If the posturing and brinkmanship of the fiscal cliff crisis is behind us, the debt limit and sequestration crises are ahead of us. As we approach those, the Administration and Congress must accept we have a spending problem, and that slowing the rate of growth in government spending is not a spending “cut.”
As we follow the Administration’s promise to work with Congress to implement a “balanced” approach to solving the country’s fiscal problems, a few thoughts about what part the fiscal cliff agreement must play in that balanced approach.
It is clear to me that current federal income tax rates — including increasing the rate on the income rich to 39.6 percent and increasing the capital gains tax on the asset rich to 20 percent — cannot support the cradle-to-grave welfare state.
Moreover, the reality is that increasing revenues through eliminating certain tax deductions will need to include many in the middle class in order to make a significant impact.
The “rich” — i.e., top 1 percent or 2 percent — do not have enough money to support the growing welfare state. The “poor” certainly cannot afford an increase in any taxes they pay. The vast amount of income subject to more federal taxation is with the middle class.
Thinking the fiscal cliff agreement forever etched the federal income tax rates in stone is a pipe dream, in my opinion.
Considering the attitude of some in the electorate, the 2014 mid-term elections could result in a majority in the U.S. House who believe it is their constitutional responsibility to try to legislate social justice through tax increases, increased social welfare spending, etc.
Should that happen without significant spending cuts, I say look out middle class.