Nov. 12, 2012 Will Republicans vote to Freeze taxes for everyone below $250,000 and tax the rich above that amount is the question haunting the looming fiscal crisis know as the Fiscal Cliff.
Both parties signed on to this agreement due to their lack of agreement on the debt ceiling last year, which on January 1st, 2013 will possibly throw the country back into a recession.
Republicans just lost the national election, after having been severely shellacked by the voters, in a major loss however, they still can obstruct any deals in the House of Representatives which they control on a resolution. They would be foolish to obstruct the government’s attempts to deal with the debt, deal with spending and had refused offers of reductions in spending in the past as
“not good enough for them”.
On January 1st the Bush Tax Cuts that have been in the works for 12 years will expire which will tax the wealthy much more. In addition major cuts to the military are also going to take place to cut the 52% spending on the military to a far less figure which worries Republicans. (their donors make money on wars).
From comments made by democratic Patty Murphy, the democrats are going to stick to their guns regarding the dissolution of the Bush Tax Cuts, even if it means going over the cliff. Voters want higher taxes on the wealthy who’ve had a good ride for 12 years but that game is now over, there will be no more Bush Tax Cuts as of Jan 1, they will finally end the subsidies that have required borrowing from China. Every time a wealthy American defers taxes, avoids taxes or uses loopholes this creates deficits, and then more borrowing.
The Republicans on the other hand who signed the Grover Norquist Tax Pledge not to raise taxes, have a dilemma on their hands.
If Republicans vote to give tax cuts to the middle class that’s good according to Grover Norquist, but if the also at the same time vote to raise taxes on the rich -that opposes their pledge.
Therefore, the GOP are caught between a rock and a hard place and can’t win either way.
But, the voters just gave them a shellacking, and so if they are ever to recover any followers they have to give on the Bush Tax Cuts and end them.
This Friday, the President will meet with both party leaders to hammer out a deal to avoid the Jan 1 disruption of the economy.
High Stakes Game of Fiscal Cliff on January 1, 2013
The Budget Office of Congress has indicated that if the January 1 Fiscal Cliff happens, a major cut in deficit reduction will happen which is too much, too fast and too soon. The group considers that the change will cause another recession, will put unemployment back up to 9 percent or more and will stop any growth of the economy.
If Republicans push this looming disaster they will fall again on their own sword, and in 2014 what is left of their party will bite the dust, in the House of Representatives.
The Fiscal Cliff will also affect other countries since the US is one of the greatest economies any slack in growth will affect the global economy in a negative way.
The debt crisis game has been played for over a year now in Congress, with neither party giving, although in 2010, the Republicans forced an extension of the Bush Tax Cuts by holding extensions on unemployment insurance hostage, and the Democrats had to vote for the extension. The Dems got attacked for this by their own party members and were accusing Pres. Obama of giving in without a fight.
He’s learned his lesson and since his re-election he has stated that he will not accept any deal that does not include increased revenues, (which means the Bush Tax Cuts will expire) and will veto it.
On the other hand Speaker Boehner has to realize he’s walking a tight rope, if the House does not come to an agreement, the republicans will be judged harshly again and will face defeat in 2014.
A Rock and A Hard Place. The game is now on …