Now that the 2012 elections are over, the US Congress must face the "fiscal cliff".
What is the fiscal cliff? The fiscal cliff is a collection of financial provisions-- including the infamous Bush tax cuts and the mandated "sequestration" cuts (brought about because the Super Committee couldn't reach a compromise)-- that either expire--or take effect-- between now and December 31, 2012.
Whether or not the fiscal cliff is really a cliff or just a bump in the road depends upon which media outlets you follow.
The Congressional Progressive Caucus has proposed the Deal for All to mitigate the impact of fiscal cliff decisions on the middle class and the poor. Here are their ideas.
From the Congressional Progressive Caucus...
The Deal for All resolution, H.Res 733, which additional Members will cosponsor through the end of the year, advocates four key policies that have built the middle class, expanded the nation’s economy and must play a significant role in any future budget negotiation:
(1) No cuts to Medicare, Medicaid, or Social Security benefits;
(2) Must contain serious revenue increases, including closing corporate tax loopholes and increasing individual income tax rates for the highest earners;
(3) Significantly reduce defense spending to focus the United States Armed Forces on combating 21st century risks; and
(4) Promote economic growth and expand economic opportunity by including strong levels of job-creating Federal investments in areas such as infrastructure and education, and by promoting private investment."
“Congress is gearing up for high-stakes tax and budget negotiations, and we’re standing with working families to make sure we build a stronger and fairer economy,” Progressive Caucus Co-Chairs Rep. Ellison and Rep. Grijalva said.
“While both parties will need to make sacrifices, we cannot do so at the expense of economic growth or the middle class. A balanced approach like the Deal for All would end tax breaks for the richest 2 percent, close tax loopholes for the wealthy and special interests, and ensure Americans don’t lose the benefits they’ve paid into for decades such as Social Security and Medicare.
“Republicans have relied on excessive tax breaks for the wealthy and corporations and cut the very programs that helped create a thriving middle class. At the same time, just this week, the Republican House majority is opposing common-sense budget cuts to protect a bloated defense budget and maintain a Cold War approach. This discredited approach of trickle-down economics, combined with the GOP’s refusal to govern during this session of Congress, has created the impending year-end fiscal cliff. We will not allow the GOP to push the middle class over that cliff.
“By pursuing a fair tax policy, effective job creation strategies, and sensible defense spending based on twenty-first threats, we will be able to steer the American people to a bright and prosperous future.”
Lawrence J. Korb, who served as Assistant Secretary of Defense under President Reagan, notes the defense budget can be reduced without jeopardizing national security. “For FY 2013, defense spending will consume about 20 percent of the total federal budget and more than half of the discretionary budget,” Korb noted. “In addition, the defense budget will be larger than major mandatory spending programs like Medicare and Medicaid.”
Maya Rockeymoore, chair of the National Committee to Preserve Social Security and Medicare, said that decisions to change Medicare, Medicaid and Social Security “must be based on what is best for their beneficiaries, and not what is expedient for reducing America’s debt. Social Security, Medicare and Medicaid are vital to the economic and health security of millions of senior Americans.”
“Arguments that we need large cuts in spending to reduce the deficit are based on a false view of what is driving deficits, in particular the myth that government spending is exploding,” Chad Stone, Chief Economist of the Center for Budget and Policy Priorities said.
“Trying to balance the budget through spending cuts alone, or worse, trying to balance the budget through spending cuts after cutting taxes even more than they would be by simply extending the Bush tax cuts is a recipe for draconian spending cuts that will hit low- and middle-income households very hard and threaten the core functions of government.”
“I think all of us here agree that the most important job for Congress right now is to help the economy to create jobs,” Steve Wamhoff of Citizens for Tax Justice added. “Tax cuts are one of the least effective tools to accomplish this goal.”