Waiting for the Fiscal Cliff and Sequestration to Happen

It's inevitable that the Fiscal Cliff and Sequestration will happen.  This will allow both the Republicans and Democrats can claim success when negotiating a solution. 

How?   Once the Fiscal Cliff happens, everyone's tax rates go up.   The solution will likely involve reducing tax rates for the middle class to Bush era rate and for the rich to get lower rates but not as low as the Bush era tax rates. Once Sequestration happens, discretionary spending will get across the board cuts, including 2% for Medicare and a 9.4% cut to most defense spending, excluding armed forces pay.   The solution will reduce or delay the spending cuts, but won't restore the level prior to sequestration.

Thus all sides will be able to claim victory for their constituents: lower taxes and lower spending cuts. 

For more on Strategies and Plans, check back every Monday  for a new segment.


This is not financial advice. Please consult a professional advisor.

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