities (saves $83 billion);
President Bill Clinton signed a welfare reform bill during the 1990s which immediately dropped the number of families on welfare from 5 million to 3 million families, Inhofe said.
“And along came Obama and took the conditions out,” Inhofe said of work requirements. “… The number of individuals on food stamps increased from 28 million to 48 million.”
Tax increases are not necessary, Inhofe said. He remains uncertain whether Democrats will accept any of his recommendations.
“It depends on the pressure of the American people to do something to come up with a difference without having tax increases,” Inhofe said.
Edmond certified financial planner Greg Womack said he does not believe Congress will can solve the $16 trillion debt issue with new taxes.
“I am totally against any tax because most of the new taxes will fall on business creation and small business owners,” Womack said. “It’s something we cannot afford. Jobs are anemic. The economy is still limping and we can’t do anything at this point to hurt that.”
Revenue will come when the economy is better, he said, and spending cuts are necessary.
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