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Full speed ahead, right over the fiscal cliff

December 11, 2012 12:10 am

Where is the serious discourse on looming changes to taxation and out-of-control spending? I had to turn to Page 7 of the Dec. 1 Free Lance-Star before the first mention of the government's ongoing efforts to address the "fiscal cliff" ["Obama takes plan to Pennsylvania"].

Based on that AP report, the president has proposed $1.6 trillion in new revenue over the next 10 years, offset by $600 billion in "savings." Given trillion-dollar deficits in each of the past four years, this proposal is laughable. It can hardly be defined as fair and balanced the president's own measure of merit.

Thank goodness for some clarity in the Sunday paper. Not from AP this time, but from an FLS journalist. Per Chelyen Davis of the FLS ["Transportation funding on agenda"], if Congress does nothing to address statutory changes in the tax code, wage earners making $30,000-$40,000 will see their taxes rise by about $1,438. Meanwhile, those earning $100,000-$200,000 would see a bill of around $6,383. Ouch, regardless of income. However, the alternative is unknown.

What's the Republican proposal, and does it stand any chance of passing? While the president's proposal focuses on raising taxes for the upper income brackets ($950 billion of the total), it also includes unspecified changes to itemized deduction tax policy (so-called loopholes).

One likely change appears to be the mortgage tax deduction. Changing this policy will adversely affect every homeowner--a bitter pill for Americans whose nest egg is wrapped up in their home.

So, should Americans be for or against taking the dive off the cliff? Per the Congressional Budget Office, going off the cliff translates into short-term pain (economic stagnation and higher unemployment) for long-term gain (unemployment back to a more healthy 5.5 percent by 2018). The alternative is neither fair (raising rates on some and not others), nor in America's best long-term interest (raising rates on none ensures continued deficit spending).

Dan Sullivan


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