Fiscal Cliff 2012
The news that is dominating Capitol Hill is the fiscal cliff of 2012. A brief summary of the fiscal cliff, the Bush tax cuts were going to expire December 31, 2010. President Obama and the Republicans in Congress could not reach an agreement back then, so they extended it to expire December 31, 2012 unless they agree to a new tax plan.
Obama and the Democrats want to preserve the tax rates for the middle class, while allowing the tax rates revert to their higher levels and close many loopholes for the highest two tax brackets, the richest 2 percent of households making over $200,000 annually. The Republicans don't want the rich to pay higher taxes, so they are obstructing the tax plan.
What's the best thing to do? Present Obama's original tax proposal, although some compromises can be made out. If the Republicans reject it and no deal is made, just let the Bush tax cuts expire for everyone. It will reduce the deficit faster, and while for the next year the economic recovery will be stalled as Americans adjust to the new tax rates, America will soon adjust and the deficit will be reduced and the economy will finally get off to the right path of growth and stability.
We saw firsthand how Bush's tax cuts that strongly favored the rich turned out to be a disastrous failure, and turned a record surplus into a record deficit. We saw how Clinton's tax plan produced an incredibly strong economy and America, and turned a large deficit into a surplus. We know what works and what failed.
Assuming the Bush tax cuts expire for everyone, the Democrats in Congress can introduce tax plans to reduce taxes for the middle class. If the Republicans block it because the rich are not receiving tax cuts, it will make good ammunition for the Democrats in upcoming elections.
The deck is stacked and John Boehner and the GOP are on the losing end. It's just a matter of how Obama carries this out, and if he will show leadership and maturity this time around.