Senator Portman On Fical Cliff Agreement

Washington, D.C. – U.S. Senator Rob Portman (R-Ohio) today released the following statement on the fiscal cliff agreement, which ended the economic uncertainty tied to pending tax increases, and what Washington must now do to address out of control spending:

“The fiscal cliff bill is far different from what I would have crafted. I voted to avoid the fiscal cliff for one simple reason: In my judgment it was better for my constituents and our economy than the alternative. Had we gone over the ‘cliff,’ taxes would have risen for nearly every taxpayer by an average of $3,500 per family, pushing the total federal tax burden to a staggering 24 percent for the typical family. These tax increases would have resulted in 3.4 million lost jobs, a steep stock market drop, and – according to the Congressional Budget Office — a new recession.

“This would have devastated Ohio’s families and businesses. Some suggest that such a crisis would have motivated the President to capitulate, but I believe just the opposite would have happened. I believe the President’s leverage would have been increased considerably and the new Congress (with a bigger and more liberal Democratic majority in the Senate, and eight more House Democrats) would have lost leverage. Instead of providing tax relief for all those making $450,000 or less, the likely result would have been the president’s proposal, which trapped thousands more small businesses and families with higher taxes. I also believe the President would have insisted on higher taxes in other areas, including the death tax, and insisted on new spending.

“President Obama called for $1.6 trillion in new taxes. He got less than 40 percent of that. Another alternative would have simply let the tax cuts expire, in which case:

  • Marginal tax rates would have risen by as much as one-half;
  • Families would have seen their $1,000 child tax credit cut in half, and the “marriage penalty” re-imposed;
  • The capital gains tax rate would have risen to 20 percent for the middle class — instead it will remain at 15 percent;
  • The dividends tax rate would have jumped as high as 39.6 percent — instead it will remain at 15 percent for the middle class, and 20 percent for the wealthiest families;
  • Every Ohio family, small business, or farm with an estate larger than $1 million would have faced an exorbitant 55 percent tax rate on the amount above that threshold — instead more than 85 percent of the estates will be exempt, and the tax rate has been reduced.
  • As many as 30 million more families – 1 million in Ohio – would have been snared by the Alternative Minimum Tax — instead a permanent patch was enacted to stop that worry; and
  • Both small and large Ohio businesses would have lost the ability to immediately expense much of their investment costs, which would have limited their ability to invest and hire new workers.
  • “Overall, one of the largest tax increases in American history, $3.6 trillion tax over 10 years, was averted, as more than 80 percent of the 2001/2003 “Bush” tax cuts were made permanent — something that Republicans had not even been able to accomplish when they controlled the House, Senate, and Presidency. And the permanence of these provisions will provide much needed certainty for families, entrepreneurs, and investors. No longer can Democrats in Congress use large tax increases that are scheduled to occur under current law to extract unreasonable class-warfare demands.

    “We know that on top of those new taxes, Democrats were demanding more than $600 billion in new spending as part of President Obama and Majority Leader Harry Reid’s proposal to stave off the fiscal cliff. Nearly 95 percent of that spending was eliminated from the final deal.

    “Originally, President Obama also demanded that Republicans eliminate the federal debt limit as part of this fiscal cliff negotiation – essentially giving him a blank check to bury Washington even deeper in debt. I wrote a letter to the President signed by 43 other Senators forcefully rejecting this irresponsible demand. The debt limit debates have been the only sustained way to force spending cuts over the last 27 years, and we successfully retained the power to use that leverage in the coming months.

    “Additionally, after I spoke out to oppose President Obama’s attempted pay raise for members of Congress at a time of record debt and unsustainable deficits, the final fiscal cliff agreement quickly put an end to the plan. The last thing Washington should be doing at this point is rewarding itself with a pay raise.

    “Lastly, the agreement did away with ObamaCare’s CLASS Act once and for all. All studies showed that the CLASS Act, part of President Obama’s big government health care spending law, would quickly go bankrupt. Last night’s repeal guarantees that the Obama Administration cannot quietly change its mind and implement this misguided policy after all.

    “But let’s be clear, on the spending side, this fiscal cliff agreement only kept worse things from happening. If someone tells you this is what deficit reduction looks like, now or in the future, they’re sorely mistaken. This might have provided temporary certainty to our economy and avoided a significant shock to American families in the form of higher taxes, but deficit reduction cannot wait. I look forward to this debate as Washington deals with both the debt limit and the expiration of the Continuing Resolution that currently governs federal appropriations levels. Washington’s budget problems are driven by out of control spending, not a lack of revenue. Congress and the Obama Administration must move forward on spending restraint, including reform of the vital yet unsustainable entitlement programs that will cause much of the deficit spending expected in the future.”

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