Leaders at Work on Plan to Avert Mandatory Cuts
The New York Times | Oct 1
Senate leaders are closing in on a path for dealing with the “fiscal cliff” facing the country in January, opting to try to use a postelection session of Congress to reach agreement on a comprehensive deficit reduction deal rather than a short-term solution.
IRS Could Buy Time on Fiscal Cliff
The Wall Street Journal | Oct 1
The prospect of the U.S. falling off the “fiscal cliff” is an ominous one for many economists, who warn that the U.S. could plunge into another recession. But exactly how painful a fiscal cliff-dive would be is a matter of debate, and some politicians and economists aren’t that troubled by it. One possible reason: the U.S. Treasury Department and the Internal Revenue Service have broad latitude to adjust withholding rates for Americans – or not adjust them. If the current tax breaks expire on Dec. 31, but tax administrators decided to leave withholding at current levels, some tax experts say that could cushion the economic blow considerably at the beginning of next year, and give Congress more time to reach a compromise.
Toppling Off the Fiscal Cliff: Whose Taxes Rise and How Much?
Tax Policy Center | Oct 1
The looming fiscal cliff threatens to boost taxes by more than $500 billion in 2013 when many temporary tax provisions are scheduled to expire. Nearly 90 percent of Americans would pay more tax, primarily because the temporary cut in Social Security taxes and many of the 2001/2003 tax cuts would expire. Low-income households would pay more due to expiration of tax credits in the 2009 stimulus. High-income households would be hit hard by higher tax rates on ordinary income, capital gains, and dividends and by the new health reform taxes. And marginal tax rates would rise, potentially affecting economic decisions.
Economists: Fiscal cliff a serious threat, but unlikely
CNN Money | Oct 1
Of 17 top economists surveyed, 14 believe the end of tax breaks and the steep federal spending cuts set to take effect at the start of next year would cause the economy to tumble into a new recession. Twelve of them believe the fiscal cliff is the most serious risk facing the economy, more serious than the European sovereign debt crisis, business uncertainty about various government regulations or the continued weakness in the job and housing markets…. But all 17 agree on one thing — the economy won’t plunge over the fiscal cliff. Despite partisan bickering ahead of the election, all the economists said they believe Democrats and Republicans will come together to extend the tax breaks and prevent the spending cuts either during the lame duck session of Congress or early in the new year.
U.S. “fiscal cliff” a risk to global growth, Europe to tell G7
Reuters | Oct 1
Europe will tell the United States, Japan and Canada next week that it is acting to resolve its sovereign debt crisis, but that U.S. fiscal policy and slowing growth in Japan and China also pose risks to the global economy. Finance ministers of Germany, France, Italy and Britain will meet those from the other major developed economies in the Group of Seven at a dinner in Tokyo on October 11.
Three Sectors with the Most to Lose from the Fiscal Cliff
Wyatt Investment Research | Oct 1
Three sectors in particular are sure to be negatively impacted by the mere possibility of the fiscal cliff. Those are:
The Big Banks
The Auto Industry