Toomey: Dems must curb cash to avoid 'fiscal cliff'
WASHINGTON — U.S. Sen. Pat Toomey, R-Lehigh Valley, says compromise will be necessary in negotiations between the White House and Congress, but President Obama could help avoid the looming fiscal cliff by getting Democrats to accept spending restraints.
“There are many, many scenarios to avoid this fiscal disaster, in terms of the details,” Toomey, a conservative, told the Tribune-Review on Wednesday. “But broadly speaking, the most important thing that we address in these negotiations is our spending problem.”
That requires commitment from both sides, he said: “It is something that both sides have to agree to because we are heading into a fiscal crisis. This isn't just a theory. It is an empirical matter of fact that countries that run massive amounts of deficits and allow their accumulated debt to exceed their entire economic output will have a complete crisis and a meltdown.”
A member of the Senate's banking and budget committees and the Congressional Joint Economic Committee, among others, Toomey in 2011 was a member of the Joint Select Committee on Deficit Reduction that set the Jan. 1 deadline for lawmakers to agree on budgetary matters in order to prevent automatic spending cuts and tax increases.
Congressional leaders on Friday are scheduled to meet with Obama. The White House said Obama would push his $1.6 trillion plan to hike taxes over 10 years on corporations and households earning more than $250,000.
The tax increases and spending cuts known as the fiscal cliff could trigger another recession in the first half of 2013, some economists predict. Middle-income families would pay an average of $2,000 more next year, according to the nonpartisan Tax Policy Center.
The Congressional Budget Office, which put the cost of doing nothing at more than $600 billion, has estimated the unemployment rate could skyrocket to 9.2 percent, from 7.9 percent now.
“There is general belief that the combination of tax increases and spending reductions would push the economy into recession,” said Allan Meltzer, a professor of political economy at Carnegie Mellon University's Tepper School of Business.
Congress returned to Washington this week but will break for Thanksgiving, leaving about four weeks to broker a deal.
“Honestly, getting it done in four weeks all depends on the president,” said Toomey, an advocate of reducing taxes. “He has to bring members of his party who refuse to contemplate any type of spending restraint and get them on board. If the president wants to address this substantively, we could reach a very constructive agreement pretty quickly.”
The political parties are far apart on a key issue: Democrats support increased tax rates for upper-income households; Republicans believe that would hurt the struggling economy.
Obama and House Speaker John Boehner, R-Ohio, have laid markers in the sand in speeches about how negotiations might play out.
The gridlock in Congress has soured many Americans.
“I totally understand the frustrations; nobody is more frustrated than me,” Toomey said.
Toomey said reaching agreement might require determining how much money tax reform should generate, as well as the rate structure and some entitlement reform with a reasonable deadline. He said he offered a framework for this as a member of last year's committee negotiating the budget and debt ceiling.
“It did not ask Democrats to agree to transformation of big entitlement programs, but asked them to agree to some modest reforms, and included a series of spending cuts that had been vetted by both sides and (was) acceptable in various degrees — and it even included some additional revenue,” Toomey said.
Any talk about raising taxes, he said, must come in the context of “pro-growth tax reform, so that we are not damaging the economy.”
Toomey last year proposed raising $250 billion over 10 years by closing loopholes in the tax code and sharply cutting tax rates, an idea that didn't sit well with Democrats who contended it would benefit wealthier Americans.
Salena Zito is a staff writer for Trib Total Media. She can be reached at email@example.com.