What is the "fiscal cliff"?
I recently found out that I get cable for free in my apartment, so I hooked it up, and all I've heard for the past few days is the "fiscal cliff". I'm assuming they're talking about whenever the automatic "cuts" go into effect, but why are they calling it a cliff? Nothing is really going to change is it?
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Originally Posted by jllundqu
It's just their way of scaring people into thinking we need more taxation and higher debt ceilings. You know, because those are the things that keep us off the cliff.
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It's when automatic spending cuts and expiration of the Bush tax cuts go into effect next year due to the Gov't inability to do anything on their own. It's also called sequestration.
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It was the deal they cut to kick the can down the road and raise the debt ceiling last time. Because they could not reach a compromise budget, certain spending cuts and tax increses will go into effect automatically.
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It is when taxes go up , unemployment goes up , stocks go down , social security tax goes up 2 %, holiday spending is over , temp holiday jobs are gone , no growth in the economy, the real layoffs start.
Oh, yes , there will be changes , most of which , most , will not like .
Basically the budget is going to be balanced automatically, with tax increases and huge spending cuts. The debate is whether the government can get it together in time to stop it happening.
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This weekend is still a good time to prepare for this impending disaster as gold and silver didn't go up that much this week (a lot of us said last weekend that it was the time to buy some PMs and if this week was any indicator we were right) their corrections are over and I smell a very good month coming for both.
Last edited by NoOneButPaul; 11-10-2012 at 01:04 AM.
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Exactly. And (of course) they somehow fail to mention that it's those things that created the cliff in the first place. Imagine that.It's just their way of scaring people into thinking we need more taxation and higher debt ceilings. You know, because those are the things that keep us off the cliff.
Frederic Bastiat
When law and morality are in contradiction to each other, the citizen finds himself in the cruel alternative of either losing his moral sense, or of losing his respect for the law. - The Law Government is that great fiction, through which everybody endeavors to live at the expense of everybody else. - Government
The fiscal cliff is something painful that our economy unfortunately needs.
On January 1, 2013, the Bush tax cuts, which were extended by bipartisan agreement in 2011, will expire. Federal taxes will rise. They will then immediately revert to the taxes we had at the tail end of the Clinton presidency. If no agreement is reached to postpone the end of the Bush tax cuts, the fiscal cliff kicks in on New Year’s Day as we will also have automatic spending cuts.
This will be painful because American taxpayers will see their tax burdens increase and their deductibles decrease. The Tax Policy Center (TPC), a joint project of the Urban Institute and the Brookings Institution, estimates that the toll on US households will average $3,500. We will see our after-tax purchasing power lowered.
More details, also according to the TPC:
- households with incomes between $108,226 and $143,000 will be taxed an extra $6,359.
- households with incomes below $20,113 will be taxed an extra $412.
- The marriage penalty will return on 1/1/2013.
- The child tax credit will be halved (from $1,000 to $500 per child).
- The two-percent payroll tax cuts, the earned income tax credit, and the childcare tax credit are some of the tax breaks scheduled to expire. As well, education tax credits, certain business deductions and credits, and deductions for state and local sales taxes are likewise slated to expire.
Technically, this windfall of new revenue for the federal government would help us reduce our huge annual deficit of over $1 trillion. But if the economy falls into a recession and unemployment rises, tax revenue will shrink, whereas money for unemployment compensation will have to be spent.
It will most definitely be very painful, but it is the right path – it is, as Peter Schiff said, “part of the solution.” We need lower government spending to make the economy improve.
Remember one thing though: if the Bush tax cuts do end after all on January 1, 2013, Obama can’t blame Bush as he has since he won his first term. It will all be on him.
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