With about 6,100 jobless Idahoans facing a cutoff in their extended weekly unemployment payments by the end of December and plunging over their own fiscal cliffs, U.S. Sen. Mike Crapo, R-Idaho, says Congress and the Obama administration have only a few weeks left to resolve the nation’s ominous federal budget crisis before taxes spiral up and deep spending cuts are imposed.
Conducting a November 14 iTownHall conference call from his Washington office that reportedly was tuned into by thousands of Idahoans, Crapo said, “We truly are facing difficult and historic times in our country.”
Noting the nation recently went through extremely intense presidential and congressional elections that only succeeded in maintaining the status quo – President Barack Obama remaining in the White House, Republicans controlling the U.S. House and Democrats dominating the U.S. Senate – Idaho’s senior senator said the government has been split and unable to bridge partisan differences.
Meanwhile, Americans “face very, very serious and immediate problems,” including a $16 trillion national debt swelling by $1 trillion a year, and the Social Security, Medicare and Medicaid entitlement systems “rapidly facing insolvency.”
Crapo said: “The economy is beginning to reel because of our debt load. If we don’t take prompt action soon, the world markets will soon lose confidence in the ability of the United States of America to pay its debt. We literally face the threat of losing the American dream.”
He explained the so-called “fiscal cliff” technically is different from the debt crisis but related. The cliff over which the federal government is scheduled to go over on Jan. 1, 2013 involves $1.2 trillion in automatic spending cuts “done in a way that is very inartful with the potential of causing great damage to the military and the economy,” Crapo said.
The Idaho Republican said he supports protecting the $1.2 trillion level of the cuts, but reforming them so they are not so draconian. On the flip side of the spending cuts is a steep spike in a wide gamut of taxes reduced eight to 10 years ago, commonly known as “the Bush era tax cuts,” enacted when George W. Bush was president.
“Every American is facing increasing taxes,” Crapo said. “Most all Americans will see tax increases, even those who don’t pay income taxes.”
Key components of the fiscal cliff include:
· The disappearance of a 2 percent temporary cut in federal payroll taxes.
· The expiration of extended unemployment benefits for the long-term jobless.
· The ending of Bush era tax cuts impacting married couples, families with children, inheritances, investments and income.
· A sharp cut in reimbursements for doctors participating in Medicare.
· Imposition of an alternative minimum tax on 26 million households, raising their taxes by an average of $3,700.
· Effecting new taxes on family investment income exceeding $250,000 to help pay for Obama’s health care law.
· A variety of smaller tax cuts for both businesses and individuals known as “extenders,” including tax credits for research and development and sales tax deductions in states without income taxes.
· A $55 billion or 9 percent cut in defense spending.
· A $55 billion in cuts to domestic programs, including a 2 percent cut to Medicare providers.
Crapo said a recent study shows the fiscal cliff could mean a $3,000 tax increase for average families in Idaho. More than 7,000 workers have left the state’s labor force since May. An estimated 1,100 left the job market in October, the fifth straight month of Idaho labor force declines.
Referring to the looming fiscal cliff, Crapo said: “Congress cannot allow this to happen. World markets would immediately react negatively.” He added the U.S. credit rating could be downgraded and the U.S. economy could implode.
Crapo continues to work with the so-called Gang of Eight, a bipartisan group of senators organized to help tackle the nation’s deficit crisis, which he said has the support of 40 senators.
“One way or the other, it’s my hope we start seeing responsible government and responsible solutions supported,” Crapo said. “People in America are clamoring for the gridlock in Washington to stop. Frankly, we don’t have time.”
President Obama’s insistence that tax rates be raised on those earning $250,000 or more annually would hit small businesses especially hard, Crapo said, urging that the U.S. tax code be reformed. Raising taxes on the upper two brackets would not come close to generating the revenue needed to close the nation’s deficit gap, he said.
“The crisis is because spending is too high not because taxes are too low,” Crapo said.
A Pocatello woman whose husband works for Meadow Gold said the company has decided it will be less expensive to pay a fine for not carrying health care than providing coverage for employees. She said her family was in panic mode upon learning the news.
Crapo predicted Obamacare ultimately will force millions of Americans to get health care coverage from the federal government because private companies will discard their own policies. Health care costs could more than double, some analysts have said.
The Congressional Budget Office estimates if the Bush era tax cuts are allowed to expire and taxes spring back up, that could raise up to $5 trillion in revenue over 10 years. About $800 billion could be raised from the top two tax brackets, Crapo said, but that’s the optimistic assessment.
“That kind of tax increase would be squarely hitting everyone in America,” he said, adding some pessimistically think it would raise only $2 trillion on the low end if unemployment were to vault and economic growth shrink by 3 percent. “I wish I could give absolute assurance the gridlock will be resolved and we won’t go over the cliff. … The worst option of everything is to do nothing and accept the status quo.”Share on Facebook