No Christmas miracle for fiscal cliff
With political leaders on holiday break, talks to avert automatic tax increases and government spending cuts are at a standstill.
'Twas the day before Christmas and all through the House of Representatives, not a creature was stirring -- since House Speaker John Boehner told members to go home for the holidays last week without a deal on the fiscal cliff. Members of the Senate are also with their families, and President Barack Obama is in Hawaii for a vacation. The once unfathomable prospect of about $600 billion in tax hikes and government spending cuts coming into effect at the end of the year is becoming frighteningly real.
Not surprisingly, stocks were lower in Monday's holiday-shortened trading day. Declines will likely continue until a deal emerges. So much for the Santa Claus rally.
"There's a lot of uncertainty,"said Jacques Porta, who helps manage $627 million at Ofi Patrimoine in Paris, in an interview with Bloomberg News. "We’re at a political dead end. Everything has cooled off. The market has become cautious."
Make no mistake, everyone loses if the economy falls off the cliff. People with limited means are especially vulnerable. According to The Wall Street Journal, the overall tax burdens for households earning $10,000 to $20,000 would rise from an average of $68 to $605. The more well-to-do would feel the pinch as well.
Consumers are already cutting back on spending. A recent Bankrate survey found that a third of Americans are spending less because of worries about the fiscal cliff. So far, the worries have not been reflected in the economic data, according to Reuters, but it's still early days. Retailers are expecting holiday sales to be less robust than last year.
As the cliff grows closer, the caution could morph into panic. Even if politicians come to their senses at 12:01 am January 1, the damage to the credibility of the the U.S. government will be lasting. Remember, it was Congress' plan to create the fiscal cliff so it would have little choice but to take action to avoid it.
Eventually, this problem will be solved. But then Congress will then have to take up the equally contentious issue of raising the debt ceiling. Unless the Treasury's ability to borrow is expanded, the government would be forced to close and its credit rating may face further downgrades. The debt ceiling was expanded as a matter of routine until recently.
For investors, it looks like political turmoil will mean tough sledding into January.
If they want to prove they have our best interests at heart then they should curtail, take away some of THEIR OWN benefits first. COURSE YOU WILL NEVER see that. Had enough lip service its time FOR ALL OF THEM to be fired!! If any of us worked in a company that couldn't get its finances straight we would be out of a job in a damn hurry, why should we let all these ingrats get a pass?
WE THE PEOPLE voted them in, WE THE PEOPLE can vote them out.
This lan did NOT come from congress. It came straight out of the white house. Congress just went along for the ride. If obama really did not want this to happen he would not only insist that congress stay in DC and hammer out a plan, but he would be right there in the room with them. Thats called LEADERSHIP!
If these so called elected officials really cared about any of us, they would have stayed until the job was done! Instead they are proving they don't give a care about john q public. OBAMA keeps saying how easy it would be to get this done, well?....................................................instead he goes to Hawaii. Actions speak louder then words, he, they, should have stayed in DC to prove they are serious about getting this done, but instead they all head home, and we the public are going to PAY for their inaction as usual.
VOTE THEM ALL OUT FROM BOTH PARTIES, THEY BOTH ARE GUILTY of Sabotaging America.
This is another reason why we need term limits, the president is bound by one, congress and senate need to be too. WE THE PEOPLE need to vote ALL THIS DEAD WEIGHT out of office from BOTH parties. Neither party has any vested interest in what happens to us as they all fall under different programs and inaction won't hurt them. People when are we going to wake up and realize DC starting with the president on down doesn't give a rats azz about us. Its all about votes. We had our chance to make changes in November and you the majority decided Nobama was the man, and look where we are now, same ole same ole.
We need term limits maybe then these so called whiny politicians will be more apt to pass reforms and laws that acually help us.
Every Representative, Senator, and the entire Obama Administration should have walking papers waiting for them upon their return from vacation. Who will replace them with? It would be hard to find any worse than these turkeys.
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