I’m not sure who came up with the term “fiscal cliff,” but it has been bouncing around for decades with one meaning or another. Now, with looming spending cuts and an end to tax cuts at the end of the year, the phrase has become a fearful household word.
The experts do not necessarily agree on what the impact would be if President Obama and House Republicans don’t come up with a compromise agreement. That unknown has markets jittery and people scared.
Some warn of the loss of 3 million jobs as the economy takes a nosedive, effectively ending the slow progress out of recession. The tax hikes and spending cuts, they say, would be too drastic a move all at once to get out of our deficit hole.
Others say a plunge over the austerity cliff is just what we need, and that the economy in the short term would have a soft landing. No one seems optimistic about the long term.
For that reason, our leaders, Obama and House Speaker John Boehner, need to work out a deal that does not hurt the people who are already reeling from the recession. It is clear that trickle-down economics do not spur growth as much as incentives to middle-class spending.
Obama is right to insist on eliminating the tax cuts for those making more than $250,000 a year. The rich should contribute more to healing our deficit problem.
The president last week said the turmoil and uncertainty in the markets and for employers could be mitigated if the House moves quickly to extend the tax cuts for all but the wealthy. The Senate already has passed its own version of the bill.
The expiring tax cuts, approved during the George W. Bush presidency, would affect income, investments, married couples and families with children, and inheritances. Also on the block are unemployment benefits for the long-term jobless and Obama’s temporary 2 percent cut in payroll taxes. There also would be a sharp cut in reimbursements for doctors participating in Medicare.