On Jan. 2, fiscal cliff tax cuts became law, some permanently and some temporarily. For about 98 percent of Americans, it was very good news, since taxes were not increased by the anticipated $3,000 to $7,000 per year. One tax that did increase for every wage earner is the payroll tax. This tax, which had been lowered the past two years, was increased to 6.2 percent. The revenue will go to the Social Security Trust Account to pay Social Security payments.
The easy part—cutting taxes—is done, but here are other fiscal matters Congress will need to address in the upcoming months:
One trillion is a number that’s difficult to put into perspective. On paper, it’s a 1 with 12 zeros after it, but think of it this way: If I spent $1 million every day since Jesus walked the earth, I still wouldn’t have spent $1 trillion by now. Our national debt is more than 16 times that amount.
Almost all legislators agree spending cuts need to occur. Conservatives are promoting major spending cuts—more than some members of Congress want to see. Entitlement areas, including Medicare and Social Security, are frequently mentioned as possible targets. Medicaid, which is a federal- and state-combined program run by each state, is often identified by both the federal and state governments as needing reform. Doing so would minimize increases in spending as the population served by the program grows. These programs are unsustainable in their current form with spending. Here are recent expenditures:
Medicare will go broke in 2024 if changes to the existing system are not made. The same goes for Social Security in 2037.
I anticipate there will be heated discussions in Congress regarding what spending cuts should occur this year. And I am confident there will be reductions. When our fiscal house is in better shape—and it will be in better shape—America will continue to be the strong and caring leader of this world. You can help ensure we are that leader.
As a constituent, let your elected officials know how you feel as issues and questions arise. Please contact me if you would like contact information for your elected officials.
By Jeff Stingley
Director of Public Affairs