E-mail updates
Follow on Twitter
Subscribe to RSSAs others have pointed out, the so-called fiscal cliff maybe isn't the best metaphor to use in describing the current debate over the looming tax increases and spending cuts set to take place in the new year.
After all, when you jump off a cliff, you usually don't live to tell about it.
But that isn't necessarily the case in this debate. If tax rates go up and spending cuts go into effect after Dec. 31, Congress always has the ability to fix things retroactively at a later date.
Perhaps a better metaphor to use is the deadline for midterm paper -- you might fail your class or flunk out of school if you don't complete the paper on time, or you could successfully negotiate to turn it in a later date, or you could do other things to boost your grades and standing in school.
Another metaphor is the deadline for a collective-bargaining agreement in professional sports -- having the contract expire could mean the end to the football or hockey season, or the principals could eventually reach a deal (even if that means a shortened season).
So what happens -- and what doesn't -- if Congress, as it increasingly appears, fails to reach a fiscal deal before the new year?
On Christmas, the New York Times ran a good summary:
Some hits — like a two percentage point increase in payroll taxes and the end of unemployment benefits for more than two million jobless Americans — would be felt right away. But other effects, like tens of billions in automatic spending cuts, to include both military and other programs, would be spread out between now and the end of the 2013 fiscal year in September. These could quickly be reversed if a compromise is found.
Similarly, the expiration of Bush-era tax cuts on Jan. 1 would not have a major impact on consumers if Congress quickly agreed to extend them for all but the wealthiest Americans in early 2013, as is widely expected.
Other probable changes, like a jump in taxes on capital gains and dividends, would most likely be felt over a broader period rather than as an immediate blow to the economy.
So the world doesn't come to an end on Jan. 2 or Jan. 3. But the question will turn to: What does Congress and the Obama White House do to fix things and limit the damage?
Leave a Comment:
Boehner at least had a plan. Better than Obama.Obamas plan: tax the rich, blame it on the senate, blame Bush,blame on the japanese earthquake, blame on sandy.etc. etc.Get the problems fixed quit BLAMING!!!!!!!
Poor. demonbone
Can you see the end of 16.3 trillion or 22.? trillion or the unfunded liability of the projected future?
The spending spree the government has been on for the past 12 years is NOT sustainable... it is the definition of insanity incarnate in evil.
At this point we borrow .46 cents of every dollar spent we now have more debt than our anual GDP this will not do. Raising taxes will contract the economy even further. Where in the world have you seen supply side economics sustain the entire populace in the long run. Hell, I suppose they can eat cake 4ward. While the ruling class sits on their laurels trying to find a way to push the blame off on the other guys "ridiculous politicians from the top down, not a statesman among the entire lot. Mark my words correctly the day of reckoning is growing neigh.
Capitalism has sustained this country Even through the times it has been subjected to the "mad science" of liberalistic/progressive socialism. American innovation rooted in exceptional growth of the private sector was exemplified with. President Regan's policies coupled with American ingenuity, this helped fuel a robust economy, Even until the burst of the housing bubble. Your guy, President Clinton merely rode the wave started by POTUS 40 combined with the technological advancements of the times we lived through, And your Pres. WJC was not responsible for the Budget surplus, congress forced his hand he merely takes credit for it.
Does it not bother you that Command communism ideology does not work for the common man, rather only propagates a ruling class on the backs of the downtrodden. see USSR, see China until they applied Capitalism. See the poor in N.Korea eating tree bark and not because it's a delectable, rather they are starving at the behest of a tyrannical dictator. Watch for yourself, How the so called progressive policies in this country destroying the Californian economy will be your lip-nus test, sparking Exodus & decline. Illinois a model for Wrath and waste, Detroit a ghost town that may actually be saved By Governor Schneider.
Pay Attention closely demo, it will be interesting to see how the test of time plays out 4ward...
Btw You will have to excuse me for the time lapse in my response. I was in the engine room below deck 12 cylinder man diesels require attention sometimes, even by the owner
Bush tax cuts were suppose to expire in 10 years. We're now at 12 years. let the friggin thing expire and then Congress can do a plan or not.
For those who don't want to pay more in taxes and only want the rich to cover there butts with gov't services,what a sad state of affairs. Obama has you all convinced that the rich don't pay their fair share. Really? You believe that or you want to believe that. Most of you no longer pay taxes at all. And because the majority of middle and low class people vote to have the rich pick up more of the expenses, that's it.
