Sen. Thune: Budget Decision Delay Could Ignite Recession

Sen. John Thune is pushing for a quick budget decision in Congress to avoid automatic spending cuts early next year, saying putting it off until after the election would be irresponsible and could lead to another recession.

 

“We want to do something about it — we want to do something now as opposed to after the election when you get into the cloud of a lame-duck session,” the South Dakota Republican told Fox News’ Greta Van Susteren Wednesday. “And that's not a good time in which to legislate and not a good time to get good fiscal policy.”

 

Automatic defense and domestic spending cuts totaling $1.2 trillion over the next 10 years will be triggered on Jan. 2 unless Congress acts, thanks to the failure last year of the bipartisan congressional supercommittee to reach a deal on tax and spending measures to bring the deficit under control.

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Deep partisan divides remain, and both parties have threatened in their own ways to take the nation over the so-called “fiscal cliff” rather than give in on their opposing positions, especially on taxes.

 

The Republican-controlled House is expected to vote next week to extend the tax cuts enacted in 2001 and 2003. But Thune said he expects no action in the Democratic-controlled Senate until at least after Congress returns from its traditional month-long summer recess beginning August.

 

Thune, a member of the Senate Budget and Finance Committees, said Congress should act now to extend the tax cuts enacted in 2001 and 2003 that expire at the end of the year and move as well to “avert the defense cuts” he said would “devastate our national security priorities.”

 

“Right now the fiscal cliff, as it’s been described, consists of really those two elements,” Thune said. “And the concern is — according to the Congressional Budget Office —  if we don’t take steps to address that, then in the first six months of next year it could cost our economy 1.3 percent in economic growth, which, according to the CBO, would probably result in a recession.”

 

He called the threat by Democrats to allow the tax cuts to expire if Republicans continue their refusal to increase rates on the nation’s wealthiest income-earners “terribly alarming and irresponsible.”

 

Thune also said the longer Congress does nothing, the harder it is for U.S. business to make sound judgments about future investments and hiring.

 

“We need to eliminate the uncertainty by providing at least a year of certainty with regard to tax rates and then we ought to get into a debate next year about how to reform the tax code and make it more simple, more clear, more fair, lower the rates and broaden the tax base,” he said. “Until that time businesses need certainty.

 

“That's why I believe that the Senate ought to do what the House is going to do next week, and that is to extend the rates for a full year,” he added.

 

But said at the moment the Senate is acting as “an extension of the presidential campaign” and appears willing to do nothing under the leadership of Majority Leader Harry Reid.

 

“Right now we are getting showboats on the floor of the United States Senate and we aren’t dealing with the problems and challenges that face our economy, and the job creators, and the American people,” he said.