Byline: William M. Isaac and Richard M. Kovacevich , SPECIAL TO THE WASHINGTON TIMES
If Congress and the Obama administration don't reach an agreement before year's end, income tax rates will increase automatically for every taxpayer, defense spending will be slashed, and other federal spending will be cut across the board. This could push the United States back into recession and increase unemployment from its already too-high level.
The most obvious way to get something done quickly to avert this crisis is to begin with approaches that already have received significant bipartisan support. The Republican leadership of the House of Representatives took a bold step on Dec. 3 when it announced its support for a plan advocated by Erskine Bowles.
Mr. Bowles, former chief of staff to President Clinton, was co-chairman of the Simpson-Bowles Commission, established by President Obama to address the fiscal crisis. The Bowles plan would pare the deficit by $2.2 trillion over 10 years through increased revenue, reduced expenditures and reforms to Social Security and Medicare. The total deficit reduction would be $4.6 trillion over 10 years, counting expense reductions enacted last year and the reduced cost of wars in Iraq and Afghanistan.
As part of any fiscal cliff legislation, we also should allow companies to bring back to the United States the $1.5 trillion in accumulated profits from foreign operations now residing overseas, by paying a 10 percent surtax. This would raise $150 billion in revenue to reduce the deficit and would enable those firms to use the money to invest and create more jobs in the United States.
To remove the uncertainty that is inhibiting investment and employment, the fiscal-cliff legislation should include a commitment not to increase taxes, other than comprehensive tax reform, or to pass additional regulations or to impose additional costs on businesses that materially impact jobs until unemployment falls below 6 percent.
All of these programs and ideas have had bipartisan support at one time or another. They are common-sense initiatives and should be passed before year's end.
Finally, we should create a bipartisan commission on economic growth charged with recommending what needs to be done and what conditions need to exist to cause our economy to grow at a 3 percent to 4 percent rate instead of the current 2 percent rate. A higher growth rate in gross domestic product (GDP) is essential for bringing unemployment back below 6 percent. …