Fiscal cliff 2013 – What are the big implications of the fiscal cliff for 2013?
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Now that the election is over we can go back to cat food and automobile commercials. After all, we need to get you consumers out of your house to blow money on Black Friday after you blow out your intestines on Thanksgiving. The fiscal cliff is the given name of the impending fiscal collapse of our government. Okay, that might be a bit extreme but we do have some gigantic challenges ahead. The country is in deep debt. I mean we have over $16 trillion in our national debt and are looking at trillion dollar deficits (that is, spending more than we make for many years to come). So what options are on the table? Given the massive costs in programs like Medicare that will see a big boost in costs courtesy of the fiscal wave of baby boomers, a perfect storm is arising. Ultimately we are going to have to cross this bridge very carefully.
Taxes and cuts are in the future. Unless we can get GDP to increase and create household income growth then we are destined to muddle through. Over half of the S&P 500 companies make a sizeable portion of their profits abroad (and many have increased abroad in other countries). As a mature economy, it is hard to expect massive GDP growth. This is typical. With an older population and a younger less affluent population, some hard decisions will need to be made.