Americans are all going off the fiscal cliff
December 13, 2012
The American public is seemingly unaware that on Jan. 1, 2013, our economy could take a serious turn for the worst. This date is when the Bush Tax cuts from the early 2000s are due to expire, and it is referred to as “The Fiscal Cliff.” If these tax cuts are lifted and both political parties are unable compromise, the taxes of every American citizen will increase, thus sending our economy into a downward spiral.
During George W. Bush’s first presidential term he enacted two laws in response to the major economic recession our nation was facing. The Economic Growth and Tax Relief Reconciliation Act was passed in 2001 and the Jobs and Growth Tax Relief Reconciliation Act was passed in 2003. Both of these laws cut taxes for lower, middle and upper class citizens, thus alleviating a significant amount of financial stress from American families.
Although these laws removed some of the financial burden from individual Americans, they did not do much to facilitate the recovery of our country’s economy. Because these tax provisions have been in place for such a long period of time, Americans are well adjusted to their current standard of living. If the Bush Tax Cuts are allowed to expire without a compromise being reached, taxes for the average American will increase by roughly $5-7,000 per year. The fact that this large portion of income would be given back to the government in taxes will drastically affect the way citizens go about their daily lives.
The expiration of the Bush Tax Cuts would have detrimental affects not only on American households, but on our nation’s economy as well. According to Dictionary.com, Gross Domestic Product (GDP) is “the total value of all goods and services produced domestically by a nation during a year.” GDP is an indicator of a country’s economic state. Higher GDP percentages are indicative of a prosperous economy and lower GDP percentages are indicative of struggling economies.
Consumer spending currently accounts for nearly 70 percent of our nation’s GDP. If the Bush Tax Cuts expire and Democrats and Republicans are unable to find middle ground, it is obvious that Americans will have less money to spend on goods and services.
Less money in the pocketbooks of consumers means fewer goods and services will be purchased, thus negatively impacting the GDP of the United States. Our GDP percentage will plummet as a result of the expiration of the Bush Tax Cuts. This major decrease will send us into a major recession with the strong potential of a depression.
The two political parties hold different views on “The Fiscal Cliff.” Democrats argue that the Bush Tax Cuts should be extended for lower and middle class citizens and believe that the cuts should expire for members of the upper class.
They believe that the upper class should have to make a greater contribution to the economic recovery of the United States because they have more to give.
Republicans believe that the Bush Tax Cuts should be extended for all taxpayers and that the federal government needs to spend its budget more responsibly. They propose cutting spending in areas that are deemed to be unnecessary or of low priority.
It is obvious that the future of the United States is in jeopardy. If no compromise is reached in regards to “The Fiscal Cliff” by Jan. 1, 2013, our country will be forced to make sacrifices in order to make ends meet. Without successful citizens and a prosperous economy, our position as a superpower in the Western Hemisphere will be virtually impossible to maintain.
Morgan Stippel is a political science major and a professional writing minor. When she graduates from UW-River Falls, she wants to become a state prosecutor and specialize in domestic violence cases.