Taxmageddon. What will happen?
Former Sen. George Voinovich thinks it’s time for Obama and the Republicans to bargain: Medicare and Medicaid cuts in exchange for tax hikes on the wealthy.
“We’re trying to warn people about the cliff,” says Voinovich, the Ohio co-chair for Fix the Debt, a centrist group trying to lay the groundwork for compromise.
The Bush-era income tax cuts expire Dec. 31. So does the payroll tax holiday that boosted our paychecks two years ago. Big across-the-board cuts to defense and domestic spending are set to kick in Jan. 1. That double shock to the economy would probably plunge us into a new recession.
Confronting the cliff means confronting the parties’ 20-year disagreement on taxing the wealthy. Obama wants to let the Bush tax cuts expire for households making more than $250,000 a year. Republicans don’t. But Voinovich, a moderate Republican, thinks his party ought to strike a deal.
“[We have] to lay out the contours of reform of Medicare and Medicaid,” argues Voinovich. “Then we need tax reform, pro-growth, which would broaden the base, lower the rates, and raise revenues and reduce the deficit.”
But just when he starts sounding like Mitt Romney, Voinovich draws a distinction.
“That was one of the problems with Romney,” he says. “Romney said [tax reform would] be revenue-neutral. But most of us who’ve been around know that if you’re going to make cuts in spending, you also have to raise revenue. So those people in the higher bracket end up paying more money!
“Almost everyone I know that’s in that category says, ‘George, I’ll pay more taxes if you can guarantee me we’re going to get this ship back on an even keel.’ ”
During the campaign, Voinovich recorded a radio ad for Romney, in which he accused Obama of having a “deeply partisan vision” that kept him from working with Congress. But “neither party has clean hands,” he says now. Perhaps thinking of this Plain Dealer cartoon about his radio spot, Voinovich mentions Senate Republican leader Mitch McConnell.
“I think McConnell made it clear he wanted to defeat the president,” he says. “He has not been as cooperative as he should be.”
Obama and House Speaker John Boehner came close last year to the sort of “grand bargain” Voinovich supports. Voinovich thinks Boehner will ultimately stand up to the tea party wing of his caucus to avoid the fiscal cliff, even at the risk of losing his job as speaker.
“I really believe John Boehner would have given up his leadership to do the right thing,” Voinovich says. “I think [he] will do the right thing. I think John knows how bad things are.”
Voinovich thinks confronting the fiscal cliff may mean limiting popular tax deductions for home mortgages, charitable giving and health insurance. It’s an austere vision.
But he believes momentum is building for a compromise. “There’s a deep feeling that people in Washington have got to get their act together and get something done,” he says. “With the right effort, I think we can.”