The Joy of the Fiscal Cliff

December 29, 2012 — 1 Comment

Until today, this blog has been careful not to over-hype the cliff.  We’ve written that a compromise between Republicans and Democrats was easily achievable; the numbers weren’t unmanageably different and both sides had publicly agreed to make concessions.  We’ve said that our beloved congress members would never actually let a series of automatic spending cuts and tax hikes worth 5% of GDP sink the economy – they’d get it together and strike a deal eventually.  We’ve likened the debate to that of the debt-ceiling, in which the drawn-out threats of defaulting on our credit were more political theatre than realistic outcomes.  We’ve also argued that the “cliff” isn’t really a cliff at all, since legislation could easily be enacted past the deadline to right the ship.

12% Americans Approve of Congress

All of the above remains true, but after more than a year of negotiations we are now at the 11th hour, and most of congress is still on vacation.  Republican Speaker of the House John Boehner failed to get his party to support his “Plan B,” an outline consisting of revenue increases that were too small for the Democrats and way too big for Congressional Republicans.  Both sides are sticking to their guns, and every minute it seems less and less likely that a deficit reduction deal will be passed before the Jan 1st deadline.

Now, it’s still logistically possible, and yesterday the 4 major congressional leaders met with the President and Vice President for another round of talks, but as a CNN commentator wondered on live TV Friday morning, “are they just going to sit around and stare at each other until someone blinks?”

The stock market is treading water, the government agencies that would be most impacted by the cuts are biting their nails, employers don’t know how much to withhold from their employees on next month’s paychecks and congress’ dysfunction has never been more blatant.  Oh, and don’t forget about patching the AMT, because if that misses the Jan 31 Deadline, we’re really jumping off a cliff..

Here’s one thing the President did say in his post-meeting interview, which I think most can agree with:

America wonders why it is that in this town, for some reason, you can’t get stuff done in an organized timetable; why everything always has to wait until the last minute. Well, we’re now at the last minute, and the American people are not going to have any patience for a politically self-inflicted wound to our economy. Not right now [1].

Tis the season, eh?

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

 Sources:
  1. http://politicalticker.blogs.cnn.com/2012/12/28/obama-modestly-optimistic-fiscal-cliff-deal-can-be-reached/?hpt=hp_t2

Trackbacks and Pingbacks:

  1. Bowles, Simpson to the Rescue! Deficit Hawks Take on the Fiscal Cliff (again) « The Joy of Tax Law & Litigation - February 19, 2013

    [...] The Joy of the Fiscal Cliff (Joyoftaxlaw.com) [...]

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