J’Dana Holsinger, ‘Doah Staff Writer
January 23, 2013
We’ve been hearing about this dreaded fiscal cliff for months now. This massive package of tax cuts and government-spending allowances expired on Jan. 1 because Congress could not come together and agree on a way to extend these items without harming the economy. Due to the extreme partisanship, gridlock and lack of action in Washington to address these items, tax rates in several different areas have now increased.
Every American can now see on their check stubs that the amount of money taken out of their earning for Social Security has increased from 4.2 percent to 6.2 percent under the payroll tax. The Bush-era tax cuts were extended for all individuals earning less than $400,000, and married couples making less than $450,000. Wealthier individuals that do not fall below this line will now have to pay a higher rate.
People in this same upper level tax bracket will also pay more in capital gains tax for money earned from stocks, bonds and real estate. The capital gains tax rate increased from 15 percent to 20.
Government spending that had been allocated to the military and Medicare has also expired within this bundle.
While tax increases on Americans at an already difficult economic time sounds like a frightening thing, the truth is that the fiscal cliff was the least of our worries. What the government is now left to deal with is the debt ceiling.
The debt ceiling is basically the limit placed on how much money the federal government can borrow. Since July 2011 the government has temporarily raised the debt ceiling several times in order to avoid defaulting on its debt. Last month the government officially reached it’s borrowing limit of $16.4 trillion dollars. Republicans did not want to raise the debt ceiling without a comprehensive plan to reduce spending, but with their backs against the wall, they decided to raise the limit for a mere three months.
Now the government has a little less than three months to get their fiscal house in order, and to come up with a budget that reduces spending in order to avoid defaulting on our national debt. If the government cannot reach across party lines to come up with an effective plan for the debt ceiling the results could be economically catastrophic for not only the U.S., but the rest of the world as well.
What do you think?