Democrats: stop your spending

For those that are still confused, the fiscal cliff is a number of spending cuts and tax increases that will automatically take effect Jan. 1 unless Congress reaches an agreement to avoid them.

The Congressional Budget Office predicts another recession and a return to 9 percent unemployment should Congress fail to negotiate a solution.

Give-and-take bargaining has given way to intransigence on reaching an agreement to avoid the cliff. Republicans refuse to budge on taxes, and Democrats won’t compromise on spending.

The latter is a far more pressing problem. Expiring Bush tax cuts would free up a paltry $80 billion, a figure almost overshadowed by the $50 billion in new spending President Barack Obama has proposed.

Raising taxes on the wealthy would score ideological points for Democrats but would not come remotely close to eliminating the deficit. The call from the left to “soak the rich” is misinformed and willfully ignorant. Most of the “rich” are not Warren Buffets. They are self-employed businessmen and small business owners as well as families in the annual $250,000 salary range, often living in high-cost areas in states that already levy high income and property taxes.

A couple earning $150,000 in New York owes 7 percent in state income taxes. A couple in California earning $100,000 owes 9 percent. In Iowa, a couple earning $70,000 also owes 9 percent. Yes, we had a top income tax rate of 91 percent during the 1950s, but people still used loopholes to pay a lower effective tax rate, and thanks to World War II, our economic competition had been wiped out.

Certainly, Republicans must make their own concessions on spending. The 20 percent of the budget that goes toward the military is far too high. But entitlements such as Social Security, Medicare and Medicaid eat up twice what defense does. Democrats have been throwing around the possibility of up to $400 billion in entitlement cuts, but they won’t kick in for 10 to 20 years.

In the spirit of compromise, perhaps Republicans should agree at least partway to a tax hike. But before that happens, Democrats need to acknowledge that mammoth entitlement spending — not lost tax revenue — is the biggest budgetary threat.

Democrats need to demonstrate they will not simply renege on proposed spending cuts in the future.

­— danoconn@indiana.edu