Yahoo News asked readers to react to Washington's fiscal-cliff deal, forged late Tuesday night? Are they happy? Will they benefit? Here's how the agreement plays out for one American.
FIRST PERSON | Watching the fiscal cliff deal debate go down was a lot like political theater, but its conclusion would have consequences for me. After all, any deal, or lack of one, would lead to changes in taxes and a potential panic on Wall Street. So the deal receives an "A-" for stopping short-term problems in my book, but a "D-" in my ledger for failing to provide long-term solutions.
Short-term success: Contrary to popular belief, professors don't make anywhere near $400,000, and I'm married to a teacher (our household income is way below $450,000), so those tax cuts sticking around help. Keeping the tuition tax credit for five years helps our college with enrollment, which we need. Staving off the cuts in payments to doctors treating Medicare patients helps my parents and my wife's parents, the latter of which would have had to rely on us for help. (One is currently hospitalized for lupus). With two kids, the child tax credit of $1,000 would come in handy to cover their school tuition. We have some savings, but the capital gains and dividends tax rates and estate tax hike on those making more than $10 million wouldn't affect us. Neither would the unemployment insurance benefits for a year, as we still have our jobs.
An indirect benefit is the absence of a market panic. Any boost in stocks is nice, but I was more concerned with a big post-New Year's Day sell-off. Businesses should be fine, until the spring debt ceiling drama.
Long-term failures: One of the biggest shortcomings was the lack of deficit reform. By not cutting spending, and allowing low tax rates to stick around, the fiscal cliff deal could add to the overall debt by $4 trillion. This doesn't affect families like me immediately, but such debt is unsustainable. If it leads to future tax hikes, massive cuts in Social Security, Medicare, and the elimination of college tuition tax breaks and Pell Grants, the short-term success the deal has for my family won't be worth it. Hopefully, the new Congress will have more appetite for long-term spending reforms, keeping more of what we need, and less of what we don't.
John A. Tures is an associate professor of political science at LaGrange College in LaGrange, Ga.
- Budget, Tax & Economy