Washington Averts Fiscal Cliff, but Our Economy Remains in Jeopardy
For better or worse, Congress has passed a deal to avert the so-called fiscal cliff. This deal ensured that the majority of Americans would not see a tax hike, but it kicked the can down the road once again on some important issues, showing how incompetent our representatives in Washington really are. Congress wasted weeks upon weeks on this mundane deal while more pressing issues that are actually destroying our economy and our way of life were ignored.
Some are attempting to claim that Congress finally did its job by passing a deal. This is far from the truth, as the fiscal cliff was a problem Congress manufactured for itself instead of doing its real job. The deal passed on Tuesday addressed tax cuts and lets the top marginal rate for those earning over $400,000 a year return to 39.6%, the same rate seen under the Clinton administration. The capital gains rate will also increase from 15% to 20%.
Beyond these moves and a handful of other reforms the deal was inconsequential. Congress deferred the $1.2 trillion of mandated spending cuts for another two months. The United States also hit the debt ceiling on Monday, but the deal did nothing to raise that limit, meaning that the Treasury will have to take measures as long as possible in order to avoid default.
This virtually guarantees that Congress will be wasting a substantial amount of time in the coming months debating relatively routine budgetary issues. These issues are an important part of our government’s job, but they were never meant to be Washington’s sole focus. These are small issues. The tax reforms passed in this week’s deal amount to only a little over $600 billion in new revenue over 10 years. This will hardly change the state of our debt problem, as our debt currently tops $16.4 trillion.
Paltry spending cuts and tax reforms are not going to fix our nation’s debt or economic problems. The only way to fix these problems is growth, and that can only be achieved by actually producing things here in the United States. Congress needs to stop wasting time and start debating the issues that affect our ability to produce for ourselves. This means looking at the facts and seeing how badly our current trade policy has failed. A few in Congress have realized this, like Senator Bernie Sanders of Vermont and Senator Sherrod Brown of Ohio. Many have not. Congress would be better served listening to these men for a few minutes than they would passing do-nothing fiscal cliff bills.