HURON — With a little over a month to go, Sen. John Thune, R-S.D., remains optimistic Republicans and Democrats can find a palatable way to avoid the so-called “fiscal cliff” of historic tax hikes and drastic spending cuts.
“I hope there will be some give and take here,” he said in a Wednesday conference call with reporters.
Thune is accusing President Obama of a lack of leadership by failing to offer what he says are meaningful proposals to create jobs and boost the economy, something he declared where his priorities after his re-election nearly a month ago.
Republicans want to see reforms to the tax code and entitlements like Medicaid and Medicare.
“Fiscal solvency is not possible without addressing these growing programs,” Thune said.
He reiterated his stance that Washington’s problem is its out of control spending.
Sen. Tim Johnson, D-S.D., said he supports a balanced approach to avoiding the fiscal cliff, combining common-sense cuts to spending with increasing revenue by asking the wealthiest Americans to return to the tax rate they were paying under the Clinton administration when the economy was booming.
“We all agree we need to keep the tax cuts for the 98 percent of Americans and 97 percent of small businesses that earn less than $250,000 per year,” he said in a statement.
“I remain optimistic that if both sides give a little we will find common ground and avert the fiscal cliff,” Johnson said.
Thune argues that raising taxes for individuals earning more than $200,000 a year and $250,000 for joint filers will at most raise $68 billion, which would fund the government for less than a week.
The administration and Senate Democrats believe they have the negotiating advantage of pushing the issue to the end of the year. It’s clear the president wants to end Bush-era tax rates for the rich while Republicans are demanding entitlement reform.
Thune said a solution is out there — the president has to put spending and entitlement reform on the table.
“If you just deal on the tax side, you’re just scratching the surface of the problem,” he said.
He and other Republicans are also worried about raising taxes in a down economy, and hurting people who create jobs.
“We can’t solve this problem absent dealing with spending,” Thune said.
“I see the contours of a deal here, but Republicans have made it very clear that raising taxes on small businesses is a bad idea and a non-starter,” he said. “If the president puts something forward on entitlement reform I think we’ll get a deal by the end of the year.”
He said perhaps the best solution would be to extend everything temporarily so entitlement reform can be address next year.
Thune has asked for the opinions of small business owners in South Dakota and chief executive officers of larger corporations. All are looking to Washington, D.C., for economic certainty, he said.
Business leaders have told Thune there is an enormous amount of capital sitting on the sidelines that could be used to hire workers or add equipment.
Those in the private sector have to look at their individual situations to determine the best course going forward. But Thune said it’s also important for lawmakers to make decisions necessary to put the country on a sustainable fiscal path.
“If it happens, I think we will see investments of capital now sitting on the sidelines,” he said.
Pro-growth tax reform would be good for the economy, but Congress must also confront runaway federal spending, he said.
“That’s what we have to deal with first and foremost,” Thune said.
For the complete article see the 11-29-2012 issue.
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