Sequestration—the scheduled spending reductions connected to the Jan. 1 "fiscal cliff" deadline—could hit Northern Virginia’s economy particularly hard.
But for now, Virginia’s senators can just sit tight and wait for a call to vote on a deal before the New Year.
On Jan. 1, a series of tax increases and spending reductions kick in automatically—an event some have termed going over the "fiscal cliff." Some economists and politicians are concerned the combined effect will send the United States back into a recession.
“I think there’s unfortunately only going to be a small deal,” Warner said. “… We have to realize it’s going to take revenues, spending cuts and entitlement reform.” Any deal lower than about $4 trillion is "kicking the can down the road." (See video of his interview here.)
Warner was part of the original “Gang of Six” senators working to broker a deal to reduce the federal debt and raise revenue in 2011 and 2012. The last meeting of that group (joined by two additional senators to create a "Gang of Eight") was at George Washington’s Mount Vernon Estate in October.
In September, Warner spoke in Alexandria and suggested looking at military pay and health care as areas to cut spending, while admitting neither idea was popular. At the time, he called sequestration a "blunt instrument."
Sen.-elect Tim Kaine, who will take office in January, is likely to face the fiscal cliff or the predicted fallout from going over it as one of his first issues.
In early December, Kaine expressed optimism that Republicans and Democrats would come together and find a solution under deadline pressure.
Kaine told a Roanoke television station that he is going to Congress with three priorities: “tackling the nation's budget problems, accelerating the economy and searching for the common ground that used to exist between Democrats and Republicans in the Senate.”
Kaine campaigned on his history of working across the aisle with Republicans, and his official website says, “The biggest problem with our politics is that Congressional leaders don’t seek common ground to find solutions at a challenging time.”
Webb was the only Senate Democrat to vote against both Democrat and Republican-proposed income tax increases in July 2012. In a statement after that vote, Webb said he supports higher taxes if they are the right kind—taxes on “passive” income instead of earned income.
“My long belief has been that if we are going to raise taxes on income, that we ought to be doing so in the fairest place, and the fairest place is from passive income not earned income. Two-thirds of the money that is being made by the top 0.1 percent in this country—that’s 140,000 taxpayers—is being made from passive income. Capital gains and dividends are taxed at 15 percent, a much lower rate than ordinary income,” Webb’s statement said.
Republican Speaker of the House John Boehner (Ohio) has asked House members to return to work on Sunday—less than 48 hours before the fiscal cliff deadline. It is not clear if House members will have anything on which to vote before Jan. 1.
Fairfax Officials: Sequestration Would Impact Budget by Spring (December)
Rep. Moran: Sequestration Hinges on Outcome of Presidential Election (November)
McDonnell Warns of Looming Sequestration Cuts (October)
Kaine Talks Sequestration with Defense Contractors (August)
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