No. of Recommendations: 2
It would be a start. Personally, I think it would be a very good thing for America's long term prospects, and should be followed by a lot more of the same. We have to escape the pretences, lying, and ignoring of reality sometime, and now is always a good time to start positive reforms.

I get the impression that people that feel this way are not well versed on the consequences.

So let's assume no deal is ever done; because really otherwise, this is just a discussion of timing and politics. Either a deal is done before or after the end of the year - or no deal is done at all.

So let's focus on the consequences of no deal at all.

From top down:

CBO estimates under the baseline projection that public debt rises from 69% GDP in 2011 to 84% by 2035.[17] In the long run, lower deficits and debt should lead to relatively higher growth estimates. But, in the short run, real GDP growth in 2013 would likely be reduced to 0.5% from 1.1%. This would mean a high probability of recession (a 1.3% GDP contraction) during the first half of the year followed by 2.3% growth in the second half.[18][19]

Note: I am going to list the major consequences - even those that I think need to go over "the cliff"

Payroll Tax Cut. The Social Security payroll tax holiday will expire December 31, raising the rate from 4.2 to 6.2 percent.

2001/2003/2010 Tax Cuts & AMT Patch. This series of legislation, often referred to collectively as the "Bush tax cuts," will expire on December 31, 2012, raising all income tax rates (top will go from 35 to 39.6 percent), as well as rates on estate and capital gains taxes. The alternative minimum tax (AMT) will also automatically apply to millions more citizens.

Extended Unemployment Benefits. The eligibility to begin receiving federal unemployment benefits, last extended in February, will expire at year's end.

Medicare "Doc Fix." The rates at which Medicare pays physicians will decrease nearly 30 percent on December 31.

The debt limit, which sets the maximum amount of outstanding federal debt the U.S. government can incur by law, is currently capped at $16.394 trillion. Treasury could hit this borrowing capacity again sometime in early 2013.

Budget Control Act. The automatic spending cuts or sequester legislated by the Budget Control Act of 2011 will hit January 2. Half of the scheduled annual cuts ($109 billion/year from 2013-2021) will come directly from the national defense budget, half from non-defense. However, some 70 percent of mandatory spending will be exempt.


So we all can likely agree that there are parts of above that we like or dislike, but to have all that hit at one time could be crippling to our shaky economy. The CBO estimates 1 to 2 million more unemployed next year if no changes are made. I don't see how that can be good for anyone.

when allowing it to happen would be so good for all of us.)

Based on what? A lot of shared accute pain?
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.