Next Monday we observe Labor Day. This federal holiday originated as a day to pay tribute to the contributions of the American worker and their achievements. Unfortunately, this Labor Day will not be a day filled with picnics and parades for the 8.3% of Americans that are unemployed. Still, President Obama states that the private sector is "doing fine" while the unemployment lines get longer and longer. It is painfully clear just how out of touch the president is with both the workers of our country and the small business owners who can create the jobs we need for economic recovery. While the economic climate is bad now, it could get worse very soon.
On August 22nd, the non-partisan Congressional Budget Office (CBO) released its updated budget and economic forecast. This report forewarns of an impending "fiscal cliff," and projects a bleak economic outlook if Congress fails to address the automatic spending cuts required by sequestration and allows a tax hike on all Americans. The report states that pending spending cuts and tax increases set to take effect on January 1, 2013 could send the U.S. economy spiraling into another recession, causing the unemployment rate to soar above 9 percent by the end of 2013. Federal debt held by the public will reach 73 percent of gross domestic product (GDP) by the end of this fiscal year, its highest level since 1950. The individual income tax alone will rise by $1.1 trillion in 2013.
This year will mark the fourth straight year that the United States will borrow over $1 trillion just to pay the bills. The deficit for Fiscal Year 2012 will total $1.12 trillion, equal to $9,500 of debt for every household in America. We cannot afford more of the same.
To address the tax hikes and automatic spending reductions set to take effect in January, the House has done its job and passed two important pieces of legislation, both awaiting Senate action. H.R. 5652, the Sequester Replacement Reconciliation Act of 2012 would provide the spending reductions required by the Budget Control Act. The second piece of legislation, H.R. 8, the Job Protection and Recession Prevent Act, would extend all current tax rates, including the death tax, for one year, and continues the 15% capped rate on capital gains and dividends.
These issues are too important for the Democrat-led Senate and President Obama to continue to ignore. The American people are rightfully discouraged, and it's well-past time for Congress to step up and ensure we do not slip off the fiscal cliff and into another recession.