Essay about Fiscal Cliff

Submitted By andrewlichwala
Words: 315
Pages: 2

Andrew Lichwala
11/28/12
Econ Paper
Fiscal Cliff Negotiations Delayed The United States Budget Control Act of 2011 set to take effect midnight Dec.31th. If the Budget Control Act takes affect the economy would be impacted dramatically. Taxes are going to be raised and federal spending will be cut, this would reduce the deficit by an estimated $560 billion. With the higher taxes and less federal spending the gross domestic product is predicted to fall by four percent, therefore sending us deeper into a recession. With the reduction in gross domestic product, unemployment is expected to rise by 1 percent. Negotiations to avoid the “fiscal cliff” have slowed recently. The latest roadblock in avoiding the fiscal cliff is the cost of federal retirement programs. Democrats and Republicans are disputing on how to deal with this aspect of the fiscal cliff. Democrats are saying “Republicans have yet to name their price for enacting legislation that would preserve tax cuts for the vast majority of Americans next year while raising revenue from the wealthiest 2 percent.” Meanwhile Republicans are saying “that it is up to President Obama to offer a plan to restrain the cost of Medicare, Medicaid and Social Security”. Medicare, Medicaid and Social Security are the government’s largest and fastest growing programs and Republicans are willing to agree to raise taxes if the cost of these programs is restrained. With less than four week until the fiscal cliff is upon us,…