We've heard so much about the January fiscal cliff that I'm afraid we've lost sight of the real fiscal cliff just a few years ahead of us: the approaching bankruptcy of our nation. Sadly, Congress began the new year by taking us much closer to that cliff.
The bill did some good things: it protects individuals earning less than $400,000 from tax hikes to Clinton-era levels and it protects millions of middle class taxpayers from being ravaged by the Alternative Minimum Tax.
The House could have passed a clean bill simply dealing with that issue. Instead, it agreed to Senate language that postpones the $1.2 trillion of scheduled spending reductions under the sequester and actually increases federal spending by more than $300 billion according to the Congressional Budget Office -- and more than $600 billion when you include the totality of new social and corporate welfare spending and tax exemptions to reward politically connected special interests.
By doing so, it turned the bill's tax relief provisions into a mere illusion.
The truth is that once the government has spent a dollar, it has already decided to tax it. The only question is whether it taxes that dollar now or taxes it later by running a deficit. Since Congress postponed the spending reductions contained in the sequester and we continue to spend money we don't have, the net result of this measure is simply to transfer OUR tax bill to our children. And since Congress just approved between $300 billion and $600 billion of NEW spending, we have not merely transferred our generation's current bills to their generation, but we have also added new burdens on them as well.
Taxes will now increase on those individuals who earn over $400,000 per year, a great victory for the President's eat-the-rich ideological crusade. But a lot of those wealthy folks aren't even folks: they're 850,000 struggling small businesses that file under subchapter S. Seventy six percent of small business income is affected by these taxes -- precisely the income they use to create and sustain 2/3 of the jobs in our economy. This means that hundreds of thousands of middle class jobs will evaporate over the next year according to analyses by such respected non-partisan sources as the Congressional Budget Office and Ernst and Young.
This is done in the name of fairness, but the fact is that the top 2.7 percent of income earners hit by the tax increase earn 25 percent of all income but pay 42 percent of all income taxes. Now they will pay even more. But that victory for the President's class war comes at a steep price for those middle class families who rely on that 2.7 percent for their jobs.
And that's the other problem: the relative tax burdens shouldered by Americans will grow still farther apart, further splitting this nation into warring factions rather than uniting us as one people. That's extremely destabilizing in a democratic republic like ours.
Let it not be said that ours was a generation of locusts that consumed not only the wealth we inherited from our fathers and mothers, but also stripped bare the future of our sons and daughters.
As we begin a new Congress, let us also begin a new direction for our nation: stepping back from the precipice that threatens our future. Our government is divided because our people are divided, but over the last two elections they have spoken clearly and resolutely that they expect spending to be brought under control -- that's why they elected Republican majorities to the House of Representatives, where all spending bills begin. It is time the House proved itself worthy of their trust.
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Congressman McClintock voted NO HR 8. The bill was voted on January 1, 2013.