It looks like the Republicans and Democrats will be at it again debating tax increases and spending cuts. President Obama is drawing the line on the United States debt with tax increases as his solution. He is calling for the wealthiest Americans and largest corporations to carry their share of the load.
President Obama took his stand with this statement. “If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic….The wealthiest individuals and the biggest corporations shouldn’t be able to take advantage of loopholes and deductions that aren’t available to most Americans” (Lowrey, Annie. “Obama and Republicans Gear Up for Next Fiscal Fight.” The New York Times January 2013).
On the other hand, Republicans are calling for spending cuts as their solution to America’s debt, particularly to entitlement programs like Social Security and Medicare. They are pushing Congress to “live within its means” rather than blindly continuing to fund programs for which it has no more money.
Congress has already agreed to raise taxes on America’s wealthiest as well as delay for two months significant cuts to the discretionary budget. This deal is known as “the fiscal cliff.” This will indeed cut $650 billion off the nation’s deficit over ten years. However, with America still facing trillions in debt, it is a much smaller reduction than negotiators were hoping.
Although just slightly into the new year, Congress has some major decisions to make. For example, it must decide whether to raise the debt ceiling and whether to defuse some of the mandated discretionary-spending cuts. These decisions will direct the fiscal outcomes of 2013.