Officials within Congress have said that a last-minute measure to avoid the Fiscal Cliff could pass the Democratic-controlled Senate if Republicans agree not not to filibuster. Unfortunately, this premise includes very little compromise and does nothing to help the Federal government’s budget woes.
The last-minute push to avoid the short term pain of the Fiscal Cliff may have undesirable results if President Obama’s current plan is anything to go on. Earlier in the year, Democrats had suggested raising taxes only on those making $1 million or more. But President Obama campaigned for re-election on the promise to raise tax rates on family income over $250,000, which he argues would protect 98 percent of Americans and 97 percent of small businesses from rates that increase on income above that level.
In reality, 98 percent of jobs are provided through small businesses, and, if you do not count the self-employed contractors, 48 percent of small businesses, which is over a million companies, would be effected by the tax hike. Chris Krueger of Guggenheim Securities, told Reuters the last-minute scenario would favor the plans of the Democrats:
“This is the ‘Break Glass’ scenario that we have long believed would rise in probability the closer we go to December 31, which essentially calls for extending all the rates for those individuals making under $200K and households under $250K and does not address the debt ceiling or the deficit.”
In practice, this means that Democrats get to score political point by raising the taxes on the rich and on small businesses without also cutting any spending. This likely scenario has GOP Representative Ileana Ros-Lehtinen complaining to CNN that both sides in the debate are at fault:
“It’s all about scoring political points. I know the American people are tired of all of [Congress].”
As previously reported by The Inquisitr, some Democrats have desired going over the Fiscal Cliff. In the first weeks of January, when the new Congress session convenes, this Democratic strategy would allow them to raise taxes only on those they wish. The real question is whether they’ll also fix the major problems with Social Security and ensure that the growing Federal deficit does not lead to a Federal debt default in early February.
Do you think that Congress and President Obama will allow for the nation to go over the Fiscal Cliff?