BOSTON (CBS) – We’ve been hearing about it every day for months.
Who comes up with this stuff and why are they trying to scare us?
WBZ NewsRadio 1030’s Joe Mathieu reports
“Fiscal cliff” is the term used for the so-called economic Armageddon we’re told will arrive in January, if Congress doesn’t do something about it first
Most people don’t have a clue what it is, so let’s start at the beginning.
The first time we heard the term “fiscal cliff” was about a year ago in a report from the investment bank Goldman Sachs. But it became a headline a few months later when the Chairman of the Federal Reserve said it out loud on Capitol Hill.
“On January 1, 2013 there’s going to be a massive fiscal cliff of large spending cuts and tax increases,” Ben Bernanke said.
Could he have known what he was starting?
He certainly got our attention and it deserves our attention because this would affect almost all of us, whether we’re employed or not.
But what is it?
Here’s the deal. If the laws on the books are left untouched, two things will happen on January 1, 2013.
Tax cuts will expire. That includes the Bush-era tax cuts and the payroll tax holiday, which would mean tax hikes for every working American.
At the same time, automatic government spending cuts would kick in. $100 billion worth. Half of it defense spending, half of it non-defense, adding up to more than $1 trillion over ten years.
Public programs like social security and veterans benefits would be exempt from these cuts, but extended unemployment benefits would expire. Checks would stop for about three million people. Bad timing.
So why is all of this happening at the same time?
You can thank Congress.
Lawmakers in Washington designed this monster themselves the last time they could not agree on cutting the deficit. Does anyone remember the super committee?
Members of Congress believe this cliff would be so scary for everyone that Democrats and Republicans would have to compromise to avoid disaster.
Here we are again, the clock ticking toward another deadline.
CBSBoston.com will have an expert on call for a live Q&A Monday through Friday from 5:30 – 6:30 p.m. to answer your questions about the fiscal cliff.
The series “Inside the Fiscal Cliff” airs all week at 5 and 11 p.m. on WBZ-TV and at 5:55 a.m., 8:55 a.m., 12:21 p.m., and 4:55 p.m. on WBZ NewsRadio 1030.