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    Posted November 11, 2012 by
    k3vsDad
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    The Fiscal Cliff - Why Should I Be Worried?

     

    Granted  Iran and Al Qaeda continue to pose the biggest military and defense  threat to the US of A, but there is another threat which may do the  nation more harm than anything that either jihadists or the Iranian  government could ever do. That threat is aimed right at the fragile  American economy.

    The  threat has been dubbed the fiscal cliff. Surprising there are some who  have little or limited knowledge of this threat or the potential it has  to sink or at least do great damage to the sluggish US of A economy.

    Just what is the fiscal cliff and why is it such a threat to the national security?

    To  simplify what the fiscal cliff is we'll break it down into 7 main  points. Each of these points actually involves more than just one action  or inaction that may or may not occur depending on what Congress and  the White House can determine to stave off plunging into an even worse  economic nightmare.

    1. On  December 31, the Bush/Obama tax cuts are due to expire. This is not just  income tax cuts, but also involves tax cuts on investiments, married  couples and families with children along with inheritance. To further  complicate the cuts set to expire, around 26 million people will be  impact of the alternative minimum tax which would average a $3,700 tax  hike.

    2. At the start of  2013, the Department of Defense must cut 9% from its budget. In addition  domestic programs will be cut by $55 billion. There is a 2% reduction  in payments to Medicare providers included.

    3. Unemployment benefits for those who are part of the long-term jobless will also expire.

    4. In addition to the 2% Medicare cut, reimbursement for participating Medicare doctors is set for a sharp decrease.

    5. The 2% payroll tax cut which American workers have enjoyed over the  last 2 years will expire and there's little movement to extend this cut  with the impact it has already had on both the Social Security Trust  Fund and the Medicare Trust Fund.

    6. Tax "extenders" which include various tax cuts for businesses and  individuals will go away. Some of these "extenders" include tax credits  for research and development as well as a deduction for sales taxes in  those states which do not have a state income tax.

    7. Making matters worse, the nation is expected to hit the debt  ceiling, the amount the government can borrow, by year's end. The  current cap is at $16.4 trillon. With adjustments and juggling the  books, the Treasury Department can forestall this battle for a couple of  months to allow for the new Congress to be seated.

    When  put together, the fiscal cliff has the impact of throwing the nation  back into recession. Unemployment is expected to rise above 9%. The  nation's credit rating is also at risk. Moody's has already warned that  failure on the part of Congress and the White House to react will likely  lead to it downgrading the US of A from its triple A rating. Standard  & Poor lowered the rating last year over the debt ceiling fight.

    The estimated cost of the fiscal cliff is approximately $637 billion.  That's a big chunk to pull out of the fragile economy. Evidence of the  impact of the fiscal cliff is already being felt on Wall Street as the  stock market plunged this past week. The plunge of course was for a  variety of factors: the election, the situation in Europe, the  uncertainty over whether Congress and the White House will act on the  fiscal cliff.

    The  fiscal cliff does not include more taxes and fees which be implemented  in 2013 from the Affordable Care Act. Those new fees and taxes will only  add to the pain if Congress and the White House do not act on averting  the fiscal cliff.

    From  the Cornfield, as I have stated in the last few days, the time for  partisan rancor is over. It is time for our elected officials, all of  them, to knuckle down and address the danger at hand that is set to  catapult the country into a swamp of financial destruction.

    http://startribune.com/politics/178153591.html

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