“Do Nothing” Congress Plays Politics As U.S. Careens Toward Fiscal Disaster
Lawmakers return to the Hill this week and two divisive proposals are high on the agenda: the Buffett Rule and the Keystone XL Pipeline.
Both measures have strong public support but are expected to languish in the highly partisan Congress. Neither Democrats nor Republicans have shown an eagerness to compromise before the November presidential election.
The Buffett Rule, which the Senate is expected to vote on today, raises the minimum tax rate on the wealthiest Americans. The law would impact 433,000 households — or 0.3 percent of all U.S. taxpayers — according to the nonpartisan Tax Policy Center. The proposal would collect an estimated $47 billion of revenue for the federal government, which critics denounce as too little to reduce the nation's $1.2 trillion federal budget deficit.
A new Gallup poll finds that 60 percent of Americans support the Buffett Rule while 37 percent oppose it.
Both parties in Washington are pushing proposals that have little chance of passing either the House or Senate. Democrats want to hike taxes on the rich while the Republicans are maneuvering to have the Keystone XL pipeline approved as part of a short-term extension of federal transportation funding.
Nearly 60 percent of Americans are in favor of the Keystone XL pipeline, according to a March 22 Gallup survey.
President Obama rejected the $7 billion pipeline earlier this year but has since given the green light to build the southern portion of the pipeline that extends from Oklahoma to the Gulf Coast. The White House has acknowledged that its decision to delay the construction of the entire pipeline — from Canada to the Gulf — has bruised the president's standing with some voters.
The Buffett Rule and the Keystone pipeline are just two issues that Congress needs to address in the next nine months. The Bush era tax cuts are set to expire on Dec. 31 as is the payroll tax holiday, extended unemployment benefits and other "temporary" stimulus programs. The $1.2 billion in automatic cuts to the defense budget and various domestic programs due to the failure of the so-called Super Committee go into effect January 2013.
If lawmakers cannot put aside their policy differences and work together, the entire country could face an economic and fiscal disaster.
We have a "do-nothing government," Henry Blodget tells Aaron Task in the accompanying video. "Nobody has a plan other than to criticize what the other party wants. Someone wins politically and the rest of us loses."
Aaron and Henry both agree that the nation's budget woes can be resolved — but only with a combination of tax increases and spending cuts. Whether Washington can make the hard decisions needed to stave off a debt crisis remains to be seen. "We're heading toward a fiscal cliff," Aaron notes.
Europe has decided to take the austerity path to prosperity and the European countries most affected by the crisis are suffering even more — not less. A New York Times article over the weekend reported that Europe has a new challenge on its hands: "suicide by economic crisis."
A growing number of Europeans are killing themselves because the economic environment in their home countries remains bleak. This is a tragic and distressing outcome of the European debt crisis that few governments could have envisaged. While the U.S. debt situation has not yet reached the levels that have shaken Europe, the decisions that could determine the nation's economic future lies in Washington's hands.
