The Fiscal Cliff

by Victor McCoy

Now that the election is over and the television stations have made a lot of money along with other businesses associated with the process, what can small businesses and non-profits expect to see? What key indicators should we be looking at? What about the Bush Tax Cuts, etc.? How will this impact your business and personal life?


Over the past few weeks you may have heard the term "Fiscal Cliff". It refers to the tax increases and spending cuts that take effect in January -- includes $7 trillion worth of tax increases and spending cuts over a decade.

Those policies include reductions in both defense and nondefense spending, the expiration of the Bush tax cuts, the end of a payroll tax holiday, extended unemployment benefits, and the onset of reimbursement cuts to Medicare doctors.

Lawmakers must choose whether to leave in place some or all of them, replace them, postpone them or cancel them entirely. That is the greatest issue facing the Senate and House, which have not come together to deal with these issues. The decision will affect the economy, the country's credit rating and the U.S. debt burden.

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.

This could throw the United States back into recession next year, when more than $500 billion will be taken out of the economy. If this issue is of such great importance, why was it not emphasized in the Obama or Romney campaign? Yes, both did spoke on the Bush tax cuts and defense spending cuts but it seems the debt ceiling issue was overlooked, or was it?