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What is the Fiscal Cliff?

The Fiscal Cliff and what it means to hardworking Americans.

Unless Congress acts by January 1, 2013 the federal government will automatically increase taxes and decrease budgetary expenses.  This action will reduce the deficit, but unless it is done thoughtfully it will have potentially negative impacts upon the economy and could push the country back into recession. 

The first component of the Fiscal Cliff is increasing revenue for the Federal Government.  This revenue will come from the expiration of almost every tax reduction since 2001, the largest of which are the Bush-era tax cuts and the two-year temporary Payroll tax cut.  

The Numbers: 

On January 1st, 21.7 million households will see an average tax increase of $3,446. The average federal tax rate, including new taxes for the Affordable Care Act (ACA), would rise by 5% for all Americans.   Additionally, extended unemployment benefits will expire, the marriage penalty tax returns and the child tax credit will be cut in half from $1000 to $500.

 

As if these tax increases weren’t enough, there’s a second component of the Fiscal Cliff – sequestration.

The tax increases will be coupled with dramatic spending cuts, often referred to as sequestration.  Sequestration will result in over $1 trillion of cuts over nine years or annual cuts of $110 billion to domestic programs including Medicare and national defense.

The problem with sequestration is not necessarily the decrease in government expenditures, but howthe cuts are administered.  Implementation of sequestration is incredibly complex and the rules are often unclear or impractical. These factors, paired with an abrupt timeline for implementation, will not allow for effective management and will likely adversely impact the economy. The Bipartisan Policy Center estimates that the annual reduction in expenses is expected to slow GDP growth by half a percentage point and will cost more than $1 million jobs over a two-year period.  

As our country struggles to emerge from recession, it cannot afford indiscriminate cuts in spending and significant increases in taxes. Moving forward, we need leaders in Congress who are willing to work towards a sustainable bi-partisan budget solution.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

John B. Greet November 04, 2012 at 09:42 PM
Nevermind, Ruehle. It seems the pictures you saw fit to append to someone else's article have now been removed. I'm glad. Like so many other things you post, they were neither constructive nor conducive to civil or fact-based political discourse.
Watts November 05, 2012 at 01:57 AM
It is like his ad about kicking the can: http://www.youtube.com/watch?v=EvqOuHfZs_I I am not even going to get into how unoriginal the concept of the ad is, but where is the substance? Any substance? That has to be one of the worst ads that I have ever seen. If anybody saw that ad and it was the deciding factor that they used to support Delong, they need their head examined. That ad is almost goofy, as far as how little it says.
Nancy Wride November 05, 2012 at 02:09 AM
For future reference to any bloggers or if there is a lack of a comment box, another blogger pointed out that there is a choice for whether you the blogger want to allow comments or not, and that may have accidentally been checked by Gary or his staff. I can assure you I had nothing to do with it nor would notice so always feel free to flag me, readers. :D
John B. Greet November 05, 2012 at 02:16 AM
Not too dissimilar, to my mind, from Lowenthal's campaign claim of "bringing tens of thousands of jobs to our community and improving our roads, bridges, and public buildings." Which community? What jobs? The projects he lists that he claims to have championed are all government projects. What has he done, specifically, to stimulate job growth in the private sector? In your own words: "...where is the substance? Any substance?"
Mike Ruehle November 06, 2012 at 11:32 AM
This blog is similar to the campaign mailer DeLong sent to Vietnamese homes claiming Lowenthal supports communisim. "Gary DeLong reveals himself to be just another thug, trying to con people by stoking their fears so that he can pick their pockets." http://www.orangejuiceblog.com/2012/10/gary-delong-denies-being-a-climate-denier-but-embraces-his-inner-mccarthyite/

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