Fiscal Cliff Fears
Updated: Tuesday, November 27 2012, 06:39 PM EST
The president and congressional leaders continue to battle over how to avoid going over the so called "fiscal cliff." The term refers to the impending unprecedented increase in taxes and spending cuts set to take effect January 1st. Independent economists say going over the cliff will result in an economic slow down and higher unemployment.
The Tax Policy Center in Washington says going over the cliff will result in $500 billion dollars in new tax revenue that will cost the average household about $3500. Middle income households will see their taxes go up almost $2000. It's the result of a deal that ends Bush era tax cuts and other 2009 stimulus tax breaks and deductions that go away in 2013. Other problems include the alternative minimum tax or AMT which increases taxes for about 4 million households, the "doc fix" which cuts doctors medicare reimbursements by 27%, and the social security payroll tax which go up 2% for all wage earners.
The congressional budget office says if we go over the cliff the economy's gross domestic product number will decline .05% in 2013 and unemployment will rise to 9-point-1 percent. Lawmakers are trying to hammer out another deal that could be a combination of new revenues and spending cuts before the January deadline.
By Frank Fraboni