COMMENTARY | Some financial experts argue that it's actually best for the United States to fall off the so-called "fiscal cliff." Federal Reserve Chairman Ben Bernanke described the massive fiscal cliff as the large spending cuts and tax increases that would kick in Jan. 1, 2013 if the Bush tax cuts aren't extended.
Some analysts argue, according to a recent CNBC article, that our economy needs another recession.
Extending the tax cuts would essentially be a way of just buying more time as government officials try to deal with the debt problem, according to some analysts. However, I think the debt problem is just another scare tactic or excuse so that the general public will accept higher taxes or a down economy. In reality, the government could easily tax wealthy companies and individuals.
Hurting the poor
If we go into another recession it will hurt the poor as well as the middle-class. Many of my friends lost their jobs during The Great Recession. I had to take temporary pay cuts during the recession as well as a permanent pay cut. I can survive on a pay cut, but people who remain unemployed have to worry about basic necessities and survival. It would be better to avert a recession by figuring out how to balance the budget in a way that protects the poor and middle class by giving them opportunities for "upward mobility" or to advance to a higher class.
Investing in a recession
As an investor, I'm not looking forward to falling from a fiscal cliff that triggers a recession. Some experts say stocks go down about 30 percent in a recession. My Roth IRA portfolio is still recovering, and my 401(k) has just gotten back to even. As a long-term investor, I have to remind myself that if stocks go down 30 percent, I'll be buying them at a 30-percent discount. However, I'm not sure I believe that anymore. With so many baby boomers retiring and pulling out of the stock market because they need to live on their investments, the market may be headed for an extended bear market.
Paying more in taxes
I am saving as much money as I can in order to pay for increases in my tax bills. Although it's hard to calculate an exact amount, I'm estimating we will owe between $2,500 and $3,500 more in taxes thanks to the expiration of tax cuts. It's clear to me that the money I send to the IRS is money that I would have spent boosting the economy with my spending.
While some argue that recessions are part of the normal economic cycles, I don't believe that we need another one so soon. It's important to minimize recessions because they can devastate families and knock people down the socio-economic ladder. I think a lot of middle-class people like me just need a few more years to stabilize our own financial situation before we are hit with higher taxes and an unstable economy.
*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
More from this contributor: