POSTED: Tuesday, October 2, 2012 - 5:33pm
UPDATED: Wednesday, October 3, 2012 - 10:30am
The phrase “fiscal cliff” has become short hand for an economic disaster looming at the end of the year.
But what will it mean to you?
So, what exactly is the fiscal cliff, and when do we drive over the edge?
It’s the end of the world as we know it, according to our bretheren and sisteren in the press.
And if nothing is done, it will be devastating.
It is a very appropriate name. The fiscal cliff.
It refers to what will happen on January first, 2013, unless Congress and the President, whoever he is, do something. And the effects will be potentially devastating.
Let’s start with the budget. Because the budget super committee couldn’t decide on budget cuts back in 2011, they agreed that automatic cuts of 8.2% would go into effect, across the board.
That’s 110 billion dollars.
But that’s the budget. Lockheed can worry about that. What you want to know is, what about taxes?
New Year’s day is when the so-called Bush Tax Cuts and Obama Payroll Tax Cut expire.
That totals 500 billion dollars.
For families, the effects would be severe.
For an average family, it would mean $2000 more in taxes in 2013.
Even for a family in the 1% of earners, it could be up to 120,000 dollars.
But for fiscal conservatives, it would cut the deficit by 60% in one fell swoop.
But at what cost?
Most economists believe it would throw the country into another recession.