In The News

Without Action, Taxes Go Up On All
Huizenga says Senate won’t present plan, bend on entitlements
The Ludington Daily News - Steve Begnoche
December 29, 2012

The next move in how to avoid the fiscal cliff is in the Democrats’ hands, U.S. Rep. Bill Huizenga told reporters Friday.

“The Senate has to take some action,” Huizenga said, adding the Democratic- controlled Senate leadership “presumably” is in contact with President Barack Obama, whom he said seems more interested in getting a trophy for his wall — increased taxes — than in resolving the fiscal disagreements between the Republican- controlled House and with his own party.

“We have passed bills that could be those vehicle bills,” Huizenga said of how a deal could be reached before the Dec. 31 deadline that, if passed with no agreement, triggers automatic tax hikes and spending cuts. “I’m assuming (Senate Majority Leader) Harry Reid and Obama have a relationship.”

“The senate has to take some action, and presumably they’d have to be in contact with the White House,” he said.

The House has passed a plan that preserves Bushera tax cuts and suggests ways to reduce spending. Huizenga said, ultimately, he’s OK with raising revenue, but how it is spent matters. He said he’s most interested in designing a fiscal and tax policy that encourages job creation in the private sector.

There’s not support enough in the House for the so-called Plan B suggested earlier by House Speaker John Boehner that would raise taxes on those making more than $1 million a year. Obama wants to end the Bush tax break on taxpayers earning more than $250,000 a year.

Huizenga doesn’t want to see any tax rates go up, but if nothing changes he said everyone’s taxes will go up beginning Tuesday when the sequestration law Congress passed earlier in the year to try to force itself to deal with fiscal policy goes into effect.

That law would eliminate all the Bush-era tax cuts, would let expire a 2 percent reduction in Social Security tax wage earners have received for the past two years, and through the sequestration portion of the bill would begin automatic cuts in spending in many sectors. Capital gains and the inheritance tax rates also increase.

“We have to face a reality that on Jan. 1 everyone’s tax rates are going up,” Huizenga said. “The question is what are we going to do about that? It’s the law.”

The Senate has refused to put forward a plan, he said. That makes it difficult to negotiate, he said, adding Republicans shouldn’t be forced to negotiate among themselves solely about their plan.

Huizenga said he hasn’t talked to Michigan Senators Carl Levin or Debbie Stabenow, both Democrats, about the matter, but later added it “would be a great idea if we could get people together across party lines. I would be curious to know where Sen. Levin and Sen. Stabenow are (on a solution) .... I would like to know why they don’t believe we should be talking about Social Security, Medicare, Medicaid.”

Even if President Obama gets all that he’s asking for, it won’t raise enough money to erase the deficit and won’t address the long-term spending issues that need to be addressed, Huizenga said.

Huizenga repeatedly stated serious reform is needed in the areas of entitlements because the nation can’t keep spending at rates far beyond money coming in.

“We have put our priorities up,” he said of House Republicans. “The notion of moving forward without any real kind of concern with dealing with our spending habits is a concern to me.”

“We have not seen the priorities of our Senate.”

He’s heard the concerns about the effect on the stock market of not reaching a deal before Tuesday. He said the message from Wall Street and the financial community has long been clear: Increase revenue, and cut spending. “This is a very inelegant way of doing it,” he said of the sequestration bill and impending tax hikes. But, he said, those he’s talked to “sense the market has baked in a lot of that” meaning the market isn’t going to be caught unprepared or unaware if no deal is reached.

A message he hears from economists, he said, is “Either you (Congress) figure it out or the marketplace will ... and it will be harsher.”

He said he’s aware of the public’s loss of confidence in the system.

“It’s frustrating, I want to come up with solutions, I feel like I have done my job. We see the hold-up on the Senate’s part,” he said.

Deal or no deal, he said, “We will be able to operate. It’s not fun to go through.”

He still believes a deal is possible. The House Republican conference is scheduled to meet Monday morning.

“I think we can put together an agreement ... I will be taking criticism from all sides ... I get that ... People from the 2nd District sent me there to find solutions.”

Should people be concerned? he was asked.

“It’s not like the Mayan calendar and the world will end. We will go on. It is something that has to be addressed. There will be tax increases,” he said.

“This is the first time we’re going to be seeing taxes going up because of lack of action,” he said. “Tax rates shouldn’t go up in a fragile economy, but you have an administration pretty intent on having a trophy of increased tax rates on the wall.”

Washington is best at putting off tough decisions, he said.

“I don’t want to make tough decisions, but we have to,” he said. “I’m not ducking any of those tough issues.”

He said he suspects there will be some kind of shorterterm agreement rather than a full-scale solution — but he hopes “short” means a year or so. Too short of an agreement will only add to the uncertainty that hurts economic growth.

“The real answer is comprehensive tax reform,” he said.

That takes time — something Congress has precious little of if it hopes to avoid the effects of not having something in place by Jan. 1, 2013, aka Tuesday.