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Opinion: Toomey Calls for Compromise on Fiscal Cliff

U.S. Sen. Pat Toomey says our economy will take a huge hit if lawmakers fail to act on the impending "fiscal cliff"

The following opinion piece was submitted by U.S. Sen. Pat Toomey:

“[T]he vast majority of Democrats on Capitol Hill would prefer not to have to do anything on entitlements, would prefer, frankly, not to have to do anything on some of these debt and deficit problems. … And what I’ve tried to explain to them is, number one, if you look at the numbers, then Medicare, in particular, will run out of money, and we will not be able to sustain that program, no matter how much taxes go up. I mean, it’s not an option for us to just sit by and do nothing.”- President Barack Obama, July 11, 2011


I agree with President Obama. No matter how much we raise taxes, we cannot avoid a fiscal disaster unless we address the true drivers of our out-of-control deficits – namely, our entitlement programs. The reality is that the federal government doesn’t have a revenue problem. It has a spending problem.

Over the past ten years, federal tax rates have remained constant, while spending has doubled. Under current tax rates, we nearly balanced the budget in 2007. But recently, spending has surged to post-WWII-record levels even as a percentage of our economy. This spending explosion has resulted in massive, trillion dollar-plus deficits, casting a pall over our economy that continues to cost us jobs and growth.

Meanwhile, our entitlement programs are growing at unsustainable rates, threatening ever larger deficits. In 10 years, three categories of spending – Social Security, government-sponsored health care, and interest on our debt – will consume nearly all projected tax revenue. Clearly, this is unsustainable. But we have an even more immediate crisis.

Four weeks from now, our economy will take another huge hit if Congress refuses to act. On January 1, 2013, personal income tax rates that have been in place for 10 years are scheduled to rise dramatically. Every American taxpayer will be hit with substantial tax increases, and taxes on certain job-creating capital investments will double and even triple. This is the devastating part of the fiscal cliff that will plunge our economy back into recession and cost perhaps millions of additional jobs.

My highest priority in the Senate has been to solve these urgent, twin challenges—restoring both sustainable fiscal policy and job-generating economic growth. The looming deadline presents Congress and the president with an opportunity to make real progress on both.

First, we must recognize that elections have consequences. President Obama and a Democratic-controlled Senate have been re-elected, but so was a Republican-controlled House of Representatives. Solving these twin crises will require Democrats and Republicans to work together. Both sides will have to give some ground.

I don’t want to raise taxes on anyone but the president is insisting on a tax increase, and, if nothing is done, a huge tax increase is imminent. That is why I have suggested we revisit the framework I first proposed in the Joint Select Committee on Deficit Reduction.

The tax side of this framework would include new revenue from top earners provided it results from pro-growth tax reform that lowers marginal tax rates and offsets the lost revenue by limiting deductions, loopholes and write-offs. This is exactly the manner in which Bowles-Simpson and every other bi-partisan deficit reduction commission has recommended any revenue increase. Doesn’t it only make sense that any revenue increase be done in a way that minimizes harm to the economy?

Now, let’s acknowledge that if the president gets the tax increase he campaigned on, that additional revenue will reduce the next 10 years’ deficits by about 8 percent. To deal with the other 92 percent of the deficits, the president must agree to address the real problem—our entitlement programs.  

That brings me to the spending side of my supercomittee framework. While I would prefer to save our entitlement programs now by making them permanently solvent, the president and most of my Democratic Senate colleagues have rejected the necessary reforms to accomplish this goal. But can’t we at least make some progress on this issue, which is the real problem we face? I have proposed a series of modest reforms, including slowing the rate at which some benefits grow and asking wealthy Americans to accept less generous healthcare benefits in their retirements. Some combination of these reforms would generate significant savings without undermining retirement security for seniors.

I hope the president will seize the opportunity—and the requirement—of this moment. I hope he will reject the calls from those Democratic senators who have urged us to plunge over the cliff and others who have insisted that we just raise taxes now and discuss spending problems on some unspecified day in the future. That day never seems to arrive and the crisis is imminent. With only a month to go, we are quickly running out of options and out of time. I believe my compromise presents a bipartisan path forward and I remain hopeful Washington will come to its senses.

 

