Despite the significant hype, I wasn’t very worried that Congress and the president wouldn’t reach a deal on the so called fiscal cliff. What I was concerned about was how the deal would affect consumers, particularly older Americans.
The fiscal cliff deal has a number of items that will benefit consumers. They include:
- All income below $450,000 for families and $400,000 for individuals will permanently be taxed at Bush-era rates.
- The 2009 expansion of tax breaks for low-income Americans – the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit – will be extended for five years.
- Federal unemployment insurance will be extended for another year, benefiting those unemployed for longer than 26 weeks.
- The Alternative Minimum Tax will be permanently patched to avoid raising taxes on the middle-class.
- Medicare and Social Security weren’t slashed.
However, Congress missed a big opportunity to truly pass positive measures to help consumers with these missteps:
- The deal doesn’t address the debt-ceiling.
- The payroll tax holiday will be allowed to expire, which means taxes will go up for consumers.
- A full package of temporary business tax breaks will be extended for another year, including breaks for race-car track owners, electric scooters, Goldman Sachs office space, coal produced on Indian lands, and Hollywood films.
- Funding is cut for the Affordable Care Act’s consumer oriented and operated plans – non-profit, customer-owned and operated plans that could test out new ways to deliver health care – by about $1.9 billion.
sequester will be delayed for two months. Half of the delay will be offset by
discretionary cuts, split between defense and non-defense. The other half will
be offset by revenue raised by the voluntary transfer of traditional IRAs to
Roth IRAs, which would tax retirement savings when they’re moved over.
Even though the Democrats won big in November, Congress is gridlocked due to faulty policies supported by Republicans, the conservative media, including Fox News, and American corporations. It’s frustrating when so much needs to be done in this country, but special interest groups squash progress and the ability of the government to move forward positively.
Instead of adequately funding needed programs for consumers, Congress will be bogged down with what to cut, then we’ll have another fiscal cliff debate and – oh, yes – another debt ceiling debacle.