By Peter Morici
To avert the fiscal cliff, President Obama may get Republican cooperation in soaking the rich, but the deal that emerges could put the nation in dire straits by the end of the decade.
The Budget Act of 2011 requires the President and Congress to cut federal deficits by $1.2 trillion over nine years, or annual defense and non-entitlement outlays automatically will be reduced $107 billion annually on January 1. Also, the Bush tax cuts, payroll tax reductions and other assorted programs expire.
Overall, annual spending would be cut $136 billion, taxes raised $532 billion, and economists fear a staggering recession would result pushing the unemployment rate into the teens.
The President's Plan
President Obama wants to raise tax rates on families and many small businesses earning more than $250,000, and Congressional Republicans would like to curb entitlements by increasing Medicare premiums paid by wealthier participants and slowing Social Security cost of living increases.Read More »from Soaking the Rich Won’t Solve Much