Not that anyone in America has any nails left after that nail-biter of an election, but we are nervous all over again worrying whether we will plunge over the fiscal cliff. Man, this is exhausting.
Wall Street quickly warned President Barack Obama he will not get a fiscal honeymoon. Republican leaders on Capitol Hill (Mitt Romney is so yesterday) sent conflicting signals on whether they’re ready to get down to work. Obama says he’s wiser and willing to negotiate. Our trembling fingers are crossed.
Folks, this is really serious stuff. This looming train wreck (every cliche has and will be overused) confronts us because Congress kicked the can down the road late last year and the can has stopped rolling.
An across-the-board package of automatic spending cuts — including military cuts that Defense chief Leon Panetta warns would be devastating — goes into effect in January, mandated by Congress last year.
At the same time, the Bush tax cuts expire and tax rates revert to what they were before 2001, with the alternative minimum tax hitting more families.
At the same time, the 2 percent payroll tax cut Obama implemented expires and goes back to 6.2 percent.
At the same time, unemployment benefits that had been extended end.
At the same time, new taxes from Obama’s health care overhaul plan take effect.
All this would cost the average family about $3,600 a year.
And soon after that Congress will have to vote to extend the debt ceiling again to cover money we have already borrowed. Tea Partiers who want the deficit slashed immediately held Congress hostage over that issue a year ago, and the U.S. credit rating by Standard & Poor’s was dropped from AAA to AA+.
Altogether, the combination of spending cuts and tax increases would be a $670 billion blow to the economy, which would almost certainly end the fragile economic recovery and put us back into severe recession.