Economists Warn of Second Fiscal Cliff
While discussions about the so-called fiscal cliff dominate the political world, there may be other factors on the horizon that could send America toward another fiscal cliff. Such issues arise no matter how Congress deals with the expiration of the Bush tax cuts and the mandated budget cuts during the lame duck session of Congress.
According to the Washington Post:
A payroll tax cut benefiting 160 million workers is scheduled to expire at the end of the year, as are unemployment benefits for millions of people. Also on tap are new taxes on the wealthy and cuts in tens of billions of dollars in domestic and defense spending that will occur regardless of the fiscal cliff.
Economists have noted these changes could “reduce growth by at least one percentage point and leave at least 1 million more people jobless.”
The payroll tax cut, which is scheduled to expire next year, was enacted in December of 2012 and lowered the Social Security tax from 6.2% to 4.2%, which gave families on average an extra $1,000.