The House, Senate and President all recently agreed to last-minute legislation to stop automatic tax increases and delay arbitrary defense spending cuts known collectively as the "fiscal cliff." The President had consistently said the fiscal cliff must be resolved through a "balanced approach" to deficit reduction including new tax revenues as well as spending cuts. However, the agreement passed by Congress only addressed the issues of taxes, which is neither good policy nor a balanced approach.
The final bill did nothing to address out-of-control spending, which is the primary driver of our deficit and debt. Further, the tax revenues expected to be generated by the fiscal cliff agreement are the equivalent of only about six days of federal spending. The American people expect more, but efforts in the House of Representatives to reduce spending have been largely ignored by the Senate's Democratic leadership.
No one wanted to see arbitrary, across-the-board cuts to defense take effect. This provision was included in the Budget Control Act of 2011 as an incentive for Congress to pass a deficit reduction plan agreed to by a bipartisan committee of members from the House and Senate. However, no such plan was produced and only the House of Representatives passed legislation to replace these cuts with other reductions and reforms. Unfortunately, our efforts were never considered in the Senate.
The fiscal cliff agreement passed this week simply delayed these cuts for two months; guaranteeing another showdown on spending in the near future. While I am hopeful this debate will result in real spending reductions, continuing to kick the can down the road is the wrong approach.
The true fiscal crisis is the national debt which has soared above $16 trillion, fueled by several straight years of trillion dollar deficits. The government borrows about forty cents of every dollar it spends. We cannot continue to spend money we don't have, passing the bill on to future generations to avoid making difficult decisions about the limits and responsibilities of the federal government.
While I did not support the fiscal cliff bill, reasonable people can disagree. There are good members, dedicated to resolving our debt crisis on both sides of this issue and the legislation did accomplish some important goals. Namely, the bill permanently extends current tax rates for the vast majority of American families and businesses. The bill permanently keeps the estate tax exemption at $5 million, indexed for inflation, protecting most family farms. The legislation also extended certain provisions of the Farm Bill, which will serve as a stopgap measure and provide producers some certainty until Congress passes long-term, responsible farm policy.
I also am hopeful passage of this bill will end the debate on tax rates, so we can turn our attention to meaningful spending cuts and the Committee on Ways and Means can focus on tax reform this year to simply the code and grow our economy.
The fiscal cliff legislation may have prevented immediate pain, but bold action is needed to resolve our long-term fiscal challenges. Now more than ever, the debate on spending must continue.