Clock Is Ticking for Fiscal Cliff; Congress Must End Economic Status Quo

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Byline: Steve Forbes, SPECIAL TO THE WASHINGTON TIMES

We all know the clock is ticking on the fiscal cliff. In a few weeks, tax increases of more than $500 billion will take effect alongside the first of $1.2 trillion in automatic spending cuts unless President Obama and congressional leaders are able to strike a compromise during the lame-duck session.

Recent economic data also point to a worrying first quarter if Congress fails to lift the uncertainty caused by the cliff. The American public may have voted for a status quo in the organization of Washington, but they did not vote for a status-quo economy.

The blunt truth is that while many have been critical of Congress' propensity to kick the can, we simply no longer have time to wait for a long-term deal. Instead, Congress must use the lame-duck session to put in place an extension of the current individual tax rates in order to buy time for a more comprehensive tax reform package in 2013. With an extension secured, Congress and the administration could turn to healing the immediate economic ills.

First, uncertainty in the private sector over taxes and government policy clearly is having an impact on business' ability to invest in the United States. Business investment is lagging - bad news for growth next year. Long-term high unemployment coupled with the acute need to rebuild in New York and New Jersey after Hurricane Sandy create a strong case for the extension of the current 50 percent business-expensing provision, which will expire Dec. 31. Congress and the president also could increase the rate to 100 percent, as they did successfully in 2010. Such a provision would encourage the private sector to invest in earnest in 2013 and provide a much-needed economic boost.

On the individual side, in addition to extending the current personal income tax rates until tax reform can be achieved in 2013, Congress must enact another patch to the alternative minimum tax. …