Don’t look now, but the fiscal cliff is nearing
Congress is no longer in Washington having travelled home to focus their energies on reelection campaigns. Even if no one is in town to hear it, the sound of the falling fiscal cliff will be heard and felt by every American.
Economist Donald Marron of the Urban Institute writes on his blog that the cost of the fiscal cliff if not averted would result in a $3,500 tax increase on every household.
There is some hope, however, of at least mitigating the impact. According to the Wall Street Journal the Internal Revenue Service and the Treasury Department “have broad latitude to adjust withholding rates for Americans – or not adjust them,” including leaving withholding at current levels.
The delay could provide some breathing room for taxpayers, as well as for a group of bipartisan legislators to come together around a solution. Such a group is still trying to get support for a three-part plan to avoid steering off the cliff, but opposition remains among both parties in the House of Representatives.
The plan would first set a deficit reduction target, after which lawmakers would vote on “expedited instructions to relevant Congressional committees to draft the details over six months” and would also put off the cuts if no agreement is reached.