Fiscal cliff debate still unresolved by Congress
Published: Monday, February 25, 2013
Updated: Monday, April 22, 2013 21:04
As the nation’s economy approached the debt ceiling, tax increases and entitlement cuts at the end of 2012, government officials feared going off the “fiscal cliff.” As a result, lawmakers made a decision to suspend the ceiling for three months. Now, with the end of February looming closer, indecision could once again threaten to cut spending across multiple agencies.
In 2011, the government made an agreement that once the nation reaches the debt limit, there will be automatic cuts to budgets of agencies across the board, economics professor and department chair James Butkiewicz said. While the cuts would save money, they would cause job loss and pay decreases. Last December, former President George W. Bush’s tax cuts for people earning under $400,000 were also close to expiring. Although the tax cuts became permanent, the U.S. Congress could not reach a compromise on the debt issue and suspended the debt ceiling until this Friday.
“They’ve been unable to agree,” Butkiewicz said. “So they agree to disagree and say, ‘Let’s do something, and we’ll come back and revisit this at a later date.’”
At the end of the week, lawmakers will either agree on spending limits or let the automatic cuts happen, Butkiewicz said. Right now, hostility is building between Congress members with opposing views, and no agreement for this “fiscal fiasco” is immediately evident, he said.
The government’s past decisions have been “kicking the can down the road” as a result of being unable to come to a compromise. Butkiewicz said he hopes a permanent solution is coming but is not expecting a resolution, given past habits. Republicans are set on making cuts, while Democrats are urging congress to allow more spending, he said.
“It’s a philosophical dispute,” he said. “What makes a compromise so hard to reach is that their fundamental principles are at stake here.”
Senior economics and English major Nate Riegel said he is upset with the situation and hopes major cuts are made to decrease the national debt. Riegel said he thinks the nation will go over the cliff at the end of the week because the same problems keep coming up. He believes the nation’s economy needs a more permanent plan, he said.
He attended an economics forum on campus where they discussed the need for massive government cuts and tax increases if the nation ever hopes to recover financially, he said. The major problem, Riegel said, is the partisanship and the terrible political climate in the Washington D.C.
“You have junior and senior senators who are undercutting each other just for the sake of ego,” Riegel said.
Junior Alexander Minore, director of political events for the College Democrats, said he predicts President Barack Obama will keep voting to push the budget cuts back until 2014 and use the time to gain more support for Democrats. Whichever party wins in that election will hopefully solve this problem, he said.
Many politicians are afraid to go against the opinion of their constituents and lose votes in the future, Minore said. They are looking ahead to see who will gain the House majority and take control of the budget years down the road, he said.
“There’s so much inaction in the Senate and in the Congress in general because if you cut the wrong thing and if you do so much austerity, you’re going to lose the support of your base,” Minore said.
Minore said spending cuts contracted and worsened other countries’ economies also facing recessions. Because of this, he is glad Congress was able to even avert going over the fiscal cliff and into a recession, he said. Also, making the Bush tax cuts permanent scared the Republicans from promoting more spending cuts, he said.
Minore said the cuts would affect military spending, which he feels is needed. The U.S. military is one of the largest in the world and does not need to be as big, he said.
“You shouldn’t be cutting the budget with a chainsaw, you should be doing it with a scapel,” he said.
In the past, the small tax increases have not been enough to cover government spending costs, Minore said. Entitlements, including Social Security, need big cuts instead of cuts from national security or temporary patches, Riegel said.
Riegel said an 11th hour deal similar to the one made in the beginning of the year will not generate growth or progress for the economy. Although the situation is bleak and the nation may lose some money, both Democratic and Republican officials need to seriously consider the cuts to make any headway, he said. If the debt ceiling is raised and there is no resolution, Riegel said he would be disappointed.
“I’d be livid at both sides,” Riegel said. “If they just keep passing the bill, it’s not going to get anywhere until they agree on something major.”
While Butkiewicz said he believes the automatic cuts will end up occurring, because a resolution will not come in time, he also thinks politicians tends to change their minds at the last minute. There could be an agreement before the cuts kick in, however, but he said the bigger issue is the government’s behavior and how it will affect the next generation.
More people, especially college students, should be paying more attention to the fiscal situation, Butkiewicz said. Young adults are the generation that will be paying taxes to cover debt and their children may not have social security coverage, he said.
“What does the future hold for them and are we really being responsible if we don’t try and address this now and think about your generation and the generation behind you,” Butkiewicz said. “What legacy are we leaving for them, and is it really fair to leave this much debt and this much burden?”