Do any of you think maybe it won't work, that maybe the rich will move assets to other places?
No,after reading a lot about this,this is basically whats going to happen.The fiscal clock will be rolled back to 1997 in essence,before GW and at a time where the federal govt was somewhat fiscally responsible.Yea it'll be painful I am not saying it wont be for a lot of people but it is what has to happen and I get a gut feeling both partisan sides know this but are not coming out and saying it to the public.
John I am looking right now at my year end pay stub.I made just under 30.I paid 4162.2 in federal taxes.About 16%.Multiply me by 120 million people because I am the average middle class worker.That comes out to roughly $500 billion dollars John.You do NOT pay the majority.YOu pay about a third of what we do(Mitt's 13% rate?C'maaan)Not by a long shot.I will get a refund of about $1200 but adjusting for differences in incomes it still works out to be about that much.so DO NOT say we do not pay any taxes anymore.We do.And a lot.That is quite facetious of you to say so..
Does that 16% include FICA??!! It probably does since the average person earning $50,000-100,000 pays 7.7% in federal income taxes. Up to $50,000 it is about 4.4%.
What spending cuts have Reid and Sambo offered?
Blame congress but none of the a$$ clowns are worth
a snot filled kleenex...........
You know Desoto the sad thing is we really can only blame ourselves for electing these idiots in the 1st place.They are good con artists indeed...
Dave - the problem is we only have 2 sets of con men to choose from. A 3rd in the running might force the others into another level of competition where honesty can be rewarded.
As far as moving assets to other places,you are most free to do so..so long as you do not spend them here without paying your fair share in taxes.See people reproduce John.We can make more people like you.Go off to Monaco or the Caymans and spend your ill gotten gains there if it makes you feel better.We do not need you.
Don't limit the damage. The most recent election showed that the people of America who have enough sense to vote had enough sense to vote by more than 50% for President Obama. He should stand his ground, Reducing benefits for the poor and elderly is not the answer. Let everyone pay! Particularly the rich and the military.
The top 1% already pays 38% of all federal income taxes and the top 2% pays roughly 50%! So who will support your a@@ if the top 2% leaves??!!
And Dave Ill gotten gains?! I earned mine and I feel a large dose of jealousy! You should put the blame for your lack of success where it belongs, on you not "the wealthy"!!!
Yes 4ward, do lets, better yet let us just confiscate all the wealth of all people in the country your mine & ours everybody, put President Obama in charge directly of everything we own if I can swing it I would like to be in charge of the bureau of bar-code tattoos. You my 4ward thing fiend can be in charge of the foilhat division of the bureau of Thought control Let us re-distribute it all fairly and evenly, Perhaps we can all propagate this socialist utopia till the end of time and beyond...
BTW, You will be expected to wear the big red nose & the floppy shoes 4ward ho ho ho "Happy New Year!"
Wow! Yoour paranoia is reaching dangerous levels, take an aspirin.
If there is one good thing about the fiscal cliff, which is anything but, is that the Pentagon will have its budget reduced and they won't be able to spend billions of tax dollars in new toys that are never used, they will have to check the corruption and the bloated expenses, they won't be able to "lose" ten billions dollars in cash while being flown on pallets to some unknown destination.
Then, hopefuly, they will have to give account of every penny they request with the excuse of "defending" the country at the same time that they make plans to invade or bomb another country to test their new toys. They have more than enough for the defense of the United States for the next ten years.
Questions for all the Dems. If we have negative repercussions from going off the fiscal cliff and Repubs catch the blame, would you consider that a victory?
Anything that helps this country is a victory, you partisan fool.
People like you are the reason nothing gets done.
If it's not really a good metaphor, Mr. Murray, then why have you and your "if it bleeds, it leads" ilk used it to the point of absurdity?
If it never really was a fiscal cliff all along, then why did you and others shamelessly use it to grab headlines?
Here's a radical thought - cough up some journalistic integrity and stop the fear mongering.
More loser journalism from NBCNews.com.
No John, the Repugnicans will consider it a defeat of their demented agenda of protecting the rich from paying their FAIR SHARE of taxes. If I pay 20% in taxes they should also.
