Tax increases and spending cuts.
There has been a lot of talk lately about the fiscal cliff. The problem is most people do not know what it is. It is really quite simple, but it branches off into a variety of tangents that lead into a plethora of confusion.
Bush enacted tax breaks for America and Obama extended them. It was a way to save taxpayers from being vigorously taxed and preventing the cutting government programs. Midnight on 2012 may see the possible end of business taxes and the start of tax increases in combination with the advent of Obama’s healthcare taxes. The spending cuts agreed upon for the debt ceiling deal from two summers ago will also come into effect. Defense and Medicare are in line with a thousand other government programs to feel the blade first. In other words, there might be a hootenanny of political bloodshed.
- Let the chips fall where they may. There is a time to reap and a time to sow. It would most likely put a damper on the already unsteady climb out of recession. However, this option would take a full year to go into effect and Congress can retroactively change laws.
- Add to the deficit and call the whole thing off. Problems do not go away simply by ignoring them. Consider the debt ceiling that is the true problem in all of this.
- Come to a compromise and address these issues head on by figure out a plan to which both sides can agree. This is the best option, but we just came out of a divisive election and both sides do not want to appear weak by backing down. Plans have been publically rejected on both sides. Obama says any plan that does not raise taxes on the wealthy will be vetoed.
Key issue: How much can we tax the wealthy?
Pro: They have the funds.
Cons: If the wealthy are taxed to death, how long before they come after the middle class?
What do you think is going to happen? Which is the best option? Lastly, should I do a post on the debt ceiling?