Fiscal Cliff, Fiscal Muddle
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.
Democrats will get a little more tax revenue; Republicans will probably get small spending cuts.
The key point is that neither party will fix our deficit-spending problem. The supposed $600 billion that will be generated for deficit reduction is over 10 years! With a $1 trillion deficit, all America can trim is $60 billion per year? It is probably actually less than that because some of the cuts will likely be back loaded to future years.
With budgets like this, America will owe close to $20 trillion by the end of President Obama’s second term.
This budget fiasco shows that America’s financial problems cannot be solved. The Federal Reserve will have no choice but to resort to money printing. Be prepared for more dollar devaluation and other economic unpleasantness. Request a free copy of Solve Your Money Troubles! and put your finances in order before it is too late.