· January 1, 2013: The government goes over the “fiscal cliff” with automatic tax hikes and spending cuts set to take effect.
· Sometime in early 2013: The debt ceiling will need to be raised.
That is why the U.S. Chamber sent a letter today, signed by 298 business organizations, calling on the president and members of Congress to immediately enact legislation that averts America’s fiscal cliff. They must prevent a devastating combination of historic tax hikes and ill-designed spending cuts from automatically taking effect at the end of this year.
The nonpartisan Congressional Budget Office and other leading economists warn that, if these tax increases and spending cuts take effect, they will plunge our economy back into recession in 2013 and could drive unemployment back up to above 9%.
The time to act is now.
The onset of harm to the economy will not wait until year-end. The very notion that the fiscal cliff exists has increased uncertainty, which has already begun to slow down consumer spending and hamper business investment.
In our letter, we urge Congress and the president to work together to immediately extend all of the 2001 and 2003 tax rates (including current marginal rates, dividend and capital gains rates, and estate tax relief) for all taxpayers; extend vital expired and expiring business tax provisions; provide alternative minimum tax (AMT) relief; and find spending cuts to replace a sequestration never intended to go into effect.
Short term action is not a substitute for long term fundamental fiscal reform. In addition to immediate action on the fiscal cliff, we also urge them to firmly commit to tackling comprehensive tax reform in the next Congress; and agree to develop a long term plan to address America’s excessive spending, particularly entitlement spending.
These are difficult times for many American families and businesses. The fact that America is entering the crucible of what may be one of the most heated elections in recent decades cannot – and should not – serve as excuses for inaction, at least on an interim basis to avert a crisis.
The threat of further harm to the American economy is real, and the American people and business community should not be forced to wait. We urge Congress and the President to act now.
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Bruce Josten is executive vice president for Government Affairs at the U.S. Chamber of Commerce. His article also appeared in The Hill.
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