The election is over and now the political world must act to keep our nation from falling off the so called “Fiscal Cliff”. The first batch of rhetoric, from the House of Representatives, was relatively conciliatory with the idea that we will have to compromise and work together. However, both the Senate majority leader and the President’s rhetoric was tax the rich. If nothing is done there is a good chance our US debt will be downgraded which in turn will put additional pressure on the markets. We believe something has to be proposed by year end.
Here is what we think should happen for the benefit of the country:
- Extend Bush Tax cuts because the economy is too fragile
- Simplify the tax code
- Reduce government spending across the board, including fixes for entitlement spending such as Social Security and Medicare/Medicaid
- Have a budget, with a proposal to pay down debt.
If Washington cannot agree on a solution, there will be higher taxes for all of us no matter the income level. This will throw us into a recession and impact any growth going forward. We also have a debt ceiling fight within the next few months that needs to be part of this conversation. We hope a solution can be found as the alternative is negative for everyone.