Kicking the can to the fiscal cliff
A Capitol Hill deal to avert the "fiscal cliff" is proving elusive as a deadline to avert tax hikes on virtually every American worker and block sweeping spending cuts grows perilously near.
Lawmakers and the White House have less than 24 hours to avoid the cliff, and are still at odds on key issues, like the income threshold for higher tax rates, and how to deal with inheritance taxes.
The Republican Senate leader Mitch McConnell and Vice President Joe Biden are expected to continue negotiating via telephone tonight.
Other lawmakers already left Capitol Hill, hoping they'd have a compromise bill to vote on when they return Monday morning.
At the heart of the fiscal cliff problem is the same problem Washington has been dealing with for generations. Before the internet and cable television, the fiscal cliff was called "kicking the can."
"We have been using the cliche of 'kicking the can down the road' for years," said Dr. Matt Will of The University of Indianapolis School of Business. "But it is absolutely correct in this instance. We have a $16-trillion deficit."
Every president in the last fifty years and the congresses with which they served all kicked the can.
Now that can is going over the cliff unless, according to Dr. Will, politics takes a back seat. "This problem is no longer kicked down the road - it's here - and it is getting worse and worse and both sides have offered solutions, and neither of which is a long-term solution. They merely kick the can a little bit more."
If the can is allowed to go over the cliff, there are any number of consequences, including increased taxes for almost all taxpayers. If nothing is done, you can almost certainly expect your taxes to go up right away.
The Tax Policy Center estimates a person earning $20,000 a year will pay $412.00 in additional tax. Those earning $64,000 a year will pay $1984.00 more. And a person earning $108,000 annually will pay $3500.00 more.
Plus, everyone will pay an additional two-percent to Social Security.
And these number do not include new taxes designed to pay for health care reform.
Now back to how, or if, a solution can be worked out.
Dr. Will has built his career making sense out of money. He says the path to a solution is not easy, "There is only one way to solve it and neither party has the political will to do it. You have to reform entitlement or you are not going to be get a control over spending," according to Will. "Spending is the real problem here."
Congress has until midnight Monday to solve the issue or kick the can - again.