...And it could be bad. But then again, it could be good.
Two events will happen December 31, 2012, unless Congress takes action:
1. Tax cuts from the Bush-era will expire.
2. Government spending will be reduced will take effect.
President Bush signed tax cuts that were to end in 2011, but President Obama extended them to keep the government running through the 2012 Presidential election and expire January 1, 2013. This would return taxes back to 2001 rates. This could mean A LOT more to be paid in taxes...by everyone.
The fiscal cliff was a gun that the president and Congress pointed at their own heads, in order to force themselves to deal with the country’s longterm debt. That debt, accumulated mostly through defense spending and irresponsible tax cuts for the wealthy, has to be resolved in a responsible manner if the U.S. is to prosper as the economy recovers. Both that debt and the fiscal cliff that we now face are products of an absence of leadership in Washington. As the nation’s chief executive, the president has to spearhead the unwinding of the trap that he helped to create. Doing so in a way that preserve’s progressive values will be his charge. However difficult, it’s the only way to avoid a calamity.
The Fiscal Cliff - Everything You Need to Know
What does the Fiscal Cliff mean for you?
Campus Progress explains what this could mean for you, me, and everyone else:
Considering all that is included in the fiscal cliff, the expiration of the Bush Tax Cuts for the middle class, the end of the temporary, two percent reduction in payroll taxes that the Obama administration passed, and the expiration of the long term unemployment benefit extension, and it’s clear that this will have a major impact on middle class families. A tax increase would make it even harder for parents to send their kids to college and young graduates to get their feet on the ground and begin their own successful careers.
As if this wasn’t enough, the spending cuts from the sequestration will hit Medicare, the Federal Emergency Management Agency, and education funding just to name a few areas. Adding it all up, failure by Congress to act would mean taking about $800 billion out of the economy next year alone. Such a severe shock could send the economy back into a recession, driving unemployment back up and erasing so many of the gains middle class families have made over the last four years.
Young people should be especially concerned because this is the kind of economic event that would ripple across generations and only add to the hurdles Millennials already face in earning a college degree, achieving financial independence, and beginning a successful career. Taking a huge bit out of family incomes means that the constantly rising cost of college will be even more challenging for families to tackle and the 37 million borrowers that have had to take out student loans to pay for school will continue to grow even more.
Our elected leaders must understand the critical juncture the country is at and take swift and decisive steps to see that action is taken now. Americans want common sense tax reform that eases the burden faced by middle class families and requires the wealthy to pay their fair share is put in place and a firm commitment to continue investing in the vital programs that have helped so many families and young people to succeed.
Shortly, after re-election President Obama said...