My dog understand this, but not the GOP.
Always amusing when people paying 85% of all taxes are asked to pay their "fair share" by people paying 0% of the taxes.
Yeah, Rasputum, if you paid any taxes, we'd consider that a victory. Are we paying for your dog, too? At least he's worth it.
Rasputin The average paid by the top 1% is 24+%! I'ii bet you don't pay 20% in federal income taxes. Look at you last tax return! You are probably including SS and Medicare taxes to get to 20%.
The problem with this whole thing is the Tea Party Republicans, Cantor, Bachman, Boehner and all of his little @ss kissing cronies on the right.
So...Obama has been the "president" for 4 years, but you admit the Tea Party is still in charge?
What a brilliant piece of investigative journalism! I couldn't have said less myself!
You just did.
Chicken Little comes to mind when I here all these talking heads, and these worthless politicians that claim to be American Patriots, now that is a laugh.
I'll bet you hear the talking heads.
Our Countries Leaders are lost. Don't expect it to get better since we have taken the most important part out of our decision making. When we don't seek guidance from our maker, we will suffer. What our Founding Fathers feared has come to be in today's America. Research what this Country was founded on in our leaders writings and you will see the opposite in today's America. I'm sure someone who is close minded will respond with something negitive and your post will be part of what proves my point. God bless our Country, we can't do ourselves, just look at the evidence in front of us.
The fiscal cliff is a device cococted by the last Congress to force the American government to address the huge Federal deficit. In the last Congress, both parties agreed to the formation of the fiscal cliff as a condition and a compromise for increasing the national debt ceiling. Essentially, the fiscal cliff is the solution rather than the problem to America's borrow-and-spend addiction.
America should welcome the fiscal cliff. It is the only way to cure the ill economy caused by Big Government's borrow-and-spend disease. Fiscal cliff would force a reduction in the size of Big Government, cut government spending and halt the run-away borrowing cost. In the long run going over the fiscal cliff will allow American taxpayers to pay less tax to a smaller government while the economy improves.
Who cares lets go off
The fiscal 'cliff' is a phony emergency designed by the Dems to try to steal TRILLION of $$$ of OUR money. Oh, and the power grab by Barry with regards to the debt ceiling: unheard of. It's the Dems that have been disingenuous about this 'crisis'. Obamacare is built upon a complete lie - and it's the Dems (and especially Obama, Reid and Pelosi) that haven't passed a budget for over 4 years.
So, answer me this: why is THIS $500 billion so much more important than any other $500 billion in spending, taxes, etc? In a $27 trillion economy such as ours, we're talking 1/54th of our GDP. No, this is an artificial crisis created so Congress and their cronies can suck up more of OUR money. Just like they did with TARP, QE1, QE1, QE3, ad nauseum. It is time to stop this madness. We simply can't spend our way out to prosperity - but that is not stopping Barry and the Dems from wanting to create even larger deficits and kicking the can down the road for someone else to deal with the huge debt.
We MUST stop the profligate spending sometime - and now is as good a time as any. There are over $250 billion in new taxes taking effect due to Obamacare on Jan 1, 2013: when is it ever enough spending for you socialists? Barry is dipping in your pocket - it's just that he asked you to look the other way while he did so and you libs fell for it. (And Obama is just another elected person like any other of our politicians. He is not a king, potentate, etc.)
Here's the truth the libs don't want you to know: Jan 1, 2013, there are a huge # of new taxes coming due to ObamaCare - and 7 of them negatively impact the middle class. Fact is, Obama lied to you. With all the new taxes taking effect, growth in the economy will be impeded and jobs will be lost.
Obamacare and New Taxes: Destroying Jobs and the Economy
http://www.heritage.org/research/reports/2011/01/obamacare-and-new-taxes-destroying-jobs-and-the-economy
Starting next year, five new tax increases will begin to raise $258.2 billion in new revenue over seven years. (So all this posturing by the the Barry and the Dems about increasing taxes on the wealthy - they already have. (And the word revenue in the above sentence is $258.2 billion of OUR money that is being confiscated by Washington: I despise taxes being called revenue. Governments make nothing, create nothing, and are very inefficient. It is private companies that have revenues based on creating a product or service that is sold, with the intent of creating jobs and, hopefully for those taking the risk, a profit.)
