Fiscal Cliff, good or bad?

If no compromise is reached then the USA will be forced to raise taxes and cut spending ( Fiscal Cliff) on Jan 1, 2013. This will cut the deficit by about $ 680 Billion as I recall. To me this is a step in the right direction. China will not forever keep loaning money to the USA.

what do you think?

Update:

Certainly no one wants to pay taxes, but the fact remains, the US federal government can not continue this way. Further huge debts will lead to ruin. Either take the bull by the horns or end up like Greece in a few years.

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  • 8 years ago
    Favorite Answer

    Something is going to have to happen to reduce the deficit particularly given that interest rates are going to start to rise in the next year or so, and whatever it is will have some negative impact. The "Fiscal Cliff" is a move in the right direction, and if the politicians can't do better it is better than doing nothing. The problem is that it hits the little guy as well as the rich. The cuts to the military are necessary. Higher tax brackets are appropriate. There would certainly be a hit to the economy -- just not as much as the GOP say (See link).

    Congress can do better than the Fiscal Cliff. Rather than lowering tax brackets there could be other measures to increase revenue that wouldn't hurt the little guy as much (deductions such as mortgages could be cut (the old argument is that this is essential to support the housing industry, but a) it helps the middle class and rich, not the poor, and b) Canada actually has a higher rate of home ownership without mortgages being tax deductible), and capital gains and dividend income can and should be taxed higher).

    As to entitlement reform ... this is a longer term issue and needs to be done after careful study ... there isn't any real urgency (as long as something happens with the next year or so).

    Bottom line: Fiscal Cliff if necessary, but Congress can (but probably won't) do better.

  • Anonymous
    8 years ago

    Its bad, but only half bad. Taxes will go up on everybody if the fiscal cliff isn't averted. Obama wants to put a measure into effect that reduces taxes on people making less than 250,000 a year, and increases taxes for those making over 250,000 a year. I'm only 15, and my parents are part of the 2nd group, so this won't really affect me personally, but I think that rich people, including my parents, can afford to pay their fair share. The koch brothers don't need to horde billions of dollars more. Im for Obama's proposal, because raising taxes on the Middle Class while America is still recovering from a recession could hamper the growth of the economy. Rich people can afford to pay more.

  • Kini
    Lv 7
    8 years ago

    If the Bush tax cuts and payroll tax holiday are extended, and Congress wriggles its way out of its commitment to cut spending, the deficit will swell to the point where alarmists see us going the way of Greece.

    If the Bush tax cuts and payroll holiday are not extended, and Congress lives up to its commitment to cut spending, the drag on the economy will be severe. The economy is expected to decline by 3.5% to 5% ; that is, it will be pushed back into a serious recession.

  • 8 years ago

    I think its a good thing. Even if we don't go over the cliff, the Democrats will still whine about how its the Republicans fault that their failed policies don't work. If I have to hear their whining either way, their pocketbooks might as well be in as much pain as mine is.

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  • 8 years ago

    It does represent significant deficit reduction. But it will also likely put a major dent in the economy, possibly pushing us back into a recession

  • 8 years ago

    the U.S. has borrowed more money from Japan than from China. It's no different than the Y2K crisis where they said all the computers might crash. "Let not your eyes see, nor your ears hear, what you can not account for." from; Bram stokers Dracula.

  • Anonymous
    8 years ago

    Two choices. Do it now or kick the can down the road until later.

  • Anonymous
    8 years ago

    it all depends on how much debt we are in right now and how long it will take us to recover

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