Sequestration will cause three things to happen on Jan. 1 unless the House and Senate reach a compromise that President Barack Obama will sign off on.
“The Speaker is still confident that we can get to a deal,” Congressman James Lankford said. “Two of them being tax increases are really chilling the whole environment.”
Beginning Jan. 1, Obamacare will increase taxes for people earning $200,000 or more a year in interest, dividends, capital gains and payroll tax, said Lankford, R-Edmond.
“The second piece is from the last lame duck, they took all the tax rates and extended them out for two years and had them expire,” Lankford said. “So everybody’s taxes increase, everybody’s rates go up from smallest to largest.”
Thirdly, the across-the-board spending reduction Congress demanded in the budget deal will begin.
Obama’s recommendations for a tax increase coupled with the Affordable Care Act tax increase calls for $86 billion of additional spending a year, Lankford said.
“That is still $920 billion short of our deficit,” Lankford said.
Congressman Tom Cole, R-Moore, told Republicans Tuesday that his party should temporarily let the top federal income tax rate rise back to the Clinton-era level of 39.6 percent, according to CNN.
House Speaker John Boehner, R-Ohio, has not budged in his unwillingness to raise taxes on the rich.
One trillion dollars of federal deficit spending is stacking up every year while President Barack Obama won’t talk about where to reduce spending, Lankford said.
Obama remains unwavering 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. Obama has said the burden of reducing national debt should not be solely on the backs of the middle class.
House Republicans are saying a double tax increase on upper-income Americans should not occur, Lankford said.
“The other part of it is the Democrats have refused to talk about where we’re going to reduce spending and that’s been our great frustration,” Lankford said. “If you look at our revenues in 2007 and our revenues this year, they’re almost identical. Our revenues have not changed from 2007 to 2012, but our spending has increased $1 trillion from 2007 to 2012. So we keep trying to wave the flag here and say, ‘The problem here is spending.’”
Meanwhile, the federal debt is more than $16 trillion. Lankford said $6 trillion of the debt has been added during Obama’s presidency.
The House has been outspoken in calling for tax reform, Lankford said.
“Just dealing with the rate increase is exactly the wrong way to do this,” Lankford said.
Lankford said the House completed its sequestration and tax document work in May. Yet the Senate and White House failed to respond, Lankford said.
“They’re still standing there saying, ‘We want to know what you’re going to do on taxes,’” Lankford said. “Our statement is, ‘This is absurd. Taxes aren’t even close. There’s no way you’re going to raise taxes to cover $1 trillion.”