Post-Fiscal Cliff: Where Do We Stand?

January 4, 2013

Photo by StockMonkeys.com, via Flickr

Like the end of the Mayan calendar, the fiscal cliff  has passed and life goes on. But now that the dust has settled, where do we really stand?

The truth is, we may be standing at the bottom of a national fiscal problem that rivals the 2,685 feet of water flowing over the Ramnefjells Walls in Norway or, if you are a pessimist, standing below the 12 mile high Verona Rupes cliffs on the planet Uranus’ moon Miranda.

This is a BIG deal and the problem continues.

Let’s update some facts and perspective since I last wrote “The Fiscal Cliff: How It Will Affect You.”

CNN’s Josh Levs’ report on Jan. 2 summarizes the five things we need to know about the fiscal cliff deal:

  1. No side won. Republicans accepted higher taxes; Democrats accepted higher bases for those who will pay higher taxes.
  2. We may have a new definition of 'wealthiest Americans' marked at $450,000 along with caps on certain deductions.
  3. The can, or cans, got kicked down the road with postponements of automatic spending cuts, the debt ceiling and a continuing budget resolution.
  4. The majority of House Republicans opposed the “deal.”  The Senate vote was an overwhelming 89 to 8, the House vote was 257 to 167. The vast majority of House Democrats supported the bill.
  5. Your paycheck is still likely to shrink with the resumption of the full 6.2% FICA tax rate for Social Security coverage.

The Washington Post’s Ezra Klein captured the essence of the issue on Jan. 2 in his article “The Lessons of the Fiscal Cliff.”   Klein wrote,

“The White House can’t negotiate. House Republicans can’t be reasoned with. And so the country is caught between pragmatists who can’t hold their ground and radicals who can’t compromise.”

Unfortunately, Klein really didn’t help us by defining who was who in that equation. So, the posturing on both sides will likely continue.

Most public employees are not in the salary ranges identified in the “deal.”  However, the FICA tax increase will affect most public and all private sector employees.

What to expect is more drama -- including possible cussing and additional finger-pointing as reported by Huff Post Politics – and plenty of back and forth between the parties in the next few months as they jockey for media attention.

My best advice is to contact your US senator and US representative and let them know whether they are representing your point of view.  If we participate in the political process, we gain a better America.

How will the fiscal cliff “deal” affect you? Share your thoughts by leaving a comment.

Other articles you may be interested in:
The Fiscal Cliff: How It Will Affect You
The Fiscal Cliff and the Basics of Bookkeeping