Cliff averted, it’s on to the next fiscal crisis
By ANDREW TAYLOR / Associated Press
WASHINGTON (AP) – Onward to the next fiscal crisis. Actually, several of them, potentially. The New Year’s Day deal averting the “fiscal cliff” lays the groundwork for more combustible struggles in Washington over taxes, spending and debt in the next few months.
President Barack Obama’s victory on taxes this week was the second, grudging round of piecemeal successes in as many years in chipping away at the nation’s mountainous deficits. Despite the length and intensity of the debate, the deal to raise the top income tax rate on families earning over $450,000 a year _ about 1 percent of households _ and including only $12 billion in spending cuts turned out to be a relatively easy vote for many. This was particularly so because the alternative was to raise taxes on everyone.
But in banking $620 billion in higher taxes over the coming decade from wealthier earners, Obama and his Republican rivals have barely touched deficits still expected to be in the $650 billion range by the end of his second term. And those back-of-the-envelope calculations assume policymakers can find more than $1 trillion over 10 years to replace automatic across-the-board spending cuts known as a sequester.
“They didn’t do any of the tough stuff,” said Erskine Bowles, chairman of Obama’s 2010 deficit commission. “We’ve taken two steps now, but those two steps combined aren’t enough to put our fiscal house in order.”
In 2011, the government adopted tighter caps on day-to-day operating budgets of the Pentagon and other cabinet agencies to save $1.1 trillion over 10 years.
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‘Fiscal Cliff’ Bill Sets March Sequestration Dates
Jan. 1, 2013 / Defense News
After Pentagon and industry officials remove the cellophane from their 2013 calendars, they should circle two dates in red: March 1 and March 27.
The Senate-passed fiscal cliff and sequestration deal brokered by Senate Minority Leader Mitch McConnell, R-Ky., and Vice President Biden sets a March 1 deadline for the passage of legislation that substantially cuts the federal deficit.
If Congress and the White House fail to act by March 1, across-the-board cuts to planned Pentagon and domestic spending would be implemented via sequestration on March 27, according to the legislation.
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Brooks: Hagel’s job to wind down military spending
Chuck Hagel has been nominated to supervise the beginning of this generation-long process of defense cutbacks. If a Democratic president is going to slash defense, he probably wants a Republican at the Pentagon to give him political cover, and he probably wants a decorated war hero to boot.
All the charges about Hagel’s views on Israel or Iran are secondary. The real question is, how will he begin this long cutting process? How will he balance modernizing the military and paying current personnel? How will he recalibrate U.S. defense strategy with, say, 455,000 fewer service members?
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