Does anyone really understand the whole concept of this Fiscal Cliff? The way the media is constantly warning us about it you’d think there is a cliff that the nation is literally going off of come January 1st. But alas, no, it will just be a complicated mess of tax increases and spending cuts that our politicians can save us from if they just do their jobs.
Here’s the low-down. Taxes will increase on almost everyone, including most businesses. Bush-era tax cuts will be gone, and the little cut in payroll taxes we briefly enjoyed will also expire. Spending cuts will affect the majority of federal programs, even our military. $55 billion cut to our defense budget and another $55 billion in cuts to domestic programs.
The important thing to note is that there is no real cliff! If our politicians fail to make a deal, the economy will not crash on January 1st, as the media would have you believe. The consequences of the tax increases and spending cuts, a possible recession and a rise in unemployment, would take effect throughout the course of 2013, causing a gradual decline in the progress made since our economy tanked in 2008. But have no fear, if Congress just does what it should do when it reconvenes in January, all won’t be lost.
And the first thing it should do is let the Bush tax cuts expire for the super rich. Presently, the current Congress can’t seem to reach a deal, with each party “surprised” with what the other is offering. Republicans want drastic spending cuts to public services like Medicare, Medicaid and Social Security without levying any new taxes, once again favoring the rich over the well-being of the poor. We can’t balance the budget on the backs of the poor and middle class while giving the rich a free pass, everyone must pay their fair share.
Getting the budget balanced is important, and making sure the deal is fair is imperative. But this “cliff” that the media is reacting to is the result of coming down from the overcharged coverage of the election. This could be figured out this week, December 31st or even in January by the new Congress, and it won’t mean the end of the economy if it isn’t fully worked out. Congress created this fictional cliff, now it’s time for them to fix it.