Fiscal cliff may drag U.S. into recession

Uncertainty over economic conditions may drag small businesses across America into recession.

This fear was reflected in the October 2012 report of the National Federation of Independent Business, which showed that 38 percent of the respondents viewed the problem as critical.  The cost of health insurance, another factor that caused worry among the respondents, topped the same survey at 52 percent.

Tied for the number three spot are issues that impinge on the cost of fuel and uncertainty over government actions, which garnered 35 percent each. Other worries of small businesses are unreasonable government regulations, 34 percent; imposition of federal taxes on business income, 30 percent; and  tax complicity, 29 percent. While other factors include frequent changes to federal rules, property taxes, and state taxes on business income, with 24 percent each.

"At the beginning of next year, federal tax increases and spending cuts equivalent to 15 percent of the GDP will automatically come into force," the same report said.

Unless the Democrats and the Republicans in Congress will meet halfway to agree on a common ground that will avoid it, America is bound to inch toward a fiscal cliff, the report warned.  However, what is happening right is that each side has shown little sign of coming to terms on certain issues that will make them settle for a compromise, the report said.

If this problem runs out of control, there is a strong possibility that the "fiscal cliff could knock enough points of the growth rate to drive America into a recession, the report quoted  the Congressional Budget Office as saying.

Notably, one of the reasons why this cliff is hanging over the horizon is that several temporary measures are expiring all at the same time at the end of this year. For example, George W. Bush's tax cuts, which were extended for two years, and Obama's temporary jobs measures that include payroll tax holiday and extended employment benefits, the report said.

This is not to mention the Alternative Minimum Tax is expected to hit 30 million middle-class Americans.  Compounding the problem is that Medicare is set to slash payments to doctors by 30 percent.

To sum it up, America will plunge into a fiscal squeeze amounting to $600 billion in a single calendar year, and $6.1 trillion over a ten-year period, the report added.

Comments

Post a Comment

Popular posts from this blog

Opening of public lands for agri-developments

Image
For many decades, vast tracts of forest lands are damaged across the Philippines. These are either the handiwork of nature like soil erosions, landslides, tremors or they're simply man-made due to humans' greed for immediate cash if only to survive. By all means, those who are within the proximity of the forests are free to do whatever they thought was best for them to survive or earn fast cash.  Notably, the most common practice that upland dwellers do is the cutting of firewood, slash-and-burn farming to plant crops even if these activities run counter to established forestry regulations that forbid them from doing these activities without permission from the authorities. Without a land of their own, they have to do it anyway. While some armed groups would simply engage themselves in illegal logging activities for profits. Forestry reports said that they even encroach on other's logging concessions to cut trees for sale to interested buyers. When I was working with the Mi
Read more

China is to blame for the pandemic spread

Image
Had the Chinese government taken the initiative or done enough to immediately contain the novel Coronavirus from spreading waywardly into other areas, this pandemic wouldn't have gone too far to pester other countries like Italy, the United States and the Philippines whose governments had declared a lockdowns thus causing extreme fears among the people, not to mention the derailments of some economies worldwide. But the provincial government, where Wuhan is an integral part of, acted too late to lockdown the place. The local government in Wuhan should have prevented residents from getting out, especially those who were infected by the virus. Sorry to say this, but the Wuhan government officials were lackadaisical in their approach to the health dilemma, thinking that the problem was just an ordinary matter which didn't require much attention. Until the problem got worse resulting to some deaths in the area had they known of Covid-19's serious impacts on the health of innoce
Read more