Monday, December 3, 2012

Advent Expectation and the Fiscal Cliff

Advent Expectation and the Fiscal Cliff
By Leslie Woods

At this time of year, as we turn our attention to the waiting and the preparation that characterizes this holy season, and to the hope for the future that will arrive on Christmas morning, we join with you as we wait and hope.  And yet we know that God has called us to be in the world and to call the world to better account.  In the church, and especially during Advent, we have responsibilities outside of the walls of our houses of worship.  We have responsibilities in our families, in our communities, and in our nation.

In Washington, it is also a season of waiting and hoping.  As Congress addresses the very pressing issues our nation faces during the Lame Duck session, we all wait with baited breath – what solutions will they bring to bear? Click here to send a message to your Members of Congress today.

Most pressing among the many items of business before this lame duck Congress is the looming so-called fiscal cliff – the convergence of a number of policies that will automatically take effect in January, 2013.  In this time of intense partisanship and long-term fiscal crisis, it is essential that the church’s voice be loud among those seeking to influence our national decisions.  The nation’s fiscal decisions reflect the collective priorities that share – our commitment to the common good, our call to be keepers of our brothers and sisters, and our call to be in solidarity and support of “the least of these.”

We continue to exhort Members of Congress to bear in mind to common good when making fiscal decisions.  We join in concerns about leaving a legacy of mounting debt to future generations, but so too do we abhor leaving a legacy of rising poverty, inequality, and under-investment.  As the national dialogue centers around ways to reduce the federal deficit, it is first important to remember what created our deficit (see chart) and second that there are only two ways to reduce it: cutting spending and raising tax revenue.  To date, all deficit reduction measures ($1.5 trillion) have come from spending cuts, mostly from the section of the budget that is not responsible for our ballooning deficit.  We cannot cut our way out of our deficit – new revenues must be part of any solution that seeks to reduce the deficit in a just way.

Absent action from Congress, on January 1st, a series of deep automatic spending cuts ($1.2 trillion) and the expiration of the 2001 and 2003 tax cuts will converge to create the so-called fiscal cliff.  These policies together will significantly reduce the deficit, but as blunt tools they will also do harm.  Combined with the pending need to increase the federal debt ceiling again and the expiration of Unemployment Insurance Benefits for the long-term unemployed, these policies have the potential to cause severe contraction in the economy and the labor market, even as a sluggish recovery from the Great Recession continues to provide too few new jobs to meet the demand of those seeking work. 

However, the current “fiscal cliff” does include some saving grace – the Budget Control Act which put in place these automatic spending cuts, also known as the “sequester,” includes specific and explicit protections for many mandatory programs that serve low-income people, including Food Stamps, Medicaid, SSI, and many other.  In addition, the sequester’s $1.2 trillion in spending cuts will be evenly split between military spending and non-military spending.  So, while the automatic spending cuts will be severe and promise to be painful for the recipients of important government programs like WIC and affordable housing, there is nonetheless some protection built into it. Indeed, Congress must only agree on an alternative to the current fiscal cliff if the new solution does a better job of protecting our shared priorities – reducing poverty and inequality, and making sure there is a strong safety net to catch people when times are difficult.

On the question of the expiring tax cuts, it has been clear since the enactment of these policies in 2001 and 2003 that they disproportionately benefit the top of the income scale.  While almost all taxpayers gain some benefit from these tax cuts, proportionately, the bottom 20% of wage earners receive only a 3.7% tax cut while the top 20% of wage earners receive a 5.8% tax cut.  And when the top of the income scale is further dis-aggregated  the top one percent’s tax cut is 7.2% (see chart).  In truth, there are numerous proposals to bring in new revenue, many on which the PC(USA) has not taken a position, including allowing some or all of these tax cuts to expire.  But regardless of the policies used to achieve the end of increased revenue, it is clear that we must have new revenue and it is essential that it not be raised from those who are already struggling.

For slides from a recent presentation on the fiscal cliff, click here.

Even in this time of waiting and thanking and hoping and praying, we know that we have so much work to do, both still to come this year, and as a New Year begins.  But we engage with Members of Congress, and with you, during this Lame Duck season with hope and thanksgiving, trusting in our God who calls us into the public square, requiring us to bring our religious understandings of compassion, peace, and justice, to the decisions we make as a nation.

Send a message to your Member of Congress today – make sure they know to protect the poor in a fiscal cliff deal.

In the next few weeks, the Christian community will prepare for the arrival of the Christ child. The advocacy community will prepare, advocate, and wait for the resolution of many policies that will affect us for years, perhaps generations.  In the Office of Public Witness, we are present and we invite you to join us in lifting up our voices. 

As the Lame Duck session continues, we will alert you to other important PC(USA) priorities that still require action by Congress.  So stay tuned and get ready for a busy season, not one of shopping and consumption, but of advocacy for that which matters most – a better world, a hope for the future.