The so-called “fiscal cliff” dominates much of the political scene after the 2012 presidential election. Experts say that should the congress fail to reach an agreement on mandatory tax increases and spending cuts by the end of this year, it will push the U.S. back into recession.
The two parties disagree on how to reduce the nation’s deficit. The democrats want tax increases on the wealthiest Americans to increase revenue, citing the reason that the wealthiest Americans ought to pay their fair share. The Republicans refuses to increase the tax rate on the wealthiest Americans, accuses the democrats for waging a class war fare and that doing so will hurt American businesses that are the engines of creating revenue and economic recovery. The Republicans want other ways to reduce the deficit and foreign debt, such as closing tax loopholes, and eliminate certain deductions in order to increase revenue.
Chances are, both parties are at least partially right in terms of their respective proposed measures. What is not right, is the unconstructive partisanship on the Hill. The American political scene has been extremely polarized in recent decades. This is not to say that there were no ideological differences between the two parties in the past. There were. Rather, despite the differences, the two parties in the past were able to come to the center from their political aisles to reach compromises for the good of the nation.
Today, we are seeing less and less of that constructive bipartisanship effort to get things done. Instead, we are seeing more and more infightings in the congress, risking the fiscal health of the nation. Most recently, both parties of the 112th Congress failed to reach an agreement on the debt ceiling in 2011 until the very last minute, which narrowly avoided a potential federal government shutdown. As a result of this perceived risk of unstable and ineffective policymaking, U.S. credit rating was downgraded by Credit Rating agencies.
We assume both political parties want the nation to do well and prosper. They just disagree on the approaches to doing that. The last thing we want during the current slow economic recovery is another recession that would bring the American people again into economic misery. Should the congress fail to come to the center, to reach an agreement by the end-of-the-year deadline, the result will be the very thing their respective approaches intended to avoid. Both parties want to reduce the deficit for the sake of the fiscal wellbeing of the nation. But should they fail to act by the deadline to reach a compromise, another potential recession would perhaps result in continued growth of deficit and a prolonged economic recovery.
The two parties have to act. They have to compromise. There is no other way. It is not undoable. The democrats need to compromise. Perhaps, instead of raising taxes on those whose income is above $250,000, make it $500,000. The Republicans need to compromise as well, instead of staunchly opposing any tax increases on the wealthiest, they can compromise to increase the tax rate for the short term (e.g. a year or two years) to raise more revenue. Increasing revenue without raising tax is not enough for reducing the deficit and massive foreign debt, at least for the short term.
The problem is not which party is right and which is wrong. Both are at least partially right in their approaches. It is the failure of constructively working together to meet the challenges we have at hand, that is the issue. The current congress is not doing that, and they need to do that, especially at this critical moment. Insisting on their fiscal ideologies to score political points is not a responsible thing to do. This is not what the American people send them to congress to do.
Compromise, and get things done!