CBO: Letting upper-income tax cuts expire would barely hurt economy
Letting the high-income Bush tax cuts lapse, for example, generates $42 billion in 2013 but hardly hurts GDP at all. By contrast, the defense cuts amount to $24 billion but hurts growth by 0.4 percentWhat's in the fiscal cliff?
$7 trillion worth of tax increases and spending cuts over a decade. ..... While that might seem like a deficit hawk's dream come true, it's anything but. ..... "It's too big, too quick, and focuses on the wrong parts of the budget" ..... reductions in both defense and non-defense spending; the expiration of the Bush tax cuts; the end of a payroll tax holiday and extended unemployment benefits; and the onset of reimbursement cuts to Medicare doctors. ...... If left in place, the fiscal cliff would lead to the biggest single-year drop in the annual deficit as a percent of the economy since 1969. ...... But because it would be so abrupt and arbitrary, it also could throw the United States back into a recession next year, when more than $500 billion will be taken out of the economy. ...... automatic spending cuts to commence on Jan. 2 that will amount to $1.2 trillion in deficit reduction over 10 years. ..... $55 billion will be cut in 2013 from projected levels of discretionary defense spending. That translates into at least a 10% cut to every program, project and activity that's not explicitly exempt. ...... $55 billion will be cut from projected levels of nondefense spending, which includes things like education, food inspections and air travel safety. Budget experts estimate the cuts will result in at least an 8% cut to programs, projects and activities .... Income tax rates: Rise to 15%, 28%, 31%, 36% and 39.6%, up from 10%, 15%, 25%, 28%, 33% and 35%.Here's What's Probably Going To Happen With The Fiscal Cliff
an agreement will be reached AFTER January 1st - so that the Bush tax cuts can expire and certain politicians can claim they didn't vote to raise taxes (silly, but that is politics). ...... the tax cuts for low to middle income families will be reenacted ...... tax rates on high income earners will increase a few percentage points to the Clinton era levels ..... Not only is there no 'bang' event on January 1, but letting the tax rates jump is a way for politicians to then vote to lower them, which is easierCBO warns of fiscal cliff risk
The biggest threat posed by the $7 trillion fiscal cliff is that it could throw the U.S. economy into recession next year. ..... Congress may choose to avert the cliff in whole or in part ..... The fiscal cliff as a whole, if it went into effect for all of next year, could result in a drop of 0.5% in real gross domestic product, according to the CBO. And that contraction could push unemployment to 9.1% by the end of 2013My Reason To Drive Off The Roof
Bad Advice From Paul Krugman