We’re officially on the edge of the so-called “Fiscal Cliff,” a self-imposed trigger of $500 billion in tax increases and $109 billion in spending cuts.
The main sticking point is the Bush tax cuts. Democrats want to extend them for individuals making $200,000 and couples making $250,000 but Republicans want those limits increased to $400,000 and $450,000, respectively. Democrats also want to increase the estate tax from 35 to 40 percent on estates worth more than $5.1 million.
If no deal is reached by midnight tonight, the average family will see their taxes go up by 4 percent but the real cost could be much higher. The Congressional Budget Office predicts 3.4 million jobs will be lost due to spending cuts. That coupled with reduced spending by families already struggling to get by could result in further layoffs and throw the country back into recession.
The Fiscal Cliff has been compared to the iconic scene in Thelma & Louise where two women drive off a cliff except in this case, it’s Congress in the driver seat.
A better analogy is a Fiscal Iceberg. We’ve known for a long time that the ship is sinking but Republicans have been holding up the line for 99 percent of Americans until the top 1 percent are safely aboard the lifeboats.
Even if both sides come to an agreement, we’re not out of the water yet. Republicans are pushing for a temporary fix known as a “sequester.” It would delay spending cuts for three months, just in time for the next debt ceiling debate in February or March.
Speaking at a press conference today, President Obama expressed his disappointment with Congress for once again kicking the can down the road.
“My preference would have been to solve all these problems in the context of a larger agreement, a bigger deal, a grand bargain, whatever you want to call it that solves our deficit problems in a balanced and responsible way,” he said. “But with this Congress that was obviously a little too much to hope for at this time.”