But we have to acknowledge that some of the things Donnelly has been saying since he was elected sound encouraging. He wants to extend all the so-called “Bush tax cuts” at least a year, in defiance of President Obama’s insistence on ending the one for the wealthiest Americans, and he also wants to reduce spending “in a very significant way,” he said in a recent interview.
(Of course Dan Coats, Indiana’s senior senator, is thinking along the same lines, but that’s not exactly startling for a conservative Republican).
Before it can even begin to deal with the country’s long-term economic problems, Congress has to avoid the fiscal cliff looming at the end of the year that will bring $600 billion in automatic tax increases and spending cuts (largely to the military) if something isn’t done. The crisis was brought on by Congress’ earlier decision to put in automatic budget triggers in order to put off a decision. Congress in essence decided to hold itself hostage, and judgment day is here.
If the triggers kick in, an already shaky economy will likely stall again, sending America back for another round of recession. But care has to be taken in how the triggers are avoided. Letting taxes go up for any group is dangerous in tough economic times, but punishing those who create jobs – i.e. all the small-business owners among those “richest Americans” – is just plain stupid.
Senators Donnelly and Coats seem to understand this. Obama clearly does not.
It’s probably too much to ask for Congress to come up with a permanent “fiscal cliff” solution during a lame-duck session. Donnelly’s idea for a one-year extension is a good one – the best to hope for is a temporary fix that doesn’t cause any harm and also sets the stage for addressing our systemic economic problems, which must include serious tax reform.
Considering that, Coats says we should start eliminating deductions and loopholes so tax rates can be lowered, and Donnelly mentions the need for lower corporate tax rates.
All of that is encouraging, too. Hang in there, guys.