Raise top rate now, reform tax next year

The late Sen. Robert Byrd of West Virginia once described the federal budget thusly: “A creation, without a mother or a father, rather more like a Frankenstein creature, a being of some sort that has been patched together from old legislative body parts that do not quite fit. And just as Dr. Frankenstein was quite surprised by the results of his creation, so may we be startled by the result of ours.”

He could well have been talking about the so-called “fiscal cliff” — and plans to avoid going over it.

Avoiding the fiscal cliff is the chief issue of concern to the American public right now. And I’m certain the people also want the solution to our economic woes to be a balanced and bipartisan one.

I believe we can and must avoid going over this cliff on Dec. 31, when unintended sequestration — across-the-board budget cuts totaling $1 trillion over 10 years — will begin in defense and other federal spending.

I believe the solution should be guided by two overarching objectives: one, putting the federal government on a real path to rein in our deficit; and two, ensuring that any revenue increases and spending cuts promote growth and strengthen rather than hurt the middle class.

The need to bring down the federal deficit through a balanced combination of spending cuts and revenue increases is indisputable. 

Balancing the budget through spending cuts alone would eviscerate the federal government’s commitment to the health and well-being of America’s middle-class families and retirees. 

Likewise, an approach that relies solely on revenue increases would punish American taxpayers and the businesses that employ them, further reducing American competitiveness in the global economy.

Because the reforms we need cannot be accomplished in the next few weeks alone, there needs to be a bipartisan deal that involves a two-step process. 

Congress should pass a bill immediately that would provide for a permanent extension of the expiring middle-class tax cuts. Let’s reintroduce all of the tax cuts for 98 percent of the American people while producing new revenue with the upper 2 percent paying a little more. All taxpayers with an adjusted gross income under $250,000 a year will get a tax cut. Let’s also cancel sequestration while passing a temporary extension of emergency unemployment benefits. 

When added to the spending caps already enacted in the Budget Control Act of 2010, these steps will reduce the deficit by more than $2 trillion — getting us about halfway to where we need to be. 

Now, that’s the first step. The second step will be more difficult, but in many ways it will be more important. As the new Congress convenes in January, let’s prepare and, in a civil and deliberative way, begin the process of really reforming our tax code. And let’s go about making more targeted spending cuts.

We need to roll up our sleeves and get down to the hard work of cleaning up our tax code. In order get the second $2 trillion in deficit savings that we need, Congress needs a clear timeline to act and expedited procedures to ensure the bill doesn’t get bottled up on the floor by special interests. 

Real tax reform would broaden the tax base, reduce tax rates, maintain fairness and contribute to the second round of deficit reduction. 

Whatever your political ideology, I believe we can agree that tax reform can be hammered out next year. By making the code more streamlined we can get rid of a lot of the underbrush and loopholes, as well as utilize that extra revenue to actually lower people’s rates. 

But, you can’t do that in the next few days. It will take some long deliberation, starting in the committee process of the Congress, to reform a very complicated tax code that’s gotten out of control.

And in that process, I believe, we need to wall off and protect tax incentives critical to middle-class families, such as the charitable giving, mortgage interest and retirement savings. 

So, for right now — before Dec. 31 — let’s postpone the sequester. Let’s reintroduce all of the tax cuts for 98 percent of the American people, and then let’s prepare to reform the tax code next year, when we also could go about cutting wasteful government spending.

Nelson is the senior U.S. senator from Florida and a member of the Senate Finance and Budget committees.