Household finances could improve in 2013
Let's start with the good news. If the hall is the deal, the fiscal cliff melodrama over. Under the spur of this contrived crisis, Congress will increase tax rates (just a bit) to the very wealthy, extend unemployment insurance, and postpone isolate a few months. Correct.
Even better, there are no new cuts (yet) for Social Security, Medicare or Medicaid. Will those who lost december predict disaster if these programs are not removed by fine Christmas now be quiet for at least six months? We can instead spend the month something useful, such as raising the minimum wage?
Household finances improve
Most Americans will continue to pay the mortgage, although they are still higher than the value of their homes. They will do it because they think it is good and reasonable to do so. Some, unable to hang on, will default and be foreclosed. The bankers whose fraud ruined the middle class generally with impunity, perhaps with the exception of civil plaintiffs.
But whatever happens, the household economy slowly improving, as long as safety net (which is the federal budget deficit) continues to support the total income. Yes, you read that right on the deficit. We would be much worse without it. As of today, the biggest risk to the economy, the tightening so far avoided, including cuts in Social Security, the Medicare and Medicaid imposed over the debt ceiling and again to postpone isolates. If it happens, it will slow down the economy and push the middle class even more.
Economy will limp along
In the meantime, we find that raising taxes on the rich makes no difference. The interest near zero, will not go down. Consumer spending and business investment will not be changed. Keeping middle class taxes and the alternative minimum tax increase is also a no-change step, the same goes for the one-year deferment for unemployment insurance.
None of these actions will increase the total private consumption, which would have been useful at this time. And a tax advantage that no tried hard to save - namely expire payroll tax holiday - will cut the purchasing power where it hurts. When a row, the economy will limp along at best.
Let's start with the good news. If the hall is the deal, the fiscal cliff melodrama over. Under the spur of this contrived crisis, Congress will increase tax rates (just a bit) to the very wealthy, extend unemployment insurance, and postpone isolate a few months. Correct.
Even better, there are no new cuts (yet) for Social Security, Medicare or Medicaid. Will those who lost december predict disaster if these programs are not removed by fine Christmas now be quiet for at least six months? We can instead spend the month something useful, such as raising the minimum wage?
Household finances improve
Most Americans will continue to pay the mortgage, although they are still higher than the value of their homes. They will do it because they think it is good and reasonable to do so. Some, unable to hang on, will default and be foreclosed. The bankers whose fraud ruined the middle class generally with impunity, perhaps with the exception of civil plaintiffs.
But whatever happens, the household economy slowly improving, as long as safety net (which is the federal budget deficit) continues to support the total income. Yes, you read that right on the deficit. We would be much worse without it. As of today, the biggest risk to the economy, the tightening so far avoided, including cuts in Social Security, the Medicare and Medicaid imposed over the debt ceiling and again to postpone isolates. If it happens, it will slow down the economy and push the middle class even more.
Economy will limp along
In the meantime, we find that raising taxes on the rich makes no difference. The interest near zero, will not go down. Consumer spending and business investment will not be changed. Keeping middle class taxes and the alternative minimum tax increase is also a no-change step, the same goes for the one-year deferment for unemployment insurance.
None of these actions will increase the total private consumption, which would have been useful at this time. And a tax advantage that no tried hard to save - namely expire payroll tax holiday - will cut the purchasing power where it hurts. When a row, the economy will limp along at best.
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