#372 (11/29) - So What Exactly Is Danger of Falling Off the "Fisical Cliff?"

BLOG NOTE: If you've looked to the right of this blog page, you've notice large gaps of empty space after the first several entries. I don't know why, but  for some reason since recently, I cannot remove those gaps NOR type any new text but one letter at a time. Please PRAY that this might be reseolved soon. In the meantime, please scroll down to almost the very end of that column to find instructions on a) how to post your comments, b) how to contact your Congressional representatives, and c) websites AND THEN books I highly recommend. (You can email me at: yonashiro@bellsouthl.net)

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PRAYER  REQUEST: "Congress Returns Under Budget Deal Pressure," November 25

Congress returns to business on Monday with the budget deal their number one priority. The legislators are under an end-of-the-year deadline to reach a deal that cuts the federal deficit and avoids the combination of $500 billion in tax hikes and federal spending cuts due to take effect on January 2. The so-called “fiscal cliff” has Americans nervous about the potential tax increases or loss of entitlement benefits from popular programs such as Medicare, Medicaid and Social Security.

The biggest stalemate between Democrats and Republicans has been over whether to raise income tax rates on yearly earnings over $200,000 for individuals, and $250,000 for families. President Obama wants to let tax rates rise next year to a top rate of 39.6 percent but has hinted that he is open to compromise. Meanwhile, House Majority Leader John Boehner and other Republicans oppose any increase above the current top marginal rate of 35 percent. They propose lowering tax rates and eliminating or reducing some deductions and tax credits. (Sources: Fox News, AP)

As the Lord leads, please pray:

• For a spirit of compromise and cooperation from Senators in both political parties over the budget deal
• That Congress and President Obama can agree on how to solve the budget crisis by the end of the year
• That the American economy will begin continue to improve and those out of work can soon find jobs

DECLARE YOUR SUPPORT FOR ISRAEL: I encourage you to go to the site below and consider signing the petition to Israel Prime Minister Benjamin Netanyahu declaring your support for Israel especially as it again faces a threat to its very survival. The petition is presented by the Christian group Liberty Counsel.  http://www.libertyaction.org/370/petition.asp?Ref_ID=18588&CID=370&RID=37375064  AND of course, try toPRAY daily for Israel. 

"The Fiscal Cliff: A Primer, " November 12;  http://www.ncpa.org/sub/dpd/index.php?Article_ID=22564&utm_source=newsletter&utm_medium=email&utm_campaign=DPD

With almost no time to celebrate his reelection, President Obama must quickly come to an agreement with lawmakers on the "fiscal cliff," a combination of spending cuts and tax increases that pose a threat to the fragile economic recovery, says the Tax Foundation.

The fiscal cliff includes such things as:

• Expiring provisions of the 2001 and 2003 Bush Tax Cuts.
• A compromise that will increase the estate tax.
• A patch in the Alternative Minimum Tax.
• A temporary 2 percent payroll tax holiday.
• Five new taxes as a result of the Affordable Care Act.
• In total, the tax increases are slated to cost around $514 billion.
• Additionally, there are spending cuts of $109 billion.

The federal government is borrowing an average of $2.7 billion a day. As a result, the debt is expected to approach the ceiling by the end of 2012, possibly as late as February 2013. Lawmakers expect another political fight between Republicans who resist any future increases to the debt, at least without spending cuts, and Democrats who favor increasing the debt without any future deficit reduction plans.
In the debt ceiling negotiations between Obama and Congress, lawmakers failed to agree on a $4 trillion deficit reduction plan. A law passed in August 2011 stated that if Congress was not able to implement a deficit reduction plan over the next 10 years, then there would be automatic cuts to both defense and non-defense discretionary items. This was done in part to make the cuts so unreasonable to both parties that there would be cooperation in coming up with a deficit reduction plan.

In addition to the debt ceiling, Congress will also pass a new budget or a continuing resolution before March 2013. The last federal budget was passed in April 2009 and since then any spending authorizations have been done through continuing resolutions. In the upcoming year, Congress has the chance to enact a new budget that can reevaluate the priorities of different programs that receive federal funding.

[bold, italics, underline emphasis mine]  Source: "The Fiscal Cliff: A Primer," Tax Foundation, November 8, 2012.
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"Without a Cliff Deal, States Will Bleed Red Ink;" November 21; http://www.ncpa.org/sub/dpd/index.php?Article_ID=22601&utm_source=newsletter&utm_medium=email&utm_campaign=DPD

The fiscal cliff is looming over the country as many states prepare for the economic impacts if Congress and the president are not able to negotiate a deal soon. According to a study by the Pew Center on the States, the economic slowdown would significantly affect state economic activity, as well as undercut many state budgets, say Eric Pianin and Brianna Ehley of the Fiscal Times.
Many states have or are in the process of making contingency plans. The expiration of many taxes, like the Bush tax cuts, as well as tax increases and spending cuts will affect states greatly.

• Six states that allow residents to deduct federal taxes from their income in filing state tax returns would lose money once the Bush-era tax cuts expire because those residents have less to pay in state income taxes.
• Conversely, 43 states and the District of Columbia will have an increase in revenues since people will have more income to be taxed.
• Moreover, there will be lower federal deductions, which could result in more income being taxed at the state level.
• Additionally, there will be a higher taxable corporate income.

High-income taxpayers can also expect a reinstatement of limits on some deductions if the tax cuts are allowed to expire. Even though some states are expected to see a slight rise in revenue from the ability to generate more revenue from taxes, families are going to be hard hit and so will industries that supply important jobs for the economy. For example, the defense industry warned of massive layoffs if the cuts to the defense budget are to go through. Federal spending on defense comprises 3.5 percent of the total gross domestic product of states.

States like New Jersey and New York are in an especially difficult situation considering the toll that Hurricane Sandy has taken on their budgets. New Jersey residents may face higher tax bills as local governments exceed the 2 percent cap on annual increases to cover rebuilding costs.

[bold and italics emphasis mine] Source: Eric Pianin and Brianna Ehley,  Fiscal Times, November 16, 2012.