Fiscal Cliff Notes: Progress on tax fairness, but cuts still loom

In 2011, after months of debate over the need to raise the debt ceiling and the appropriate size of the federal budget, Congress passed a temporary budget with a built-in “fiscal cliff” set to kick in at the end of 2012. This political creation was meant to spur Congress to action by enacting deep, across-the-board cuts to many domestic spending programs, including the military budget. The logic was that, since these cuts were so unsavory to both parties, they would be forced to cooperate and compromise to find a solution.

At the same time, the Bush tax cuts were set to automatically expire at the end of 2012 and Congressional action was required if any of the cuts were to be extended. President Obama had made his promise to end the Bush tax cuts on income above $250,000/year a centerpiece of his campaign.

Many progressive organizations across the country felt that the President had a unique opportunity to leverage the automatic end of the Bush tax cuts and introduce more fairness into the federal tax code. Republicans in the House of Representatives, however, fiercely resisted this plan and insisted instead that cuts to social programs constitute the majority of the deal.

The bill that Congress passed and the President signed was, by and large, a good step forward – the legislation protected important programs and ended tax breaks for the wealthy. Unfortunately, the line on ending those tax breaks shifted upward from the President’s campaign position, ending tax breaks only on income above $400,000/year. At the end of the day, Congress and the President passed a bill that raised $620 billion, far less than the $1.5 trillion that was cut in the 2011 budget (in which there was no revenue increase). So for every dollar that was just raised, there had already been 2.5 dollars in spending cuts.

Far more troubling, however, is that the bill did not deal with the budget crisis as much as it pushed it down the road. By the end of February, sequestration (those deep, across-the-board cuts) will go into effect unless Congress can agree on a plan to avoid it and conservatives are already calling for cuts to programs like Medicare, Medicaid, and Social Security. Make no mistake: elected officials who decry government’s role in setting up and providing foundational health care and retirement programs that protect low-income and elderly Americans will use this as an opportunity to whittle away at the very programs many Mainers depend upon for survival.

More revenue is still needed to invest in job creation programs, education, and infrastructure and we think there’s a better solution than the reckless and extreme cuts proposed by conservatives. For example, negotiating the cost of prescription drugs in Medicare might finally force big pharmaceutical companies to pay their fair share. Closing corporate tax loopholes makes more sense than cutting back on retirement security, and MPA intends to support solutions that raise revenue as opposed to the cuts-only conversation pushed by conservative opponents.

In three months, MPA members had dozens of letters to the editor published in Maine newspapers on the topic of the Bush tax cuts, and more than 120 MPA members met with Senator Collins’ staff to advocate an end to tax breaks for the wealthy. Your phone calls helped keep the pressure on, and the postcards you asked us to deliver made a real impression on the Senator. On multiple occasions, we heard from Senator Collins’ office that she was taking notice of the grassroots groundswell to end tax breaks for the rich, and you should be proud that your work helped win votes from all four members of Maine’s congressional delegation on the fiscal cliff bill. We’ve got work to do on both sides of the aisle, and we’re glad that we can count on you to keep holding elected officials accountable to an economic vision that works for everyone.