The top tax rates on capital gains and dividends will jump from 15% to 18.8%. The 3.8% surtax on unearned income (income earned through interest, rents, dividends, annuities, royalties, etc.) will only fall on the wealthiest two percent: households making at least $250,000, or individuals making more than $200,000. The 3.8% surtax is a big adjustment, but the current 15% tax rate is the lowest it's been since World War II. If Congress allows the 2003 Bush tax rates to expire, the top rate on capital gains will rise to 23.8%, and the top rate on dividends will leap to 43.4%
Read more: http://swampland.time.com/2012/12/07/5-new-obamacare-taxes-coming-in-2013/#ixzz2Eauo65CT
A new tax will charge the wealthy to help pay for Medicare's hospital insurance. There will be an additional 0.9% tax on earned income in excess of $250,000 for families and $200,000 for individuals to help pay for Medicare Part A, which covers hospital stays, nursing facilities, and hospice care. In addition to the 3.8% surtax, the hospital insurance tax will raise $20.5 billion in new revenue next year, and $210 billion over the next seven. (I hate how we have become so inoculated to the way the thieves in Washington (in fact, all politicians) use the word 'revenue' for taxes. Revenue my arse: this is MY money not yours.)
Obama is a job killer not a job creator - and Obamacare will bankrupt us.
"This week, the Internal Revenue Service outlined which medical supplies and technologies will be subject to a tax. Now, everything from latex gloves to pacemakers will become more expensive and in some cases, more scarce," Rep. Tom Price, R-Ga., said in a statement. "The tax on medical devices harms America's ability to conduct the necessary research and development to maintain our global competitiveness, resulting in the loss of tens of thousands of jobs and fewer groundbreaking innovations in this field. With millions of Americans unemployed, this simply makes no sense."
The Affordable Care Act imposed the 2.3 percent tax on medical devices with the goal of raising nearly $30 billion over the next decade.
Equipment makers, though, argue that the tax ends up being much higher than that since it's on gross sales. One industry spokesman estimated earlier this year that the impact on actual earnings is more like 15 percent.
Already, some have warned that the tax will stifle growth. Indiana-based Cook Medical earlier this year announced it was scrapping plans to open five new plants because of the tax.
The Republican-controlled House voted over the summer to repeal the tax, but the Senate never took it up. (Naturally the Dem-controlled Senate didn't want to repeal something that would dilute their thievery of someone elses necessary revenue.)
Medical bills for their pets may go up as well. According to a rule published Friday by the Internal Revenue Service, some medical devices used in veterinary practices will be hit by Obamacare's 2.3 percent device tax. Many of their manufacturers are expected to hike prices, meaning higher veterinary costs for the nation's pet owners.
Ethanol Tax. In 2010, Obamacare excluded ethanol from the existing cellulosic biofuel producer tax credit. This will hike taxes $24 billion from 2010–2019.
Reducing Medical Deductions. In 2013, Obamacare raises the floor on itemized medical deductions from 7.5 percent of adjusted gross income to 10 percent, meaning Americans must spend 2.5 percent more of their income before they get a medical deduction, costing $15 billion from 2013 to 2019. (So, if you're really sick, Obama will stick it to you even further.)
Prescription Drug Fees. Since 2011, Obamacare has put an annual fee on manufacturers and importers of branded drugs based on each individual company's share of the total market. Between 2011 and 2019, this will amount to a $27 billion tax increase.
Hospital Insurance Tax. Beginning in 2013, Obamacare increases the Hospital Insurance (HI) portion of the payroll tax from 2.9 percent to 3.8 percent for families earning more than $250,000 a year and for single filers earning more than $200,000 annually. The increased HI tax is also applied to investment income for the first time. The 3.8 percent surtax on investment income is the most economically damaging tax in Obamacare. And these tax increases won't remain just on families making more than $250,000 a year for long. As the JEC explains, this tax is not indexed to inflation: "This means that in just 10 years from now, the so-called 'high-income' thresholds will have effectively ratcheted down to $152,000 and $190,000 in today's dollars." This tax increase amounts to $210 billion between 2013 and 2019.
http://blog.heritage.org/2012/04/18/top-10-most-expensive-obamacare-taxes-and-fees/
"Cadillac" Tax. In 2018, Obamacare puts a new 40 percent excise tax on "Cadillac" health plans, meaning plans that cost more than $10,200 for an individual and $27,500 for families. However, this tax is not indexed to medical inflation, causing it to eventually tax "Honda" plans at this rate as well. The JEC points out that "[t]he bulk of revenues from the 'Cadillac' tax would not be paid by platinum health insurance plans, but rather by employees who are forced to exchange tax-free health insurance benefits for taxable wages after employers reduce or eliminate health insurance." This tax amounts to $32 billion in higher taxes in the first two years of its implementation.
