By Gene Robbins, Managing Editor
Two central Jersey Congressmen stare at the “fiscal cliff” and wonder if we’ll go over it.
They hope not. They expect not.
But both Leonard Lance and Rush Holt can’t predict the details to end a stalemate over federal finances that will sock the American public with income tax increases if nothing is done.
Congress positioned the country for this cliffhanger in August 2011 when it lit the fuse on automatic spending cuts in defense and domestic spending as well as cuts in entitlements like Social Security and Medicare if Congress did nothing to disarm a long-term fiscal bomb.
Mr. Lance, a Republican from Clinton Township, and Mr. Holt, a Democrat from Hopewell Township, each passionately hold to their philosophies and contend the public will is behind them.
”You won’t find a person in Washington who thinks this immediate crisis won’t be solved, but no one will tell you how,” Mr. Holt said.
Mr. Lance represents the 7th District, which includes Hillsborough and Montgomery townships. Mr. Holt’s district is the 12th, which includes Princeton, Lawrence, South Brunswick and Manville.
The “cliff” fixation has its roots in the August 2011 action Congress passed to extend the nation’s debt ceiling — and, thus, be able to borrow money to pay off longstanding debt.
Complicating the situation is the scheduled end to the Bush-era tax cuts Dec. 31. If allowed to go into effect, higher tax rates will mean all Americans will pay more.
On one side is Mr. Lance, who campaigned on not raising taxes. He said he hoped “an agreement can be reached that does not change marginal tax rates that have the potential of not permitting the private sector to create the jobs we so desperately need.”
On the other is Mr. Holt, who says government needs to stay true to its principles of investing in things that make the country richer socially, economically and culturally.
”Whether the top marginal tax rate is 35 or 39.6 percent in historical terms is pretty insignificant,” he said, and “should not divert us from the real things we need to pay attention to.”
Republicans like Mr. Lance think if they have to agree to increasing “revenue,” either by closing tax loopholes or even agreeing to higher taxes on the wealthiest Americans, then Democrats should agree to reform of their sacred programs of Social Security, Medicare and Medicaid.
Those are the programs the drive the deficit, Mr. Lance said. They need to be preserved, yet reformed, he said. He noted he’s been in favor of extending “for a year or two” the retirement age from the current 67 for people now in their 20s.
The Medicare eligibility age might need to be changed, too, “although I am more reluctant to do that,” he said.
And he favored making Medicaid more of a shared program between the state and federal government. States have the potential to bring greater innovation in delivering services, he said.
Mr. Holt said to link the current financial “crisis” to a wholesale rewriting of the programs in the social services net would be unwise.
The problem with Medicare, which has a more imminent financial problem, is not in its structure, he said, but in skyrocketing health costs in general. The country needs to get those under control, he said.
Both parties are scuffling for the popular high ground following the recent national election.
Mr. Lance said he saw the mixed results as the public asking “for a balanced approach.” They want compromise and people working together, he said.
He noted the president was elected with a lesser plurality than 2008, and the Democrats and Republicans held onto Senate and House, respectively, with slightly different margins.
To him, that equated to the public sentiment looking for more “revenue” as well as reform of the entitlement “cost drivers” in the federal budget.
Mr. Holt said he stood against “drastic cuts in unintelligent ways” that could close airports, stop coast patrols, interfere with law enforcement and cease enforcement of environmental regulations, to name a few government responsibilities.
”Across-the-board cuts are never smart,” he said.
”Over the long term, we want to make sure we’re living within our means,” he said, but government has a role in stimulating the economy.
Where Democrats use the word “investment,” Republicans often hear “wasteful spending,” Mr. Holt said.
”It’s jobs and economic growth we should be seeking now,” Mr. Holt said. “If that requires direct job creation, that’s the thing to do.”
He called it more likely to succeed than to rely on “trickledown” jobs from business in a free market economy. He called the Bush presidential years “anemic” in job creation.
Mr. Lance put his faith in small businesses, which create seven in 10 jobs, he said. Many small businesses pay taxes through the individuals’ tax code, not the corporate structure. He said he’s seen studies that show higher taxes could cost 700,000 jobs across the country.
Crafting a compromise usually means a solution in which both sides can gracefully pivot from hardened positions. That may not be possible. Mr. Holt said.
”For those who see only cuts to spending as a solution, I don’t see a graceful way out,” he said.
It might come down to the president having to strong-arm a deal, he said, if not by Christmas, then in January.
Mr. Lance said a solution might lie in a “down payment” on the debt and tax issues in the “lame duck” session of the current Congress, with emphasis on fundamental reform and tax changes in the new Congress that is seated in January.
Another debt ceiling extension will be needed soon — probably by February. Mr. Lance didn’t think a debt ceiling vote would be part of a “fiscal cliff” compromise.
Mr. Holt and Mr. Lance agree the best way to lower annual deficits is through more people working.
High unemployment is unacceptable in this society, Mr. Lance said, and it carries ancillary costs, like more money for food stamps and welfare.
Mr. Holt took pains to stress the fixation is “an artificially created crisis” by “renegade members” of Congress who, “in order to teach the country a lesson, said we should not pay our debts.”
A crisis created by Congress can be fixed by Congress, he said. Yes, the country is in debt, and it is higher than it should be, Mr. Holt said, “but it’s not immoral or catastrophic.”
”We should put in place reasonable plans to for the country to stay prosperous and with in its means,” he said, but putting all government services at risk and completely overhauling the social services net “is just bogus.”

