First and foremost, I wish all our clients, friends and readers a happy and healthy New Year. May it be prosperous as well, and a bit less stressful than the last!
At 10:10 PM with just hours to go before the Bush Tax Cuts were set to expire and as close to the 11th hour as you can get, the Senate and Congress passed what they called their version of averting the "Fiscal Cliff" signing into law a small portion of the enormous problem to face our great nation. While lawmakers take this as a step forward in resolving, or at least addressing the expiration of the Bush tax cuts, it isn't very well taken by the people of our fair country. They had a year to work on this- you think this was a last ditch effort? How many decisions made under pressure turn out to be the right one?
The matters at hand which envelop the entire bill are thousands of pages and involve trillions of dollars. We as Americans, although it's all about us, are not given a clue as to what's in it. Yet, this last minute agreement between the parties addressed essentially the tax issue so that we can get on with the great mystery of who will pay more or less taxes going forward. The long and short of it is that while they addressed the limits of who will pay what, it still includes the expiration of the payroll tax deduction, meaning that roughly 75% of those working will see a pay cut due to more taxation. It appears that while they worked to determine who will pay how much taxes in 2013, little thought was put forth to see how those "Average Americans" will be affected week by week with a reduced paycheck. For 2011 and 2012, President Obama had reduced payroll taxes from 6.2% to 4.2%- that reduction is now gone, so the working person is now hit with the returning 6.2% reduction. This would cost the average American family between $1000-$2000, depending on income. In a time where every dollar counts, it's not very good news to the working class.
As a New Yorker who was here to witness the horror of Superstorm Sandy, benefits and aid to the East Coast was shelved, appearing that it was not as important to them as a NASCAR entitlement and other ridicules aid packages that our lawmakers felt took priority. In addition, the agreement does not take into account any cost cutting measures, so it is akin to a band aid on a major surgery patient. Big cuts to domestic programs and defense, slated to kick in the first of the New Year were shelved until March to be addressed again. The long and short of it? The talk and fears of the Fiscal Cliff are not nearly done- they've only gotten started. You can't just ask for more taxes to close the gap unless you are willing to get your house in order and cut spending for a balanced approach. We do it at home every month... perhaps we just need some everyday folks like you and I to teach the government how to handle expenses like we do at home, and teach the politicians a thing or two. Or if they participated in our retirement and Medicare system as well and their decisions actually affected them as well... maybe they'd take it a bit more personally.
The "Fiscal Cliff" is not gone by a long shot- we as a country are hanging on by our fingernails. It will rear its ugly head once again in March. Stay tuned... the outcome of this is anybody's guess.