Cuts.Savings and taxes

[tommy001]

Now that the election is done and dusted, what's all the cuts,savings and taxes which are intended? Will people be worse off? Do you think there will be lots of new jobs or losses? It will be a big task for Obama, and just how will he do it? I'm in the UK and would love to know if he can pull this off or not in his promises? Have your say to educate a British guy (Me!) on everyday life in the USA post election.

[tommy001]

No replies yet! Ah well!
Suppose nobody really know's yet what will happen.

Changing the subject I heard good reports on the news over here he did well at hurricane Sandy. Let's hope things get back to normality there soon. Looked frightening even to watch on tv.

[Odelay]

Tommy, it's not an easy or simple answer. If I had to guess, I'd say this gets done in 3 or 4 parts.

Part 1 during the lameduck congressional session btwn now and 1st week of January (when newly elected members begin), I think the current middle class tax structure will be preserved while the GOP gives on allowing the top tax rate of 34% rise to 39%.

Part 2, starting soon after the first of the year and ending say in March, the top tax rate will be negotiated, and will be tied to the current budget. They'll also resolve the automatic cuts to defense. It will likely be a huge budget bill.

Part 3, would be the grand bargain to reduce the deficits. Long term cuts and deficit reduction would be negotiated here. That might take 6 to 9 months to complete.

Part 4, would be tax code reform, eliminating loopholes, adjusting rates, etc. I'm pessimistic that this can get done in 2013. I watched tax reform occur in 1986 and it was a long painstaking process. And that was with advocates in both parties and the White House. I don't think tax code reform starts with near that support this time around.

The result will be somewhat of a tax hike for the rich. A lot of loopholes will be examined - some of them cut. Corporate tax rates might come down in compromise with removing corporate subsidies. I envision the middle class bearing some pain, i.e. with a return of the payroll tax to previous levels. Medicare and Medicaid will see reductions in benefits, and perhaps higher premiums. Social Security might not get touched until maybe 2015. Defense spending will go down very slightly or stay flat. Other discretionary spending will take a bigger hit. Not too sure about big investments in infrastructure or clean energy. Not sure there's any room or political capital for that. My fear is that global warming and costly responses to it will be largely ignored.

Caveat: All of what I've stated above could be completely wrong. No one really knows for sure. I don't know enough about the UK's parliamentary system to be able to contrast it for you. From what I do know, a new PM comes in with a ruling coalition in parliament to allow him/her to proceed with an agenda. We rarely have that kind of uniformity over here.