There has been significant discussion recently about our nation's "fiscal cliff," an impending January 1st deadline which triggers $500 billion in tax increases and across-the-board cuts to domestic and military spending. We must not cross this deadline. The consequences of going over the fiscal cliff would be disastrous for working families, leading to an increase in unemployment and a likely descent back into economic recession.
According to reports by the Tax Foundation, the average Hoosier family would see an annual tax increase of $3,653 -- or 5.27% of their income -- if Congress fails to act. The Tax Foundation also notes that low- and middle-income families will be hit the hardest due in part to mandatory cuts to programs like Pell Grants, public safety, job training, and hunger prevention.
In August of 2011, I opposed the Budget Control Act, which brought about the automatic tax increases and spending cuts we now face. While across-the-board cuts seem like an easy solution to our financial woes--resulting in every interest taking a similar hit--it lacks the precision needed to protect our economic recovery and strengthen the middle class. We need thorough analysis of our priorities. Should we cut subsidies for oil companies making record profits? Definitely. Food for starving children? Absolutely not.
This is why Democrats and Republicans must work together to tackle our debt and deficit and find a balanced solution that cuts domestic and defense spending in a measured way. We need to protect working families from preventable tax increases and cuts to programs they rely on, while eliminating initiatives we can do without or that no longer belong in our federal budget. Frankly, the fiscal deadlines, and their quickly approaching consequences, provide us a unique opportunity to change the broken dynamics in Washington, not perpetuate them.
As we address defense spending, we should look to Indianapolis. We need smart investments, like the LiftFan System being produced locally by Rolls-Royce, which will provide more versatility to our modern aircraft. With these sorts of investments, we can spend less while maintaining force strength and protecting hundreds of thousands of good paying defense industry jobs, including thousands locally.
We should also look to other industries where we can achieve the same result by spending less--most significantly in health care. We should protect and strengthen the new health care law, which is streamlining our health care system and eliminating waste. According to the non-partisan Congressional Budget Office (CBO), this is set to reduce our deficit by $1 trillion in the coming decades--all by expanding care for the American public, not cutting it.
Eliminating tax cuts for millionaires and billionaires alone could avoid both the defense and domestic sequestration cuts next year, saving another $1 trillion over a decade. If Republicans insist the wealthy need these cuts to create jobs, we should make them contingent on job creation, not just being wealthy.
Of course, no spending cut or change to our tax code will fix our fiscal situation as quickly as putting Americans back to work. In fact, the CBO estimated it could reduce the annual deficit by one third.
As we work towards a solution, difficult sacrifice and compromise will be required from all sides. We cannot have a robust debate about the multitude of challenges we face if either side takes potential solutions off the table.
By recognizing our shared priorities, we can pass a long-term deficit reduction plan that includes comprehensive tax reform and that is balanced, fair, and makes clear to the world that the United States is serious about reducing its debt. I am ready to support a bipartisan, comprehensive deficit reduction proposal that combines spending cuts and increases revenue. Hoosiers are demanding we get the job done, and I'm working every day to make it happen.