Despite the Kumbaya moment following the White House summit with Congressional leaders, I am becoming less confident that a the fiscal cliff and sequestration will be resolved prior to the end of 2012. This weekend the softened stances of the President, Senate leaders, and House leaders has stiffened up again. The lines in the sand have been drawn again: higher tax rates on the rich by the President, no cuts to Social Security and Medicare by the Senate, and keeping tax cuts for everybody, including the rich, by the House. In addition, the President has doubled his target for increased tax revenue to $1.6 trillion while delaying any discussion on spending cuts until 2013.
I don't see much opportunity for compromise and lots of opportunity for brinkmanship, which will bring the stock market down, perhaps even worse than the 2011 19% market decline.
For more on New Realities, check back every Sunday for a new segment.
This is not financial advice. Please consult a professional advisor.
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