Impact:
As a result, the tax hikes in PPACA will slow economic growth, reduce employment, and suppress wages. These economy-slowing policies could not come at a worse time. PPACA tax increases will impede an already staggering recovery. (And this is ALL on the Dems and Obama.)
They Will Slow Economic Growth and Destroy Jobs . Taxes transfer money from productive private hands to the less efficient public sector. A politicized allocation is less efficient than market-based allocation because political decisions do not consider the highest-value use of resources, while the private sector considers such issues and therefore does a better job of assigning resources where they will contribute the most to economic growth.
They Will Discourage Work and Savings. Congress must levy high tax rates to take more Americans' money, and this has a number of negative implications. Higher tax rates decrease the incentives for individuals to work and save more, both of which are essential for economic growth. Additionally, high rates discourage individuals from working harder and saving larger portions of what they earn. Combined, these two effects impede economic growth and reduce the number of jobs that businesses would have created had tax rates been lower.
They Will Not Reduce Deficits. Higher taxes never close budget deficits because, in the short run, Congress will spend all of the extra revenue it receives from higher taxes. Congress always spends every dollar of tax revenue it raises and however much it can borrow from credit markets. In the long run, the extra revenue will dissipate as individuals adjust their behavior to minimize their tax liability. The only way to close deficits is to cut spending and align it with how much revenue the tax code typically raises.
Best idea: let's go over the cliff and vote out everyone in Congress.
"vote out everyone in Congress"
Great idea. Let's fire anyone with experience, skill, and knowledge of how to get things done, and replace them with unskilled, uneducated yahoos with no experience, purchased cheap by Koch et al. They can just sit there and do nothing until Grover tells them how and when to vote, just like the first herd of newbies did. That's working great so far - nothing is getting done, right on schedule.
You really want to cut spending? Close deficits? Shutter the TSA and end that huge welfare program, followed by a 50% reduction in our empire-building military, along with most of the military bases around the world. The savings from those moves alone would put this country back into the black overnight.
Boehner is only following POTUS Grover Norquist orders.
Grover is the new: "Simon Says"
I hope all you "burn baby burn" people remember to thank the GOP come tax time. Oh that's right you can't file taxes until this is done. Payroll depts. will be working overtime to fix the mess, but thats ok stores will still be open to pick up that 8.00 gallon of milk.
There will be consequences to this mess that has been created to allow the tea party to say "I didnt raise taxes". So as you watch your 401k's tank, remember to thank your GOP.
What happens? Who cares? The political elite is like the business elite, they have golden parachutes and they won't feel a thing.
The really permanent damage is to the reputation of the Republican party as a party that can govern.
Sequestration was agreed to by BOTH parties in order to balance spending VS cuts. The deal is done. Politicians are likes kids in a game where one side decides it does not like the rules of the game and calls "do overs". Either play by the rules or go home. Whiners all.
I am so sick of everyone blaming the repubs. This article finally points out that what is happening is not a big deal but boy the dems wanted to make it the biggest thing world like we are all going in to the poor house or whatever and you drones just followed right along with them. Let the taxes go back the way they were then you dumb ass libs can't keep blaming everything on the Bush tax cuts which your beloved leader odumbo did nothing about when he had the chance. Let the spending cuts take hold and maybe some of you slugs living off the government will have to find out what working for a living is all about. Oh I am sure you stupid libbers will keep right on blaming the repubs but when your admin ends up spending all the additional revenues they get on BS and don't do anything to counter the spending cuts that affect you personally just remember the dems are the only ones who are able to do that so suffer like the rest of us. As the article says this is not the end of the world--they tell you this now because the dems don't want to fix it either---but just a few weeks ago this was the worst thing that could ever happen it was going to collapse the whole world economy. What a bunch of low-life self serving liberal dickheads these reporters are.