Newly elected reps Shea-Porter, Kuster ready to tackle fiscal cliff
(File photo) Ann Kuster, right, looks through a window at White Mountain Lumber in Milan while campaigning in 2010. The newly-elected congresswomen Kuster and Carol Shea-Porter must face the looming "fiscal cliff" to avoid another economic crisis. (JOHN TULLY/Monitor staff) Purchase photo reprints at PhotoExtra »
If you haven’t noticed, the nation is about to go over a “fiscal cliff,” and our recently elected congresswomen have a mandate to do something about it.
The question is: What, exactly, can they do?
When Carol Shea-Porter and Annie Kuster arrive in Washington, D.C., the nation may have already hit the $16.4 trillion limit on how much it can borrow.
If the current crop of “lame duck” members of Congress haven’t done anything about it, a series of tax increases – which the Tax Policy Center says are worth more than $500 billion – will have taken effect.
It will also have started a decade-long implementation of $1.2 trillion across-the-board spending cuts, known as “sequestration.”
Many fear the result of this fiscal cliff would be another recession.
Most of our current delegation in Washington – Sen. Jeanne Shaheen and Reps. Frank Guinta and Charlie Bass – unanimously voted for the August 2011 compromise that set the timetable for the fiscal cliff.
But when they voted for it, they did so with the hope that a bipartisan commission would come up with a compromise on taxes and spending that would avert the crisis we face now.
But that bipartisan commission failed, and this week voters made choices that effectively sent the same leadership to the White House and Capitol Hill that they had last August.
Kuster and Shea-Porter made some specific promises on the campaign trail – they will fight for the middle class, protect Medicare and Social Security and bring down the debt. Both blame U.S. House Speaker John Boehner and Tea Party Republicans for the fiscal cliff we face and say President Obama will now have more freedom to do as he sees fit on the issue.
But given the enormity of the problem at hand, it’s very possible that Kuster, Shea-Porter and the other 433 members of Congress are going to make choices that could put them at odds with the people who elected them.
“There’ll have to be some cuts,” Shea-Porter said in an interview at the Sheraton Hotel in Portsmouth yesterday.
If Congress does nothing and taxes really do increase by more than $500 billion on Jan. 1, the Tax Policy Center projects an average impact of $3,500 per household and $2,000 for middle-class households.
It’s a combination of several tax cuts that will expire and new taxes that will take effect. Shea-Porter and Kuster support some of the tax increases but oppose others.
The most widely known are the so-called Bush tax cuts, which were first put in effect in 2001 and have been renewed several times since, including under President Obama in 2010. Those include taxes on income, dividends and capital gains.
Kuster and Shea-Porter campaigned on the premise that the nation can’t afford tax cuts for “millionaires and billionaires.” They believe the tax rate on the income of the country’s “highest earners” – which is currently 35 percent – should return to the Clinton administration’s 39.6 percent.
But what constitutes the highest earners?
On the campaign, Kuster set her threshold at $250,000. That’s a “lot of money” here in New Hampshire, she said, “even when it’s two incomes.”
But she recognizes there may need to be some compromise.
“There’s going to be a discussion between $250,000 and $1 million, so I’m open to discussion about that,” Kuster said after meeting supporters at the Windmill Restaurant on Wednesday. “But I cannot see that we can afford tax breaks for millionaires and billionaires when we’re trying to tackle the deficits.”
Shea-Porter articulated similar thoughts yesterday.
“I personally said $300,000 because I know that people are educating their kids and that’s $40,000 or $50,000 a year now,” she said. “I don’t mind if they move it up. That’s the whole idea of compromise.”
“We’re really trying to direct it towards the millionaires-plus.”
But a lot more than the Bush tax cuts go into effect on Jan. 1.
The payroll tax that funds Social Security that had been cut from 6.2 percent to 4.2 percent will once again increase. That measure passed in 2010 to provide temporary stimulus to the economy and renewed a year later.
Powerful constituencies, including seniors, had supported that temporary tax cut. But the longer the payroll tax cut continues, the more it undermines the solvency of Social Security. Now some, including the AARP, say it’s time for the payroll tax cut to expire.
Kuster has said she wouldn’t support a bill that would continue to cut the payroll tax.
And there are new taxes coming into effect, including those created by the 2010 Affordable Care Act – commonly referred to as “Obamacare.”
When they do, the Medicare taxes on income greater than $250,000 for married couples and $200,000 for a single person will increase from 2.9 percent to 3.8 percent. Other taxes, including those on capital gains, dividends and some interest will also increase, according to the Tax Policy Center.
Both Shea-Porter and Kuster have been adamant defenders of the health care law, saying it will provide preventative care and force more efficiency through electronic records and other measures.
Members of congress will also need to decide where and how to cut.
The August 2011 Budget Control Act raised the debt limit from $14.3 trillion to $16.4 trillion – the country’s been running a roughly $1 trillion deficit annually for the last few years. The bill also appointed a “supercommittee” that was supposed to find at least $1.2 trillion in deficit reduction.
But because it failed, $1.2 trillion in across-the-board cuts could start to take place over the next decade and the result, the Bipartisan Policy Center says, could be a 13 percent cut to defense spending and an 11 percent cut to non-discretionary spending.
Both Shea-Porter and Kuster said higher taxes on high-income earners is a first step to address the problem.
They also support ending certain tax deductions, such as those on oil and gas companies.
Both Kuster and Shea-Porter have large defense-related businesses in their districts that they vow to protect – Kuster has BAE Systems in Nashua and Shea-Porter has the Portsmouth Naval Shipyard. Both are necessary for the nation’s security, they said.
“I would distinguish between goods and services for the troops themselves versus . . . redundant weapons systems, weapons systems that they do not need and people in the Pentagon are not asking for,” Kuster said.
“You can’t just take a knife to the defense budget,” Shea-Porter said.
Both said finding waste, fraud and abuse will help with defense and entitlement spending and that society’s vulnerable need to be protected.
“My position is that you don’t do it to Medicare, and you don’t do it to Social Security and you don’t do it to the safety net programs,” Shea-Porter said.
Shea-Porter said she will ask to be on the three committees that she served on previously – Education and the Workforce, Armed Services, and Natural Resources. Kuster said she hopes to be on committees that deal with education and health care.
But both will be relatively junior members trying to build coalitions broad and powerful enough to affect New Hampshire.
It may be easier said than done. But that’s the plan.
(Molly A.K. Connors can be reached at 369-3319 or email@example.com or on Twitter @MAKConnors.)
A previous version of this story previously misstated who voted in favor of the August 2011 compromise that set the timetable for the fiscal cliff. Sen. Kelly Ayotte voted against it.