It was a costly and contentious cliffhanger to the end. Yet the final outcome of the national election of 2012 changed little. And now Americans must hope and wait for their representatives to reach a deal on the fiscal cliff.
With the Bush era tax-cuts set to expire, and $109 billion in spending cuts scheduled to take place on December 31st, the nation remains in a state of flux, causing many to experience deep anxiety and insecurity about their fiscal futures.
Impact of the Fiscal Cliff Decision
A dive over the fiscal cliff promises to affect all Americans, with economists agreeing that failure to reach a resolution will undoubtedly result in a new recession. Those dependent on federal services will be forced to determine how to proceed with fewer benefits, while taxpayers will need to allocate even more of their incomes to Uncle Sam.
Small business owners will be negatively impacted if a budget is not reached. Uncertainty of the fiscal cliff is also adding to existing concerns about the cost of ObamaCare to corporate bottom lines. Many large corporations are holding off expansion plans and restricting hiring. Others have announced layoffs and job cuts in anticipation of increasing healthcare costs.
CEO Zane Tankel of Applebee's Restaurant said on Fox News, “We've calculated it would be some millions of dollars across our system. So what does that say? That says we won't build more restaurants. We don't hire more people. It's exactly the opposite effect."
Meanwhile, Wall Street is showing signs of concern.
Many experts in the financial sector do not believe a deal will be reached on the fiscal cliff by the end of the year. The failure of past negotiations, conducted via the “super-committee" may have contributed to such gloomy forecasts.
Democrats and Republicans blame each other, with conservatives criticizing the Obama administration for not taking an active role in past negotiations. The President insists Republicans can no longer maintain their stance against increasing taxes. At his first press conference since winning re-election, Obama re-introduced his budget plan calling for $1.6 trillion in new taxes on those earning more than $250,000.
Conservatives are vehemently against such tax hikes, arguing that such increases will impede job growth, though they propose closing certain loopholes and deductions. Sen. Mitch McConnell, R-Ky., told Fox News, "…we're also not about to further weaken the economy by raising tax rates and hurting jobs."
Ultimately, both parties will need to compromise. Otherwise, a recession—that will topple a fragile recovery—is likely. And millions of Americans will suffer anew.
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Date of original publication: April 02, 2013