We are about to witness a confluence of events that will have an enormous affect our economy for the next several decades. The manner in which the two political parties and their respective nominees are able to respond to these events will ultimately decide who will win the White House this fall.
Within the next ninety days the Supreme Court will announce its decision regarding the constitutionality of the President’s Affordable Health Care Act. The ruling will have a dramatic effect on the distribution and cost of health care in this country. The validation or defeat of the President’s signature piece of legislation will also have an enormous impact politically heading into the election.
Within ninety days the Supreme Court will also hand down its ruling on Arizona’s tough immigration law. The effect of this ruling will determine how we police our borders and will go a long way to determining the future course of dealing with both legal and illegal immigrants. How this plays out will have a direct effect on their benefits, voting rights and tax obligations. Needless to say the economic affect on local, state and federal budgets will be substantial.
On October 1, 2012 the federal government will orchestrate across the board spending cuts totaling $1.2 trillion dollars. This will include a $450 billion reduction in military spending. These automatic cuts are the result of the Super Committee’s failure to reach a deal on the debt and deficit.
On December 31, 2012 the Bush Tax Cuts will expire resulting in a substantial across the board tax increase for all Americans.
On December 31, 2012 the temporary payroll tax cut extension currently in place will expire resulting in another tax increase.
On December 31, 2012 the current extension of unemployment benefits will expire removing the primary source of income for millions of Americans.
The ultimate disposition of each one of the aforementioned events impacts the lives of millions of Americans and therefore carries huge political consequences in what promises to be a very close election.
House Republicans were first to enter the fray. Speaker Boehner, addressing the Peter G. Petersen Foundation’s 2012 Fiscal Summit said that the GOP led House will vote to extend the Bush tax cuts and will act next year on “broad based tax reform that lowers rates for individuals and businesses while closing deductions, credits and special carve outs.” He was not specific as to what those might be. Regarding the debt ceiling, Boehner drew a line in the sand saying; “I will insist on my simple principle of cuts and reforms greater that the debt limit increase.” You may recall that last year the Tea Party members of Boehner’s caucus forced him to walk away from a deal with the President. The resulting impasse caused credit rating bureaus to reduce the country’s credit rating for the first time in history.
Republicans in the Senate are going on offense as well. Today, no less than three Republican Senators will offer budget proposals for consideration.
The Democrats have been slow to respond. Harry Reid and the Democrat led Senate have not put forward a budget proposal in the past three years; preferring instead to pick apart the Republican’s draconian offerings. The President has offered bits and pieces of a proposal but has yet to list specifics while shying away from any mention of entitlement reform.
As we have said before this promises to be a very close race with the victor winning by a mere 2-3 percentage points. The days of whining about social issues, dissecting income tax returns and questioning birth certificates is over. It is all about the economy and the future of the country. We believe that the candidate that can effectively communicate the most realistic, specific and sensible path through the events previously mentioned will win this election. That proposal will have to include an overhaul of the tax code, difficult spending cuts and entitlement reform. It will require a strong leader willing to take a political risk to do the right thing for the good of the country. It will require leadership.
But that is what a President is supposed to do…lead.
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