Fiscal Cliff Temporarily Averted

fiscal cliff
President Obama’s signing of the deal agreed upon by Congress to avert the “fiscal cliff” may have allowed Americans to stop holding their breath over the impending sequestration, but no one is breathing a sigh of relief quite yet.

An agreement was made between the House and the Senate regarding taxes but delayed other tough decisions on spending cuts.  Congress agreed to make the Bush-era tax cuts permanent while raising taxes on the wealthiest Americans. Yet, Americans are likely to see smaller paychecks, since the lowered payroll tax rate expired on January 1.  The bill also extends unemployment insurance and delays cuts on R&D and education but with many more deadlines coming soon, it is unsure what cuts will continue to be spared.

Despite signing off on an agreement, Congress still faces three other cliff-like deadlines over the following months. The debt ceiling still looms overhead and failure to address this could lead to further downgrade of the country’s credit rating and stock market plummets.  The threat of sequestration must be faced again in two months. Furthermore, the current continuing budget resolution is set to expire on March 27th.

Hopefully, with Congress beginning afresh, they can put the past behind them and work together to jumpstart the American economy.

Posted by: Elizabeth White

Sources: CNNMoney, Financial Times

Photo source: flickr user MyEyeSees

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