'Taxmageddon'--really?

• Position: Editorial

Call it "taxmageddon" (as coined by congressional aides in The Washington Post), or "going over a financial cliff," (as expressed by Federal Reserve Chairman Ben Bernanke), but come Jan. 1, 2013, the fact is: if Congress doesn't act on several key tax issues, get set for monumental tax increases and budget cuts along with deficit spending.

Here are just a few of the historic deadlines begging for legislative action before year-end: the 2001 and 2003 tax cuts are expiring, as is the 2 percent unemployment tax cut; the items known as "tax extenders" are up for renewal; death taxes as well as dividend and capital gains taxes will rise; and Congress will yet again face the prospect of raising the nation's debt ceiling.

Additionally, starting Jan. 1, certain costs associated with Obama's health reform kick in and the Defense Department could face enormous cuts through the budget-cutting measure known as sequestration.

The Heritage Foundation's 2012 Federal Budget in Pictures series highlights the "watershed year" that will raise tax revenue levels to a "staggering 20 percent of the economy." Emily Goff, a Heritage researcher and coauthor of the series explains: "While past presidents have overseen deficits that historically averaged about 2 percent of the economy, President Obama has run deficits averaging at 8.3 percent of the gross domestic product."

David Leonhardt wrote in The New York Times in April that leaders of both parties say they are opposed to letting the changes happen on Jan. 1, and "economists are also frightened of what such a sharp shift in government policy might do to a still fragile economy." So, what's the problem? The two parties cannot agree on what changes should take place and that combination--of political stalemate and potential economy cataclysm--could create an extraordinary period after the election when a lame-duck Congress will have...