Lindsey Graham (R-SC) is making gloomy headlines over the fiscal cliff, saying “we’re going over the cliff.” These comments to CBS News on live TV followed President Obama saying he wants to reform entitlements, which account for the majority of the deficit overspending but only after Republicans first agree to raise taxes on the rich and extend the rest of the Bush tax cuts. Republicans do not believe this promise and instead are pushing for entitlement program reforms now, saying that the “President’s plan will damn us to becoming Greece.”
“I think we’re going over the cliff. It’s pretty clear to me they [Democrats] made a political calculation,” Lindsey Graham said. “This offer doesn’t remotely deal with entitlement reform in a way to save Medicare, Medicaid and Social Security from imminent bankruptcy. It raises $1.6 trillion on job creators that will destroy the economy and there are no spending controls.”
As previously reported by The Inquistir, Lindsey Graham previously signaled a willingness to violate the Grover Norquist’s Taxpayer Protection Pledge in order to come to a budget agreement. Obama and the Senate Democrats have focused on raising the top marginal tax bracket, which will also have the side effect of taxing small businesses more. Senate leader Harry Reid has also made these negotiations difficult, threatening to implement the nuclear option in order to take away the ability for Republicans to filibuster.
“I’m serious about revenue,” Lindsey Graham said. “You can limit deductions to $40 or $50,000 a person, which takes care of the middle class. Upper income Americans will lose their deductions, and raise about $800 billion of revenue. But I’ll only do that if we do entitlement reform, and the president’s plan when it comes to entitlement reform is just, quite frankly a joke.”
After all, while taxing the rich may sound important and win Democrats popular support, in reality this tax revenue would only equal about three to five percent of the annual federal deficit. Everyone in Washington knows this. Some feel this move by the President is part of a plan by Democrats to allow the country to go over the fiscal cliff yet then blame Republicans for it. This would give the Democrats an edge in future negotiations, allowing them to choose who they reward with a tax break.
“If the Republicans will not agree with that [raising the highest tax bracket], we will reach a point at the end of this year where all the tax cuts expire and we’ll start over next year,” said Patty Murray, who was Democratic co-chair of last year’s deficit super-committee. “And whatever we do will be a tax cut for whatever package we put together. That may be the way to get past this.”
Social Security and Medicare are projected to reach an unsustainable point relatively soon. The spending on Medicare, Medicaid, other related programs, and interest on the debt are projected to devour all tax revenue within 13 years from now. Even if these issues are fixed in time Social Security by itself will lack the funds to pay full benefits beginning as early as 2033.
In addition to the fiscal cliff, the Federal government will reach its new debt ceiling sometime this spring, probably in mid-February, according to the Congressional Budget Office. Do you think Republicans like Lindsey Graham should dig in their heels or allow Democrats to lead us over the fiscal cliff?