rm December 12, 2012 at 03:07 PM
I have heard the 'devil quotes scripture'. Not to equate toomey with the devil - reduction to the absurd, but... I would like to see a good faith effort on both sides to resolve the budget issue. Tax the 1% and reduce spending plus at a time to be decided by both parties work on the tax laws.
Joe Sommers December 12, 2012 at 03:28 PM
The Democrats lose their base by reducing entitlements. Its the entitlement crowd that voted in Obama. You tell me whats wrong with this country ?????
Fae Danner December 12, 2012 at 08:01 PM
I receive Social Security and Medicare; and, let me make this perfectly clear ... I did NOT vote for Obama!!! In fact, I have sent messages (no one pays attention or cares, I'm pretty sure) stating that we should all be willing to give up some of the pieces that Medicare provides. I'm more than willing to see adjustments made on entitlements so that our future generations have an opportunity at a decent life. However, frivolous government spending has got to stop! It can't just be one side making the concessions. If anyone out there thinks Obama is making ANY attempt at resolving this issue, by all means, enlighten me. I am unaware of his attempt to put together a serious meeting that he, himself, attends. He sent Geitner and we see where that got us. This is the guy that, it is reported, doesn't even attend his daily briefings! Call me any name you wish, but if I judge - and I do - by Obama's actions, I contend he is being his usual obnoxious self and would be content to see the problem continue unresolved so that he can #1: blame everything on the Republicans and #2: fiddle while America burns! Actions always speak louder than words and even the words from this guy are worthless! Whoever called him articulate must have a exceptionally skewed sense of humor?
Hugh Gallagher December 12, 2012 at 09:47 PM
I am certainly not in the upper 2%. I am on SS + Medicare. We should all realize that this country is not as prosperous and powerful as it used to be. But we hear our leaders on the left + right and others repeat the same mantra "the other guy should pay more" It's about time we realize that we will all have to pay a little more and expect a little less. It's the only way to fix this..
Joe Sommers December 13, 2012 at 02:15 AM
Hugh...this country has a spending problem and it starts with Obama Claus. I pay 40 % out of my weekly paycheck for taxes and 50 % of the country pays ZERO taxes. The welfare crowd needs to be put to work performing badly needed public services. Want welfare .,,,clean the streets .Want Food Stamps Clean city parks, pick up litter on the highways, Why should you and I pay more ...for what so they can get Obama phones, contraception now ?Are you kidding me! Wait till Obama goes after your 401 K ...Then the Successful Democrats who voted for Obama will kick themselves in the ass, Obama, Reid and Pelosi ..Thats a pile of Socialist shit !
Joe R January 02, 2013 at 11:38 PM
>>"...50 % of the country pays ZERO taxes...." that's just another rabid radical right wing filthy lie. The working poor pay wage taxes, sales taxes, state taxes, excise taxes, gas taxes, they may have a small shack from better times on which they pay property taxes, they pay rents and they may indeed pay some federal income taxes, depending on their situation. Included in the folks who may not pay any federal income taxes are disabled people, poor older veterans, poor senior citizens on a fixed income but they still pay sales taxes, maybe property taxes. Oh, don't forget the big corporations like GE that didn't pay any income taxes for years but still got refunds, rebates and subsidies. Joe S's comments are a pile of blank. Anyone who disagrees with his regency is automatically a socialist. You need to lay off Fox News and Hannity and hate wing radio.
Joe R January 03, 2013 at 12:53 AM
You do realize that that 50% figure does include folks in nursing homes who have used up all their life savings paying for the nursing home. They then go on Medicaid to pay for the nursing home and Medicare covers their health care expenses.
Joe Sommers January 03, 2013 at 05:12 AM
Joe R..I stand by my words and believes.I didnt ask you for your opinion.However, please keep speaking your mind .Your a liberal and I am not. Life goes on. Socialism=wealth redistribution.That is Obama's dogma and persona. Its who he is. Don't need Rush, Hannity to convince me of that.
Fae Danner January 03, 2013 at 01:24 PM
Well said, Hugh. I believe, though, that we would still be prosperous and powerful if all our elected leaders would work for the country instead of themselves - some do so. I am more than agreeable to take less if the money would be used more wisely. Unfortunately, I've come to terms with human nature and see that our path, now, leads away from altruism and toward self-interest.
Rosemary B January 03, 2013 at 02:16 PM
When people say 50% pay zero taxes they are obviously referring to FEDERAL TAX. Many people actually get more back then they have paid in.http://www.washingtonpost.com/blogs/wonkblog/wp/2012/09/18/who-doesnt-pay-taxes-in-charts/
Joe R January 03, 2013 at 05:11 PM
Rosemary, sorry it is not obvious. These people have to be reminded that the working poor pay all kinds of taxes besides federal income taxes. As I've pointed out, that 50% figure includes the disabled, the poor and lower middle class elderly on Social Security, people in nursing homes and the rich corporations finding all kinds of loop holes not to pay federal income taxes. So you folks are upset that some decent honest person working 2 part time jobs, maybe making only $25,000 a year and is not paying federal income taxes? You want to increase this person's federal income taxes? A sizeable number of the elderly live entirely on Social Security and you want to increase their federal income taxes? These elderly people worked all their lives, they did all the right things but stuff happens in life and through no fault of their own they do depend on Social Security to survive. Why would you want to increase their federal income taxes?
Joe Sommers January 03, 2013 at 06:03 PM
