Fiscal Cliff, Fiscal Muddle

Posted by Robert Morley at 3:00 pm on December 31, 2012
America’s recent fiscal cliff aversion is only a temporary Band-Aid in trimming our deficit and escaping our imminent financial woes.

Senator Mitch McConnell and Vice President Joe Biden reportedly said they are close to a deal to avert the so-called fiscal cliff. More Washington talk with little real problem solving. From Bloomberg:

Income tax cuts would be extended on families earning up to $450,000, [an official familiar with the talks] said, with rates rising to 39.6 percent on incomes above that.

Rates on estate taxes would rise to 40 percent, on amounts above $5 million. Extensions of business tax breaks would continue through the end of 2013. There would be a permanent fix to the alternative minimum tax threshold.

The Medicare payment rate for doctors would be extended through 2013.

The contours of the possible deal would generate $600 billion toward deficit reduction. The debate over how to postpone automatic federal spending cuts remains. Democrats propose postponing it for a year, while Republicans want to allow cuts to begin taking effect with the new year.

Democrats will get a little more tax revenue; Republicans will probably get small spending cuts.

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