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Coats Op-Ed: An imperfect fiscal cliff deal, with more financial challenges ahead

January 7, 2013
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WASHINGTON, DC – In Sunday’s edition of The Indianapolis Star, Senator Dan Coats (R-Ind.) discusses his vote to avert the fiscal cliff and prevent massive tax hikes on Hoosiers and the need for Congress and the White House to focus the new year on reining in out-of-control government spending.

 

 

An imperfect fiscal cliff deal, with more financial challenges ahead

By Dan Coats

Indianapolis Star op-ed

January 6, 2013

 

 

The new year was barely a few hours old when I cast a vote in favor of an imperfect deal that I did not like. I did so because the alternative — raising income taxes on everyone — would have been a worse outcome. Allowing the country to go over the fiscal cliff could have sent the economy back into a recession, making it harder for Hoosiers to pay the mortgage, put food on the table and earn a paycheck.

 

Our fiscal crisis is a spending problem, not a tax problem. That’s not a partisan statement; it’s an economic reality that the president will be forced to face in the coming months.

 

But as the clocked ticked on New Year’s Eve, the fiscal cliff resulted in a choice between a bad option and a terrible option. Republicans could either allow the country to go over the cliff resulting in trillions of dollars of new taxes, including an average tax increase of $4,000 on Hoosier families and $2,800 on individuals or vote for the plan to protect 99 percent of all taxpayers and permanently lock in those current lower rates.

 

I chose the lesser of the two evils to ensure that 99 percent of Hoosiers do not pay higher income taxes. Was this bill ideal? No. Do I agree with everything in the plan? Not even close. Will it solve our fiscal problems? Absolutely not. But I was not willing to make Hoosier families pay the drastic price in higher income taxes for Washington’s dysfunction.

 

It seems every couple of months Washington finds itself at the edge of a cliff, riding to the rescue of a disaster of its own making. These repeated budget confrontations are a result of a lack of presidential and congressional leadership.

 

Then came the fiscal cliff of 2012. Without legislation, all American taxpayers would face one of the largest tax hikes in our history and the country would endure substantial defense cuts jeopardizing our national security.

 

Fixated on his pledge to raise tax rates on millionaires, the president made it clear that he was not going to have any part of a deal that addressed out-of-control spending. Instead, he chose to hold middle-class taxpayers hostage and was willing to take us all right over the cliff.

 

The fiscal cliff is Round One in a much larger fight. The larger battle is the debt limit debate in the upcoming months when two things happen almost simultaneously: the government reaches its borrowing limit, and the current resolution funding the government expires. By separating the spending issue from the tax fight during the fiscal cliff, Republicans have taken the threat of income tax hikes off the table in future negotiations.

 

For too long, the president has used the threat of raising taxes on Americans as a diversion from addressing spending. During the campaign, he successfully sold the narrative that Republicans’ refusal to ask more of millionaires is the only cause for Washington’s deadlock. Now that the president has the tax rates on high earners, he will have to face the music on spending.

 

Members of both parties, along with conservative and liberal economists, agree that we cannot keep spending at the current rate. Whether lawmakers and the president want to admit it or not, the crux of our problem is this: Washington has promised Americans far too much and committed well beyond our means.

 

According to the nonpartisan Congressional Budget Office, the United States cannot maintain its current federal spending programs with our population aging and health-care costs growing faster than the economy. Reducing out-of-control spending, reforming our tax system and restructuring Medicare, Medicaid and Social Security to make them solvent is the blueprint to build a stronger fiscal house.

 

I didn’t return to public service to sit back and watch our country continue down the current unsustainable path. I came back to make the difficult decisions necessary to help protect Hoosier taxpayers and work to get our country back on solid ground.

This task will not be easy and will no doubt cause political pain for both sides. It is time we all rise above partisan politics and take responsibility to put our nation on a path to fiscal health.

 

Coats is Indiana’s senior senator.

 

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