"Each generation has its difficulties. In each generation, those difficulties, those problems take new shape, but the spirit necessary for the solution of the problems does not change from generation to generation."
President Theodore Roosevelt
Christopher Ruddy's Perspective:
The fiscal cliff can be averted and the Republicans should accept a tax rate increase on the so-called "rich."
Sounds like a sellout of conservative ideals?
No, not if Republicans demand that any overall deal remains revenue neutral.
By agreeing to a deal with the President which raises taxes on high income earners, Republicans, for the first time since the election, can take the political high ground while recognizing their limitations in Washington.
Congressional Republicans are not powerless, but they have been dealt a very weak hand as a result of the 2012 election. The president won re-election handily as Republican Senate candidates across the country got walloped.
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Facing the fact that the Bush tax cuts are set to expire all at once as of Dec. 31, Republicans have courageously offered a set of proposals for keeping tax rates low while closing loopholes and ending certain deductions.
On top of that they have proposed sweeping changes to Medicare and other government programs, effectively cutting spending in an effort to close the deficit.
While I applaud Speaker Boehner and Senate leader McConnell for having the political guts to at least offer a plan, the President has effectively outflanked them.
Obama continually rejects their proposals while claiming that he is striving for deficit reduction. To that end he offers no proposal whatsoever to fix the deficit problem. He even rejected the recommendations of the Simpson-Bowles commission he empanelled!
Despite this, the Republicans continue to be blamed for the current gridlock in Washington and for helping to drive the nation off the fiscal cliff, according to polls.
Here's a potential come-back game plan for the GOP:
1. Accept higher tax rates for high income earners.
The president, I believe, won this point during the election. The exit polls from the 2012 election show that Americans support his plan for increasing tax rates for higher income earners. The rate is set to go from 35 percent to 39.6 percent. So let it happen!
2. Keep the tax deal revenue neutral.
The Republicans should negotiate a deal that allows for an increase on the rate for higher earners while lowering the rate on middle-income and lower-income earners. Capital gains and dividend taxes should be negotiated. These should not rise to pre-Bush tax cut rates.
At the same time the Republicans should be pushing for tax incentives for business and tax credits for ordinary Americans.
How about a tax credit for anyone who purchases a new energy-efficient car such as a hybrid or an electric car? This would encourage auto sales while lowering US dependence on foreign oil and presumably gas prices as demand drops.
3. "A gun to our head."
As Republicans sign off on a deal with Obama as outlined above, they should do so by clearly stating they are doing so "under duress."
The economy remains precarious and tax rate increases, even on the highest earners, will harm the recovery – – this on top of coming Obamacare tax increases set to take place next year. The recently published Obamacare Survival Guide
offers a powerful presentation of these coming taxes, fees and fines -- many of them hidden in the 2,700-plus page law.
Also, there is a ton of empirical evidence that shows that by raising rates on high income earners, the government often generates less revenue, not more.
Another point the GOP should bring home: it's ridiculous to define a couple as "wealthy" because they make $250,000 or more.
Take, for example, a fireman and a school teacher living and working around New York City. They could easily make over $250,000. But housing, food, local taxes are all expensive. This same couple could be just making ends meet on $250,000.
And other high income earners like doctors, lawyers, accountants and other professionals – – are not really wealthy as they are high spenders.
My bet is that when the President gets his wish and rates rise on these folks, they will cut spending. A severe economic recession could ensue.
The Republicans need to scream a warning about this and let the President and Congressional Democrats accept full responsibility for what happens next.
4. Forget spending for the moment.
After getting a revenue-neutral tax deal signed by the president before the Bush tax cuts expire, Congress should go into recess and we all celebrate Christmas!
After the holiday breather and with the New Year, a new Congress will sit that can deal with the widening deficit.
But ambitious spending cuts should not be the centerpiece of such a program. At the moment, big spending cuts are as dangerous for the economy as tax increases.
Instead, Congress and the President need to find ways to grow the economy while reducing government's percentage of GDP.
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The Republicans lost the recent election by embracing the Ryan plan calling for an overhaul of Medicare with benefit cuts. The GOP seems to have forgotten that they won control of Congress in 2010 because voters -- especially senior voters -- voted against Obamacare and its Medicare cuts.
By agreeing to a "tax the rich but revenue neutral plan" the Republicans can seize the high political ground once again. They won't look like the bad guy.
Meanwhile, they can protect the nation against an overall tax increase. And all of the downside risk of raising taxes on high income earners will be borne by the president and members of his party.
Christopher Ruddy is CEO and editor of Newsmax Media Inc. Read more Christopher Ruddy Insider articles — Click Here Now.
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