by Nancy Zambell | November 22, 2011 5:15 am
Tasked with finding $1.2 trillion to cut in the federal budget, after summer’s playground antics that caused the markets to tumble and roll like a roller coaster, the 12-member congressional “super committee” — as expected — has turned into the “stupor” committee.
Monday was their deadline to send their plan to the Congressional Budget Office, and — surprise, surprise — the Dems and Reps released a joint statement of failure. But you can be sure that the rhetoric of blame has already begun. Even on Sunday, when unofficial statements suggesting no agreement had been made, the airwaves were filled with pointing fingers.
Business as usual in Washington. I’m not going to rehash the politics, as that won’t help you understand the importance of this failure. Instead, let’s look at how the inaction may negatively impact your financial situation.
First of all, a failure to pass the needed reductions will trigger $1.2 trillion in automatic spending cuts — half in defense and half in other programs. The good news is that the cuts won’t be enacted until 2013. The bad news is that gives Congress another year to play politics, running right up against the next deadline, probably failing to meet it too, and, most importantly, causing extreme market volatility. Just like we had last summer, which did investors no favors.
And that’s not all. Here are five additional non-investment ways your pocketbook might be affected:
Those are the major effects for you and me. But there are many more that could make you poorer next year — in your personal finances, as well as in other areas that will affect you, directly or otherwise. They include losing your deductions for state and local sales tax and college tuition; businesses paying more taxes because they won’t be able to write off bonus depreciation allotments for new purchases or get tax credits for research (which hurt their bottom lines, preventing expansion and new product development); and less money for city, state and federal government funds to improve our decaying infrastructure (which dates back to the 1950s and is in dire need of repair and replacement).
So what’s an average taxpayer to do? Make your views known! Write, call, fax or email your representatives and senators and let them know that you don’t appreciate their political shenanigans that waste our time and money and place our country at risk of additional financial calamity.
I expect that we will see some short-term fixes, but nothing that really bridges the gap. But I always say, “It’s better to be prepared,” so don’t stick your head in the sand. Get out there and let your representatives and senators know what you think!
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