We have (almost) fallen off the fiscal cliff, now what

Fiscal Cliff“Senators failed to find a compromise to avert year-end tax hikes and spending cuts.”

Well there is one day left, New Year’s Eve, for congress to avert the much sensationalized “fiscal cliff”.  It was put in place to like a poison pill, something so detrimental we would not even try to, no not even think about getting to that point.  It could almost be thought of like the doomsday clock.  If they do not come up with a deal then the major cuts will go in effect.  The economy is growing arguably between 1-3 percent.  If these cuts go in effect it may drop the growth by let’s say 4% (for argument sake).  That would then make our growth negative.  This is something that would not be easy to get right back out of and there would likely be at least 2 quarters of negative growth.  By definition 2 quarters of negative GDP (Gross Domestic Product) growth is called a recession. By those standards going over the fiscal cliff will put us directly in recession. 

Now the “fiscal cliff” or as some may see its likeness to the doomsday clock, is a deterrent. Congress should (be all means necessary) find a deal that is best for the country and not personal goals and ulterior motives, to avoid the “fiscal cliff”.  The battle now is over tax cuts increasing the taxes for the upper 2% and entitlement reforms.  There is a major push to reduce taxes for the middle class which is being defined now as making under $250,000 a year. Democrats are trying to raise taxes on the top 2% of the outermost rich which also most likely have a very heavy influence on Congress for their own funding. Republicans do not want to raise the taxes on the upper 2% at all as they ran and got into office by stating no tax increases. Democrats are pushing for tax decrease below $250,000 in salary year and a tax increase for the rich. There is also a major push to reduce entitlement programs such as Medicare and Medicaid. The way these would be decreased is on the way they calculate the yearly increases which would affect slow down and decreased funding.

What a time to wait. We tell the European countries such as Greece they need to do austerity measures and the needs to be done right away. But in the United States we decide to hold back and kick the can down the road trying and deal with it at the very end of the year. Even that backfires as it is the end of the year with one day left and they still have yet to make a decision. Talks could’ve been going on this whole time but they waited until the very procrastinated. How to live in a credibility to tell other countries what to do when we don’t even do it ourselves. If this were a business and we couldn’t pass a budget the business would not last as there is no time to just kick it down the road. Half of congress’s job is to pass a budget and create legislation.  I feel people are too stubborn and focus on the own self-interest failing to put the United States public who they represent first. Now this may be tough as this may not get them reelected but do what is right and we don’t have time for this.

Now what may happen if we fall over the fiscal cliff? likely this means Congress can then pass laws lowering tax rates that they let increase so on the record it shows that they lowered taxes.

In the meantime our credibility has been tarnished, it does nothing to help the spread of democracy, and the American public suffers. Her credibility is been tarnished by us kicking the can down the road telling others how to do austerity measures we can impasse our own budget. What business can pass a budget and stay in business. We should be showing right now how democracy works for both sides can come together and find the best way for the people. Though the American public has suffered as a stock market has gone down lowering and hurting our 401(k) retirement accounts, businesses have held off on hiring, and her future is once again up in the air.

I challenge Congress to stand up for what’s right, represent the people, come together and do your job.

 


via Blame bandied about for lack of ‘fiscal cliff’ deal  and http://www.businessweek.com/articles/2012-12-20/strap-in-were-heading-over-the-fiscal-cliff