One Possible Option to Prevent the Fiscal Cliff

Let’s get to the point of the matter: President Obama and Sen. Harry Reid (D-NV) and their media parrots are hell bent on raising taxes for those making over $250,000.  While their talking points are the worst example of political demagoguery rather than reality, we are losing the public battle. 

How do fiscal conservatives deal with this desire to raise taxes? Reality is, we have to get our country back on a sound fiscal path and that means real spending cuts. Those cuts will not be forthcoming with a Democrat controlled Senate and an Obama White House unless they get their income tax hike (read The Price of Politics by Bob Woodward).  The first step to any negotiation is understanding reality, and Democrats focus is raising the rates on the top bracket.

Therefore I have the following suggestion which should be considered:

Agree to increase income tax rates for those making over $250,000; however, instead of trusting the government will actually pay down the debt with the additional money, legislate that three things: 1) The $823 billion estimated 10 year revenue is all put toward fixing and expanding our infrastructure, at $823 billion per year.  All projects would be required to go to the most cost effective bid, with no union preferences, 2) the president signs off on the Keystone pipeline and 3) for $823 billion in new revenue, Congress and Pres. Obama provide $2,469 trillion in real spending cuts (3-1 spending cuts).

Infrastructure spending will stimulate job creation and allow for greater competitiveness and productivity.  Instead of allowing this increased revenue to go down an Obama black hole, it could be directed toward modernizing our infrastructure so at least we would have something to show for it.  According to the CBO, “From 2008 to 2011, total government spending on surface transportation infrastructure – highways, mass transit, and passenger rail – surpassed $200 billion a year,” with just over $50 billion of that coming from the federal government.

According to the National Surface Transportation Policy and Revenue Commission, in order to aggressively expand the highway system, significantly improve conditions and accommodate increasing demand while maintaining already existing infrastructure, we would need to spend around $240 - $250 billion annually.

If we were able to add another $82 billion per year to what they’re already spending, federal government contribution would more than double and could bring available funds to over $280 billion annually. This would provide us with resources to not only upkeep that which we have, but to expand the system to a degree that efficiency would be maximized. Currently, overcrowded freeways cost Americans $78.2 billion a year in wasted time and fuel costs and freight bottlenecks cost an estimated $200 billion per year. 

While we were promised that the stimulus bill of 2009 would provide us with major investments in roads, bridges and rails, in actuality we saw less than 3 percent of the money go toward infrastructure.  Lesson learned. The requirement here to direct that money specifically to infrastructure projects would need to be airtight.

The result would be more people working at decent wages (hence more tax revenue) and less money dumped into unemployment and food stamps. We might as well have some say over how those funds are spent to at least ensure long-term benefit.

The second issue of compromise, the Keystone pipeline, would create somewhere between 6,000 – 10,000 jobs per year, generate an additional $5.2 billion in property tax revenue to the states along the route and allow the US to reduce its dependence on foreign oil. 

Our refineries in the Gulf of Mexico are calibrated to refine the heavy crude that Obama made difficult for us to get out of the Gulf of Mexico, but which is in abundance in the Persian Gulf and Canada.  Even as our oil imports have been falling, our dependence on the Persian Gulf, especially Saudi Arabia, has increased rather sharply. 

The final must-have for our compromise, make real spending cuts. When I say spending cuts I’m not talking about any of these slow the rate of spending increases that politicians like to call cuts; I’m talking about real cuts, where with every $100 spent, $3 will be cut out of the next budget. This is only a down payment to solve our fiscal mess.

Yes, we need real tax reform  - every working American should pay some income tax so they understand the price of government - but if Obama is willing to put our entire economy at risk and send the country over the fiscal cliff in his political class warfare game, then we need to call his bluff.

It certainly is something worth considering, especially since there aren’t many better ideas out there.  It’s not a perfect idea, but it is called governing.


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