Alexander takes aim at spending
by Michael DeVault - posted Wednesday, January 2nd, 2013 @ 5:14 pm
Just hours after the U.S. House of Representatives passed legislation to avert the so-called "fiscal cliff," U.S. Rep. Rodney Alexander says the Congress should now focus its attention on getting a handle on spending.
Alexander said nothing should be off the table when it comes to discussing spending cuts and eliminating a $1.1-trillion a year deficit. That includes looking at cuts in two controversial areas: Social Security and national defense.
"I think that's going to be the objective of the conservative movement now, is to look at everything," said Alexander, R-Quitman. "Again, I sometimes offend those on the ultra-conservative side when I say defense needs to be on the table."
Social Security may also need to be overhauled to close the budget gap, according to Alexander, who is a member of the powerful House Appropriations Committee.
"Raising the (eligibility) age and means testing is something we have to consider," Alexander said. "I certainly think we have to look at the whole picture."
Currently, individuals become eligible for Social Security when they reach age 62. Proposals have been floated in the past to increase that age to 65 or 67, but those proposals often prove controversial and draw the ire of powerful lobbying groups like the AARP.
Alexander noted that there are fewer workers in the workforce paying into Social Security. Meanwhile, thousands of retirees join the system every month. The disparity between workers paying into the system and retirees drawing money out of it has created massive revenue problems.
"It's a problem we have to deal with and not shy away from fixing," Alexander said.
Alexander also took aim at other so-called "entitlement programs," such as Medicare, Medicaid and the federal Head Start program.
Spending in those programs has exploded in recent years and, according to Alexander, spending cuts should entail drastic reductions in entitlement programs.
"I think we need to change the interpretation of entitlement," Alexander said. "Exactly what does that mean?"
Both Medicare and Social Security require participants to contribute financially before they are allowed to take part in the benefits.
"One can argue that, when one pays into some of those programs, they're entitled to some of that money back," Alexander said.
But that is not the case with other entitlement programs such as welfare and food stamps.
"I don't think anybody is entitled to that," Alexander said. "Those are gifts from the taxpayers. So we have to revisit what entitlements are and get a handle on runaway spending."
Curtailing spending is what Alexander expects to dominate negotiations about raising the nation's debt ceiling, the legislative cap on how much money the government can borrow to pay for everything from Head Start programs to the wars in Iraq and Afghanistan.
"Some argue that the debt ceiling is about paying the bills and spending the money that's already been spent," said Alexander, R-Quitman. "I argue that if we don't raise the debt ceiling, then that forces us to address the spending problems."
The upcoming debate over giving the government the green light to borrow more money will not be the first time the Congress has sparred with the White House over the debt ceiling, which currently stands at some $16.4 trillion. That's the maximum amount allowed under legislation approved by the Congress in 2011. The government reached the $16.4-trillion limit on Dec. 31, but officials say the Treasury has enough cash on hand to pay the government's bills for 60 days.
The debt ceiling was increased by $1 trillion in 2011, but the legislation included more than $3 trillion in spending cuts over 10 years, or roughly 10 percent of all federal expenditures across the board, including in military and social programs. The automatic cuts are known as sequestration.
The deal lawmakers reached late Tuesday temporarily delayed the spending cuts involved in sequestration.
The compromise also extended the Bush-era tax rates for individuals who make less than $400,000 per year. For individuals who make more than $400,000 per year, their income tax rate will rise from 35 percent to 39.6 percent. Couples who make more than $450,000 annually saw their tax rate rise from 35 percent to 39.6 percent, too.
The higher rates for wealthier Americans will generate some $600 billion over 10 years.
The Bush-era tax rates were approved by the Congress in 2001 and 2003 during President George W. Bush's first term in office. The rates were scheduled to expire in 2010, but the Congress and Obama agreed to a two-year extension in 2010, sun-setting the rates on Dec. 31, 2012.
The expiring Bush-era tax rates and automatic spending cuts including in raising the debt ceiling in 2011 created the so-called "fiscal cliff."
Among the biggest benefits of the compromise was the Congress made permanent the Bush-era tax rates for individuals who make less than $400,000 per year.
"Who'd have ever thought that we'd get to vote on permanent tax cuts for the middle incomes?" Alexander said.
The compromise also included a repeal of a two-percent tax break on Social Security taxes paid by employees.
Congress approved the two-percent payroll tax cut as a temporary measure to stimulate the economy. Repealing the payroll tax reduction will generate roughly $120 billion a year in revenues, or $1.2 trillion over the next 10 years.
Taxes on estates valued at more than $5 million will also increase, from 35 percent to 40 percent. But the increase in estate and inheritance taxes came with a bit of good news for Alexander.
One of the perennial fights in Washington has for years centered on how to govern the estate tax threshold. Periodically, the Congress approved an increase in the threshold for inheritance taxes to keep the threshold in line with inflation.
The compromise reached earlier this week puts an end to that, as well, by automatically tying annual estate tax thresholds to the core rate of inflation.
"So we won't have to deal with that anymore, either," Alexander said.
All told, the tax increases included in the fiscal cliff compromise will generate almost $2 trillion in new revenues over the next 10 years.
Alexander said the compromise, while not perfect, was still a good move that permanently lowered tax rates for 98 percent of the people.
"That's the largest tax decrease in the history of the nation," Alexander said.
Alexander called the fiscal cliff compromise "the best we could do, but responsible."
"That sounds like I'm implying that those who voted opposite me were irresponsible," Alexander said. "I'm not implying that at all."
Alexander and U.S. Rep. Cedric Richmond of New Orleans were the only two members of the House from Louisiana who voted for the fiscal cliff compromise Tuesday night.
U.S. Reps. Charles Boustany, Bill Cassidy, John Fleming and Jeff Landry voted against it.
Early Tuesday morning in the Senate, Sens. Mary Landrieu and David Vitter voted for the compromise.