The U.S. House of Representatives couldn't muster enough votes on Thursday for legislation that cut $3.9 billion in taxes for families and small businesses, while replacing harmful national defense cuts with $217 billion of additional new savings from other wasteful federal spending. President Obama had threatened to veto the measure, while calling for higher taxes and higher spending.
It's now the President's turn to act, says U.S. Congressman Kevin Brady (R-Texas).
"Republicans understand the urgency of the fiscal cliff and we acted a long time ago -- last summer -- to prevent all tax hikes, cut spending and force Washington to address its deficit crisis," said Brady. "President Obama has done very little beyond press conferences and campaign events. Since Democrats run two-thirds of Washington, the responsibility now falls squarely on the President and Senate Democrats to come back after Christmas and produce legislation that can pass both houses of Congress."
"Next week we'll see if the President is serious about avoiding the fiscal cliff. I hope I'm wrong, but my guess is that President Obama sees political gain from driving America off the cliff and blaming Republicans for it."
Brady thinks it is irresponsible to go over the fiscal cliff on New Year's Day because of the automatic tax hikes and the damage to the economy, but he believes that would be preferable to a bad agreement that raises taxes, fails to address Washington's spending crisis and ignores pressing needs like tax reform and saving Social Security and Medicare.
"I'm not going to accept a bad deal for American taxpayers and small businesses just to avoid the fiscal cliff."
Beyond damage to the economy, Brady's interest in the fiscal cliff is even more focused on avoiding tax increases on families and small businesses in Texas, as well as pushing forward with fundamental tax reform.
"Doing nothing while every taxpayer in my congressional district gets hit with a major yearly tax hike of $3,600 starting New Years Day just isn't acceptable. And if we go off the fiscal cliff -- even for a short while -- our Republican goal of fixing this broken tax code gets even more difficult. Those are my main concerns."
In addition to tax cuts and spending cuts, included in the House Republican package was a permanent block of scheduled increases in the marriage penalty, death tax, capital gains and dividends rates. Republicans wanted to permanently allow small businesses to immediately deduct certain business purchases up to $800,000.
The bill also permanently prevented the Alternative Minimum Tax (AMT) from capturing an additional 27 million American taxpayers -- many of them middle class families paying this additional tax for the first time. The bill was endorsed by numerous small business organizations and certified by Americans for Tax Reform as a net tax cut.
Brady took issue with an angry White House who also protested that House Republicans refused to extend $134 billion of stimulus spending that President Obama had earlier slipped into the tax code.
"President Obama's stimulus failed. For the sake of our deficit crisis, we can't afford more special interest spending that's not paid for," said Brady.
Brady also expressed confidence that preventing a wholesale tax increase on New Year's Day makes it possible for the House Ways & Means Committee to bring comprehensive tax reform to the floor in 2013 that lowers tax rates, closes special interest loopholes and dramatically simplifies the complex U.S. tax code.
"We need to fix our broken tax code so that America is competitive again and families can confidently and quickly do their own taxes if they choose," said Brady.