by Alex Porter ’13 and Diana McDermott ’13

Warrior staffers Alex Porter and Diana McDermott weigh in on the Fiscal Cliff.

The Left Side (Porter)

At the beginning of this month, Democrats made the mistake of agreeing to the negotiated deal to prevent the fiscal cliff provisions from going into effect. When the Democrats had the chance to do something to address Congress’ overspending, they instead buckled under pressure and agreed to a compromise in the interest of bipartisanship.

To deal with the nation’s deficits, tax rates would have been restored to their levels before the Bush tax cuts went into effect and were continually renewed. If this had happened, the Democrats could have performed the same political maneuvers as the Republicans, blaming them for the fallout. The necessary high tax rates on the wealthiest could be continued, with new legislation to nullify the other positions. Opponents would be reluctant to now be the side fighting for higher taxes on the average person.

But maybe we do need higher taxes. Restoring taxes to the rate they were before the economy faltered is only responsible. Rates are at a historic low, at a time when money is needed the most. America became a superpower and remained as the only one in the 21st century with rates over 90 percent for some income, and this kind of revenue was used to make us great.  But the world-beating systems that this money financed are falling apart. Infrastructure is in disrepair; education is faltering; now is the time to revitalize our nation’s success with more programs and financing for them, not send them to the pasture.

Across the Atlantic, the economies of Europe face these same problems. The global recession hit them all, but some have handled it better than others. France has maintained taxes that would seem ridiculous to Americans, and its people have continued to enjoy their remarkably high standard of living. Germany has worked to protect workers and their livelihoods unlike the U.S., and weathered the economic downturn much better. Even with the fall in output, the labor market was not hurt to anywhere near the same extent. On the contrary, austerity budget cuts in other countries have only increased instability and made them less viable for the future, relying on money from Germany to make it each quarter.

The government has a responsibility to the citizens to sort out its bills responsibly. While keeping taxes low to reduce the burden on families during these tough times sounds nice, it is a recipe for disaster in the long term. The government needs to handle its problems in a way that does not ruin the country for the future. Big government brought the U.S. success through the 20th century and can again in the 21st.

The Right Side (McDermott)

Living with a single mother of two children, one thing I’ve learned is that when you do not have money to spend, you get by with only spending for what you absolutely need. If the government insists on maintaining a plethora of entitlement programs, there has to be money to afford them. If the money is not there, show the restraint to not spend any more money. With the country currently 16.4 trillion dollars in debt,  the best solution is to cut back on spending for federal government entitlement programs, since just raising taxes on the rich and on payroll are not big enough steps to erase the federal debt.

During a recession that is heading toward its fifth year, it is not reasonable to expect to have all the government programs there are when the country has experienced economic booms. The obvious solution is to cut back our spending drastically.  Lowering the debt ceiling will help to keep Congress from appropriating too much money to possibly wasteful causes.

The raises on payroll taxes and the taxes on the very wealthy seem like a lot but actually the revenue raised will not be enough to counteract the money being spent. Even though the currently proposed bill will decrease the debt by 500 billion dollars, this is chump change compared to the deficit of 16.4 trillion.

Increasing the tax on wages also leaves employees with less money in their hands, and it goes to a government in which people have little say about who will reap the benefits from increased tax revenue. In a free-market economy that balances itself out, it is optimal to have the money in the system and not taxed out.

In hard financial times such as now, less money for each citizen is probably going to result in a short-term recession and the Congressional Budget Office projects that unemployment will increase to 9.1 percent by the end of the first year. These changes made to our economy have a lasting effect on our gross domestic product which will decrease by four percent.

A world with lots of programs is a world with high taxes. Much of Europe is facing a crushing economic downturn, and a legacy of high taxes is largely responsible for it. The United States should keep the taxes at the rate it was in 2012, and cut the spending drastically to efficiently counteract the debt. This will not lower the quality of life for each citizen necessarily; it will help everyone have more money and let the citizen have the say about how to spend it.