The Congressional Budget Office issued a report yesterday, which sounds the alarm on so many fronts. It stated for fiscal year 2012 the federal budget deficit will total $1.1 trillion, making the fourth year in a row a deficit of more than $1 trillion. It is not the one trillion dollars, a staggering sum, but it is that is the fourth year in a row. What a record. It is a record Mr. Obama never seems to mention nor does he mention his early term promises to cut the deficit. However, in spite of his failures, the problems are even more serious than the deficit.
As politicians go to their respective national convention playgrounds to denounce each other, the budget deficit increases at a mere $4 billion a day. The budget deficit, federal debt, and the economy are all in precarious positions because substantial changes to tax and spending policies are scheduled to take effect in January 2013. This is the so-called “fiscal cliff.” A brief summary is in order:
- Extended unemployment insurance, and provisions that extended reductions in tax rates and expansions of tax credits and deductions originally enacted in 2001, 2003, and 2009 will all expire. The AMT year fix has already expired, but the consequences will not be felt until 2013 when taxes are due.
- Sharp reductions in Medicare’s payment rates for physicians’ services are scheduled to take effect. (I never worry about the doctor’s getting paid)
- The Budget Control Act of 201 initiating some minor discretionary and mandatory-spending limits over the next 10 years will go into effect. This is what is known as the “sequester.” (Which would be a great title for a Sy-Fi channel movie)
- The employee reduction of 2 percentage points in the payroll tax for Social Security is scheduled to expire.