THE FISCAL CLIFF
In 2011, the Budget Control Act was passed, which dramatically increases taxes on the American people. The fiscal cliff, lately referred to as the “fiscal crisis,” is the problem that the U.S. government faces to prevent the substantial, automatic tax increases on the nation’s people that would result from the Budget Control Act.
At midnight on December 31, 2012, the laws concerning taxes will rid of the temporary payroll tax cuts, end specific tax breaks for businesses, increase the alternative minimum tax that all people pay, and the new taxes resulting from Obamacare will commence. This will make it harder for people to buy houses, cars, run their businesses, and a greater percentage of the money that every person makes will be given to the government.
In other words, no one wants us to fall of the “fiscal cliff.”
If no action is taken to prevent the looming fiscal cliff, it will result in a potentially devastating $500 billion in automatic tax rate increases and spending cuts on January 1, 2013.
THE LATEST DEVELOPMENT
This morning, during a conference at Capitol Hill, Speaker of the House, John Boehner told the press, “We have a spending problem, and we need to fix it. The idea that taxes will go up on every American is an idea that I do not agree with.“
Speaker John Boehner offered President Obama an economic plan that seemed like a major breakthrough: Republicans would agree to raise taxes (for the first time in decades), if the President agreed to reduce entitlement reform.
The potential grand bargain was one of the closest moments for Obama and Boehner to finally compromise, who have been attempting to create a deal to cut the deficit for the better part of the past two years.
Last night, the vote for the plan proposed by Boehner, which he named “Plan B,” was cancelled because of the tension between the two parties in the house — Democrats to not want to reduce entitlement programs, and Republicans do not want to raise taxes on any of the American people. Essentially, because of the disconnect between the parties and politics at play, it was a huge mess in Washington.
Now, the only significant chance for Americans to avoid substantial, automatic tax increases is for Obama and Boehner to return to the negotiating table and compromise on a deal that will gain the support of House Democrats and more moderate Republicans.
Boehner said during the news conference this morning that if they had to come back to the bargaining table after Christmas, then they will do whatever it takes. “We do not agree on everything, but we have to do something better for the people and families of America,” remarked Boehner.
Boehner stressed the idea that at some point Washington is going to have to do something about the spending problem, and the only way to do that is to promote real economic growth, by decreasing the amount of of entitlement programs and increasing the amount of jobs in our country.
It should be very troubling to American citizens all when conflicting politics is preventing the government from making a compromise to ensure that American people do not have to suffer the huge tax increases, that will happen on January 1. The pressure is not on one party or the other; it is crucial that both parties find some way to compromise. Otherwise, on the first day of 2013, we will all have very substantial tax increases, whether we like it or not.