WHEELING - West Virginia's candidates for U.S. Senate agree America is heading toward a "fiscal cliff" at the end of 2012 unless Congress works to steer the nation away from the fall.
Either incumbent Sen. Joe Manchin, D-W.Va., or Republican challenger John Raese must deal with the nation's spending and debt problems come January and the next term of Congress unless federal lawmakers act soon. On Dec. 31, last year's temporary payroll tax cuts expire, as do many tax breaks for businesses. Taxes related to President Barack Obama's health care reform law also kick in with the start of the new year.
In addition to this, the federal government faces automatic spending cuts worth $1.2 trillion during the next nine years unless Congress moves to avoid the situation. This "sequestration" of funds comes about as the result of last year's failure by a Congressional "supercommittee" to achieve a spending plan to help curb the nation's $16 trillion debt. Financial experts believe the combination of these fiscal changes will force the nation over a financial precipice.
"There's no question: the fiscal cliff is real, and we must absolutely address it in a unified way - as Americans, not as members of any one political party," Manchin said. "I was frustrated when Congress adjourned without taking on these issues, and I can assure you, I am determined to make sure that we fix our finances in a balanced, bipartisan way as soon as possible. I'm so concerned because every indicator that we have is that if we hit the fiscal cliff, it will put a strain on this economy and instill a lack of confidence that we have never seen before - that's my prediction."
Raese said he was "disappointed" with both Manchin and Sen. Jay Rockefeller, D-W.Va., for not voting to extend the Bush tax cuts before Senate adjourned for its pre-election recess.
"The senate adjourned without choosing to extend the Bush tax cuts - what does that mean to West Virginians?" Raese said. "It means that anyone that has a small business - and there are a lot of them in West Virginia - their taxes just went up 39 percent. What's it mean for capital gains? If you are going to sell your house, you better do it by January or you're going to be stuck in a situation with capital gains at a very high rate."
Dividend taxes also will go up to nearly 45 percent, affecting many small businesses, Raese added. He said the end of tax breaks at the end of year will increase his own business' taxes from a 36 percent rate to a 39 percent rate.
"And with Obamacare it takes me to 44 percent - and I'm just paying federal taxes," he said. A total of "44 percent will represent what Obamacare is going to do to me personally. I'm the guy who is signing the check, and the federal government is already taxing me at 44 percent of everything I make. This country and this Congress have a real disaster coming. You don't raise taxes in the middle of a recession. You can't tax us into prosperity. It doesn't work."
He added he is "astounded at what government is doing right now."
"When you raise taxes, all you are doing is feeding the beast. The beast, and the problem, is spending. ... If we don't repeal Obamacare, and we don't stop Obamacare, we're going to have the widest government spending problem in the history of this country."
The numbers are "stark," Manchin said.
"We borrow more than 30 cents of every dollar that we spend," he said. "Our debt exceeds the entire gross domestic product of this nation for the first time since the World War II era, when we were fighting for our survival. For the past four years, we've been spending more than $1 trillion more than we take in every year. "
Manchin said he advocates a long-term solution to the nation's debt problems, and supports the recommendations put forth by the Bowles-Simpson fiscal commission. Their 2010 report suggests cuts to Social Security and defense spending, coupled with tax reform.
"I believe we need to find a balance between a fair tax system, major spending cuts and entitlement reforms that protect the core values of Social Security and Medicare while eliminating waste, fraud and abuse," Manchin said. "And I truly believe that if we put our country before our politics that we can solve the tough fiscal problems that we face. We came together in West Virginia when I was governor, and I know that this country can do the same."