Tuesday, January 1, 2013

As Senate Votes To Avoid Fiscal Cliff, All Eyes Are On The House

Cliff Averted?
Word got out early this morning that the US senate has voted to avert the much touted fiscal cliff, an automatic series of tax increases and spending cuts scheduled for December 31, 2012 that many economists had predicted would send the American economy back into recession. By a vote of 89 to 8, the senate voted overwhelming for Bush era tax cuts to lapse on individuals earning 400 thousand dollars a year and families earning 450 thousand dollars a year.

Automatic spending cuts known as sequestration that was expected to trim 24 billion dollars from military and domestic programs in just two months time if a deal had not been reached was also deferred giving US law makers chance to work out detailed cuts to domestic programs and entitlements over the next coming months.

This news comes as a particular relief to those of us involved with community organizations which receive a lot of their income from federal and state funds. Community organizations and nonprofits that work with the poor and elderly and health care and other programs that benefit low income earners and minorities risk losing thousands in federal dollars over the coming few months if Republicans, especially those with strong Tea Party affiliation have their way.

Though the fiscal cliff crisis has in theory been averted, the real test comes from what happens in the US House of Representatives where Tea Party members from ultra conservative districts who think that a vote for tax increases is a betrayal of their core principles abound. Many Republican lawmakers view a vote to increase taxes as a vote of death. The Tea Party, the formidable ultra conservative and vocal wing of the Republican Party has over the past few years successfully challenged Republican lawmakers they view as moderate and Republicans in conservative districts are in awe of them. Tea Party Republicans sign a pledge of no new taxes even before they are sworn into congress and they come to Washington swearing not to compromise on any of their core beliefs, a rigid stance that has caused much gridlock in Washington and made this particular congress the most unproductive in US history.

The only hope of reaching a deal is through technicality. Technically, the Bush era tax cuts expired yesterday midnight, December 31, 2012. As I write, all taxes on everyone is automatically up. So the Tea Party lawmakers will be voting to reduce taxes on those making below 400 thousand and would therefore claim that they voted to reduce taxes, rather than vote to raise them, an important technicality that yields the same net result as a vote yesterday to raise taxes, but prevents conservative Republican from reneging on the sacred "No New Taxes" pledge.

However, the delay in spending cuts may be hard to swallow by Tea Party Republican who view government spending as too excessive and believe that too much public debt is threatening the future of their grandchildren. Even the warning by economists that massive cuts in public spending will slow down economic recovery leaves these lawmakers unruffled, as they came to Washington to pursue a single agenda; to rein in a government which they believe has grown too large, spends too recklessly, encourages laziness and is not only driving the economy into bankruptcy, but is mortgaging the nation's future to China.

Some of us are just relieved by the vote to prevent an increase in our taxes, to put it mildly. Given the high cost of living in recent years, the lack of wage increases and the increasing reliance on us by our families back home in Sierra Leone, we are barely managing to survive. A tax increase of the magnitude of 2500 dollars which I would have been hit with in addition to the current astronomically high federal and state taxes I am already paying, would have been like running a tornado through my pocket. I just hope that the some House Republicans would join Democrats to give us a break. US law makers can continue their arguments in the future, as long as they leave our taxes out of the equation.

Sheku Sheriff
Segbwema Blogger

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