Fiscal Cliff

The “Fiscal Cliff” - Blog Assignment

President Obama will be addressing the public on Wednesday, 11/14 at 10 am. One of the pressing issues that he will discuss is the upcoming “fiscal cliff.” You are to write a 1/2 - 1 page blog due Wednesday, 11/21 that addresses the following questions:

1) What is the “fiscal cliff?”

2) What is the danger of failing to address the “fiscal cliff?” When answering this question, consider consumer and producer behavior in relation to what you have learned about demand.

3) What is a potential solution to the problem of the “fiscal cliff and are there consequences to this proposed solution?”

1. The fiscal cliff is the expiration of the Bush "era" taxes gets cut off and falls into a fiscal cliff. It is a shorthand term that people use to describe the problem that the US government will fact at the end of 2012 when the terms of the Budge control act and scheduled to go into effect. Laws will change at midnight on December 31st are set to change payroll tax cuts. Certain tax rates for businesses will take a large tax bite at the end of the pay roll. 

2.  The danger of failing to address the fiscal cliff is people having to pay more taxes and businesses going down the drain. This will also hurt the companies and the jobs applicants depend on trying to find jobs in. Overall the demand will fall a large amount and peoples wages will go down as well. 

3. In order to develop a fiscal plan financially and politically, there has to be some sort of agreement towards companies across the Us and the government. These plans could be more reformed healthcare and improvement of efficiently in the overall health care system. Limiting future cost growth is also a potential solution to the problem of the fiscal cliff. Lastly, if people have a comprehensive tax reform in which lowers tax rates, raises revenues and reduces the deficit, the fiscal cliff will not effect them as much as it could have.