All of the groups you mentioned are covered in the current safety net programs that have been in existence for years, Obama increased Foods Stamps from $17M to $ $47M his first term. New programs have been developed to help just about every special interest group there is. Example...working single mom with two kids making $29,000 per year is ENTITLED to benefits bringing her take home to $67,000 !!!!!!! Thats Bullshit....and thats whats going on in this country .Thats how Obama won the eection Joe.Enough of your bleeding heart BS Joe.!
Rosemary B January 03, 2013 at 06:51 PM
Joe R, I don't want to raise anyone's taxes! I think that is bad for the economy. I just wanted to add some facts to the discussion as to who the people who do not pay federal income tax are. The 50 percent of AMERICANS who do not pay FEDERAL INCOME tax does not include the corporations. That would be Federal CORPORATE Taxes that they do not pay. That will give me something else to look up ...
Rosemary B January 03, 2013 at 06:58 PM
http://www.washingtonpost.com/blogs/wonkblog/wp/2012/09/18/who-doesnt-pay-taxes-in-charts/ Hope this link works better. It is interesting...
Joe R January 03, 2013 at 11:07 PM
>>".....working single mom with two kids making $29,000 per year is ENTITLED to benefits bringing her take home to $67,000 !!!!!!!"<< That is utter nonsense, talk about BS. That's some kind of urban rumor, a zombie myth. To qualify for Medicaid or some of these benefits, you have to be almost totally destitute, $29,000 would be too much. Have you never heard of the Welfare Reform act signed in 1996, it has reduced the welfare rolls by 60%. So spare me the wailing and kvetching about welfare. Welfare has been gutted, there are no welfare queens except for the big corporations. It's very, very difficult to get welfare these days and they kick you off as soon as possible. Hey guys, I guess you forgot corporations are people, the supreme court said that corporations are people, Mitt said that corporations are people.
Rosemary B January 03, 2013 at 11:33 PM
It is the people who get hurt by high corporate taxes because that is less spent on Research and Development of new products, less spent on paying dividends , less spent on benefits and salaries. And higher corporate taxes are only passed thru to the consumers in the form of price increases.
Rosemary B January 03, 2013 at 11:49 PM
http://articles.marketwatch.com/2012-12-18/commentary/35877237_1_corporate-welfare-cuts-tax-rates-budget-savings/3 Interesting article about corporate welfare. Truth is, if we eliminate all these subsidies/corporate welfare we will probably be paying higher prices as consumers.
Joe R January 04, 2013 at 06:12 PM
Bruce Bartlett who held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul: "One problem with the Republican theory is that many big corporations actually pay little, if any, federal income tax. For example, The New York Times has reported that General Electric, the sixth-largest corporation in the United States, earned $14.2 billion in 2010, but disclosed in federal filings that it had no federal tax liability."
Joe R January 04, 2013 at 06:15 PM
More from Bruce Bartlett: According to Citizens for Tax Justice, G.E. paid a federal tax rate about the same as Continental Resources’ over the last 10 years – an average of 2.3 percent, including four years in which it received a net tax refund. When poor people pay no federal income taxes and get a government refund because of such programs as the earned-income tax credit, Republicans are incensed, implying that if only the poor paid their fair share that the deficit would disappear. They never suggest that corporations like G.E. pay their fair share, even though the G.E. example is far from unique, according to Citizens for Tax Justice. For these reasons, the investor Warren Buffett says it’s “a myth that American corporations are paying 35 percent or anything like it.”
Rosemary B January 04, 2013 at 06:54 PM
Fine, have all the corporations pay 35% Corporate tax and watch prices go up and the citizens of America be hurt by the higher prices. Can't have it both ways. Can't have high taxes and big government and prosperity at the same time.
Joe Sommers January 04, 2013 at 09:07 PM
Joe...These figures come from CNN and FOX.,You Liberal idiot !!!!! As said many times before.Liberals cant handle the truth. Your Socialist President is ruining thsi country.
Joe Sommers January 04, 2013 at 09:14 PM
Joe...Stop with your bullshit .Your President's spending spree is why The US is in huge debt. His truly belives his"investment" in social programs is the answer to a prosperous America. . He is brainwashing all you liberal idiots into thinking wealth redistribution is good for America. Wealth Redistribution=votes for the Democratic party and thats why I abhor your party and Liberal Philosophies. Liberalism is for losers.
Joe R January 04, 2013 at 10:10 PM
Ronald Reagan tripled the national debt, no one complained then. Bush ran up the largest deficits in US history because he put two wars and Medicare Part D on the credit card. Bush made two massive tax cuts for the billionaires but no spending cuts so he made another massive hit to the deficit. Bush was the only president to cut taxes during a time of war. Where were all you deficit concern trolls when Bush was running up massive deficits???? You do remember that the economy crashed and the big recession hit in 2008 and TARP started in 2008 and the bank bailouts began in 2008. Of course Obama had to spend money to try to stimulate the economy. Obama is not a liberal, he's to the right of Ike, he's a centrist who kisses the arses of corporate America. I wonder if Joe S is on Social Security or Medicare? Or does he have any relatives on Social Security or Medicare?
Joe R January 04, 2013 at 10:16 PM
During the 1950s, the top marginal tax rate was 91% and the economy was booming. The corporations didn't raise prices through the roof and the billionaires didn't move out of the country, so spare me the fear mongering, Rosemary. From JFK through Carter, the top marginal tax rate was in the low 70% range and the world didn't fall apart and we didn't have a great horrible Bush-created recession like we are going through now.

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