In case you've been wondering,
this story in Forbes gives a pretty good explanation of what the fiscal cliff is all about
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Quote:
It begins with the December 31, 2012 expiration of the Bush tax cuts. These were originally scheduled to expire at the end of 2010 but were extended two years ago in a horse trade between President Obama and the GOP controlled Congress. You may recall the December deal, following on the heals of the Republican wave election victory of 2010, wherein President Obama agreed to continue the tax cuts for all Americans in exchange for Congress agreeing to extend long-term unemployment benefits for the many Americans who were out of work.
Should the Bush tax cuts now be permitted to expire, taxes will go up for most Americans—an increase that would extend to the taxes we pay on our earnings, investments and inheritance along with the removal of a number of tax incentives that have been made available to businesses for things such as research and development.
But the expiration of the Bush tax cuts is just the beginning.
The temporary, two percent reduction in payroll taxes that the Obama administration pushed through so that consumers could have a few more dollars to spend is also scheduled to end on December 31 of this year along with the long term unemployment benefit extension mentioned above.
Adding to the misery is the reality that, beginning on January 1, some 26 million households will again become subject to the alternative minimum tax which is estimated to raise taxes for many Americans by as much as $3,700.
When it is all said and done, the expectation is that the average American household will be paying $2,000 to $3,000 more in taxes each year—leaving them with $2,000 to $3,000 less to spend in our consumer driven economy.
Not a good thing as we struggle to get the economy on a more solid footing. But we’ve only just gotten started.
While the expiration of all these laws that have provided Americans a measure of tax relief dating back to 2001 will deliver the ‘set up’ punch, the ‘closer’ comes from the sudden and immediate reduction in government spending that hits on January 1—courtesy of the failure of the While House and the Congressional GOP to reach a more reasonable agreement in 2011 to resolve the debt ceiling crisis.
This is the ‘sequester’ you’ve heard so much about.
The cuts hit all areas of the federal budget, including a $55 billion reduction to the Pentagon’s budget in 2013, a reduction of payments to physicians participating in Medicare, substantial cuts to FEMA and the Dept. of Education budget along with a host of serious reductions across the wide ranging operations of the federal government. - more
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There is some speculation that each side may play a game of “chicken” with the other. The lame duck Congress (to continue with bird analogies) will do a lot of posturing and blustering along the standard party lines then go home without resolving anything. Happy New Year, everybody.
The major sticking point seems to be the extension of the Bush tax cuts for those with incomes over $250,000. Republicans become hysterical at the very thought of this and the Republican propaganda machine is already working over time. If those in the $250,000 plus tax bracket have to pay higher taxes, this will adversely impact “small businesses” and the “job creators.” These people will take their toys and go home and pout if forced to pay the same amount in taxes as they did in the Clinton era. No jobs for YOU, America! Take that!
But wait? Small business? “Job creators”? George Orwell would have been proud. By the Republican definition, Mitt Romney is a “small businessman.” As a matter of fact, so is Barack Obama. Say what? And what’s all this about "job creation"?
Again I turned to Forbes, hardly a bastion of liberal progressivism, and read their well-researched historical analysis of
tax cuts and jobs creation. Jobs growth under the George W. Bush administration with its tax cuts averaged from 4.5% to 7%. Sounds good? Well, not really. Since 1950, with the exception of the Eisenhower administration, EVERY president who served two terms saw job growth during his tenure. And it was DOUBLE DIGIT job growth, not the anemic numbers W. managed to achieve with his tax cuts for the wealthy.
What we have here are a bunch of tea party inspired lemmings who will rush us over that “fiscal cliff” as a matter of political ideology, NOT what is good for the Country.