As we enter the final month of 2012 we inch ever closer the âfiscal cliffâ conundrum that Congress and President Obama will have to face. The Congressional Budget Office (CBO) anticipates that the fiscal cliff will lead to a recession and a jump in the jobless rate to 9.1% by the end of 2013. If a deal were to be made to avoid the fiscal cliff it would lead to an additional $503 billion in budget deficits according to the CBO. President Obama plans to deal with this deficit by increasing the tax on Americans who earn more than $250,000 annually. Currently the two percent of citizens who fall in this range pay 43.6% (as of 2008) of all personal federal income taxes, a fair share in my eyes. This also doesnât take into account the philanthropic efforts which many of these people participate. The tax increase that is being proposed would yield $30-$40 billion in additional revenue which hardly alleviates the current budget deficit. For those who still believe there should be an increase in taxes for individuals in the one percent an argument that is commonly used is that many of these âone percentersâ inherited their wealth and didnât earn it themselves. This, quite frankly, is ludicrous. The Harrison Group, a well-respected strategic marketing consulting and research services firm, has determined that 85% of the âone percentersâ accumulated their wealth during their lifetime and only 3% of their total assets came as of inheritance. In essence the Fiscal Cliff is the automatic legal trigger will make spending cuts and tax increases that will lead to decreased deficit in 2013. If this legal trigger occurs it is estimated that the budget deficit will shrink from over $1.1 trillion to about $641 billion. Of the $607 billion that will be eliminated from the deficit the largest portion of that ($221 billion) would come from an increase in individual income taxes beginning in the 2013 calendar year. Many people, especially those in the one percent, are very concerned about the cliff and the potential tax hikes. Due to the re-election of President Obama it is likely he will propose new bills focused on tax cuts if we do go over the supposed cliff. About the Author: 20 year old student attending University of Connecticut. Graduating Class 2014. Pursuing Bachelor of Arts Degree in Economics including Quantitative Certificate with a Geography minor. Born and raised in Weston, CT.
Barrack Obama does not intend to deal with the deficit. He intends to neuter the republicans. The people most concerned with the coming demise of the Bush tax cuts are those below the so called millionaires lower limit that do pay taxes.
Every one, rich or top 1%, middle class and even poor should chip in more towards facing off the debt crisis. HOWEVER! this only at a condition that politicians do also play by the ethics and not squander away the extra revenues. Rich can pay more because they can well afford to and not starve. Rest can pay more because they would learn how to manage matters better. This is US not some third world nation where people live off $1 or 2 a day. Look around and find easy savings for only very little extra effort or self control.
It's anybody's guess if an agreement will be reached in December or not. I tend to think it will, but it is far from certain. If an agreement is not reached in December, you can bet that when one is reached in January or early February, everything will be made retroactive. Thus, although there is a possibility of a lower GDP in December/January, it will be made up for with larger spending in February and beyond when the agreement is reached and made retroactive.
Hunter, there is no fiscal 'cliff.' It was a stupid metaphor made up by our Ivy League lobotamized Fed Chairman in testimony, and it was adopted by morons posing as reporters in our comic book media...and now you are summerizing their definitions and observations of a propaganda slogan... in college? Is there a better picture of how dumbed down our society has become? Look, the truth is that the U.S. has been wandering around in a 'fiscal DESERT' for six years now. We are starving to death and dying of thirst from no investment in U.S. domestic assets. None of the recently promoted solutions or plans for agreements will encourage any new investment, so they are meaningless outside the funny pages. What is geography all about; will you get to draw the new maps of the Middle East?
A set of recent economic reports appears to present contradictory assessments of consumer perceptions about the economic climate. However, taken together, maybe they just underscore the economic uncertainty and confusion that is so understandable at the moment of political brinksmanship.