Amid dire predictions that the U.S. economy is heading toward a so-called “fiscal cliff,” Sen. Jeff Sessions, the ranking Republican member of the Budget Committee told Newsmax.TV that he believes Congress will ultimately extend the Bush tax cuts.
In an exclusive interview with Newsmax.TV on Monday, the Alabama lawmaker also said that the extension is unlikely to be passed before the November presidential election.
“It looks like there will not be a vote until after the election, but I can’t say that for certain — but it certainly looks like that,” predicted Sessions. “That’s not healthy because we need certainty in our tax rate. There’s far too much uncertainty in our financial condition in America today.”
See the exclusive Newsmax interview below:
The Bush tax cuts are set to expire at the end of this year, while automatic fiscal spending cuts are set to kick in — a dangerous combination that has been described as a fiscal cliff because it could yank an estimated $7 trillion out of the economy within a decade, and throw the U.S. back into a full-blown recession, according to fiscal experts.
“I think they will be extended in the end, but it will be better for the country and the financial markets if they knew firmly what was going to happen,” insisted Sessions, who said uncertainty is adversely impacting U.S. growth.
“The president has said he would want to continue most of those tax cuts — virtually all but the upper income one. So we ought to move that forward I think and it could be done,” he said.
In March, Federal Reserve Chairman Ben Bernanke warned that the U.S. recovery could come off the rails in 2012 if Congress failed to take action to address what he called a "massive fiscal cliff" of tax increases and spending cuts.
Meanwhile, Sessions, who is a senior member of the Senate Judiciary Committee, also declared that Americans have every right to be upset with “a very plush vacation” conference being planned by the 9th U.S. Circuit Court of Appeals to the Hawaiian island of Maui.
“This is a dramatic example . . . of business as usual — things being done today — when we don’t have the money that we need to change, reduce, alter in such a way that any family or private business would do when finances are short,” he maintained.
In a letter to Chief Judge Alex Kozinski, Sessions and Sen. Charles Grassley wrote that Congress has an obligation to guard against "waste, fraud and abuse" and demanded details about the conference, set for Aug. 13-16.
“You know we’re borrowing 40 cents of every dollar we spend and we simply have got to change behavior,” Sessions said. “These kind of conferences just need to be looked at. It cannot be justified it seems to me.”
The disclosure of the Maui conference comes on the heels of taxpayer outrage over a lavish, four-day conference in Las Vegas by the General Services Administration back in 2010. That event cost $823,000 and featured fine food, a comic, a clown, and talent show.
Democrats and Republicans denounced the GSA conference as a spending scandal, and quickly passed legislation to better guard against such gatherings. Even so, officials of the San Francisco-based 9th Circuit Court of Appeals continued to defend their upcoming event, describing it as an important gathering for the court, which covers eight western states plus Hawaii.
“I do not believe it can be justified, and I do believe they deserve to be examined about it,” Sessions told Newsmax.TV, adding that he anticipates a full and complete response to his letter. “This is the second year the 9th Circuit has been to Maui in the last two,” he said. “In 2010 they went to Maui. I think that gets expensive.”
At the same time, average Americans continue to tighten their own belts.
“We really need from the very top of our government down, a culture of management, frugality, efficiency, productivity — the kind of things that make America strong and make our corporations strong. And create profit-making enterprises,” according to Sessions. “We need the government to operate with that same mentality and it just has not.”
He called inexplicable the Democrat-controlled Senate’s rejection of President Obama’s latest budget proposal by a 99 to 0 vote.
“It’s very irresponsible. Under the president’s budget, we would go from $225 or so billion in interest last year on the debt we owe to paying $850 billion in the 10th year of the budget,” he said, noting that such an expenditure would be far greater than the total defense budget as well as the amount spent on Medicare and Social Security.
“We get nothing for that interest of course, but it’s every year you’d have to pay it,” he added. “Were we to have a surge in interest rates — which are quite possible, above those that are being projected — that could dramatically increase our interest payment every year.”
Sessions views such an interest payment as a “dramatic demonstration of the danger of debt” and how when you borrow money today, to spend it today, you leave a burden in the future that our future people and children and grandchildren will have to pay.”
Asked if he subscribes to the prediction that some are calling a “Taxmageddon” in the final hours of the lame-duck Congress following the election, Sessions acknowledged that there are “fundamental disagreements” about the fiscal direction of the nation between Democrats and Republicans.
“It’s a classic choice between a lean and effective constitutional type government and a larger, more European model of government — socialist government — that we seek,” he said. “How it’s settled at the end of the year will impact whether we go for a larger government or a smaller government. It will be influenced dramatically by the outcome of the elections.”
He doesn’t necessarily advocate tax cuts. “We really need permanent tax rates that are lower and simpler — not necessarily cutting taxes, but lowering the rates and eliminating deductions and complexities,” he said.
“We definitely need that and we need to reduce regulations that are pulling down our growth.”
Sessions also said that the U.S. needs to produce more oil and gas energy and do a better job of defending the American worker on the world financial stage.
“There are a lot of things we can do that don’t cost money, but the idea that we can continue to borrow money from the future to spend today has reached its limit,” he added. “The country is in danger. Debt to GDP is 100 percent. That in itself is pulling down growth according to experts. So we’re in a difficult time. There’s no doubt about it.”
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