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Fiscal Cliff

“ Fiscal Cliff” the term was first proposed by Federal Reserve Chairman Ben Bernanke at a c cashback forexgressional hear forex cashback easyg on February 7, 2012, to describe the start of the automatic deficit reduction mechanism on January 1, 2013, which would force a sudden reduction in government spending, making the spending curve look like a cliff “fiscal cliff” “fiscal cliff” there are four main issues involved: the expiration of former President Bushs tax cuts; the expiration of the 2% payroll tax cut; the expiration of the unemployment compensation extension; forexcashbackeasy the expiration of the Budget Control Act if Congress fails to reach an agreement to meet the 100%cashbackforexuper Committees deficit reduction targets. The automatic spending and budget cuts authorized by the Budget Control Act cashbackforex take effect. All of the above measures involve about $600 billion, or about 3.8% of the cashbackforexpip.S. gross domestic product, and at present, the U.S. economic recovery is still stumbling, with a growth rate of only about 2% “ fiscal cliff” the significant impact on the economy can be imagined The origin of the fiscal cliff On January 20, 2001, George W. Bush Jr. was inaugurated as U.S. President, in order to stimulate long-term economic growth, Bush Jr. enacted the Economic Growth and Tax Relief Reconciliation Act in that year, reducing the top income tax rate from 39.6% to 35%; in 2002, and the capital gains tax rate from 20% to 15%, and the personal income tax rate on dividends from 35% to 15% The former is expected to cut taxes by $1.35 trillion, the latter tax cut scale of According to the timetable, the top income tax rate reduction should have ended at the end of 2011, but due to the financial crisis in 2008, Barack Obama, who became president on January 20, 2009, was forced to extend the Bush Administrations tax cuts by two years, a move supported by Congress. In order to stimulate consumption, Obama also announced that from 2011, the U.S. payroll tax will be reduced from 6.2% to 4.2%, while the introduction of unemployment benefits program, the two corresponding policy cycle for two years, respectively The reduction in tax revenue and economic stimulus programs generated huge spending, making the U.S. fiscal straits, struggling last August 2, the size of the U.S. debt due to exceed the debt ceiling of $ 14.3 trillion at the time and the U.S. government faces the risk of default Obama proposed to Congress Although the debt ceiling was subsequently raised by a bipartisan agreement, the debt problem was not really solved, and the U.S. House and Senate did not agree on a deficit reduction plan for the next decade. Deficit reduction program to reach agreement in case they set a trigger mechanism, that is, if a consensus is not reached on January 1, 2013, the Democratic and Republican parties each advocate of government spending projects, will need to share the amount of deficit reduction, is expected to cut government spending in the next 10 years 1.2 trillion U.S. dollars above “ Bush administrations tax credit relief and the Obama administrations 2% payroll tax cut The expiration date of the above measures, especially the automatic deficit reduction mechanism, will force a sudden reduction in government spending, making the spending curve look like a cliff, so named “ fiscal cliff ” the election has intensified the vicious fight between the two parties last year. The vicious fight over the national interest, resulting in the loss of U.S. sovereign credit “ AAA ” the highest rating in addition, the bipartisan agreement on raising the national debt ceiling, but also only to support the U.S. government operations until the end of the November election this year, the election will be held in a few months “ fiscal cliff ” become a stubborn problem that can not be bypassed Obama July 9, called on Congress to reduce revenue below the fiscal cliff. On July 9, Obama called on Congress to temporarily extend the Bush-era tax cuts for people earning less than $250,000 and to increase taxes on the wealthy at the same time; but Republican presidential candidate Mitt Romney was adamantly opposed, “ in the current economic situation, the last thing we need is to raise anyones taxes ” the focus of the debate between the two sides was the wholesale extension of the Bush-era tax cuts to benefit If no changes are made to the original agreement and the tax incentives are allowed to end as scheduled, the personal income tax in the United States will generally rise, the payroll tax rate of about 160 million working people will rise by 2 percentage points, and millions of long-term unemployed people will lose their benefits so this path will definitely not work. If, as Obama advocates, only the tax cuts for those earning less than $250,000 a year are extended for one year, the governments revenue will be reduced by $150 billion as a result, but after raising taxes on those earning more than $250,000, then they will generate $850 billion for the treasury in the next 10 years Conversely, if the tax cuts for the rich under the Bush administration are fully extended as Romney advocates, then the U.S. will need to pay for 2% of the Therefore, Obamas measure may be feasible, but it cannot be passed by the Republican-controlled Senate, and can only be a moon in the water, a flower in the mirror “ fiscal cliff ” serious consequences The U.S. two parties must start new negotiations on the debt issue in the second half of this year According to the operating space set aside by the Democratic Party, the two parties on the debt The struggle over the issue is expected to be staged after the presidential election in November, and its intensity is feared to be even greater than last year relative to the huge scale of the debt, the endless partisan struggle on investor confidence is even greater, once the U.S. credit rating was downgraded again, its impact on the market absolutely more than last year The Congressional Budget Office predicts that if Congress can not on the “ fiscal cliff &rdquo ; reach agreement, the 2013 U.S. unemployment rate will reach 9.2%, from October this year, the 2013 fiscal year economic growth will only be 1.1%, when the U.S. economy or will fall back into recession; and if the tax cuts are extended while the spending cuts alarm is lifted, the U.S. economy will grow at 3% in 2013, the unemployment rate is close to 8% The Federal Reserve also believes that if Congress fails to agree on federal cuts Budget plan to reach agreement, the beginning of 2013 U.S. fiscal position will be a significant contraction, which will lead to delayed hiring and investment, and then drag the economic recovery, the United States or will suffer “ Greek moment ” U.S. House of Representatives voted to pass the fiscal cliff bill U.S. House of Representatives late on January 2 local time to 257:167 vote to avoid &ldquo Fiscal Cliff & rdquo; bill, so that the U.S. economy successfully avoid the risk of recession the bill was passed in the Senate yesterday, it is expected that President Obama will soon sign the bill into law As many House Republican members previously opposed the Senate version of the bill, the agreement was passed mainly on the support of the Democratic Party it is reported that more than half of the Republican members voted against House Speaker Boehner himself voted After the House of Representatives could not get enough votes to amend the bill, the Senate version of the fiscal cliff bill was able to vote directly in the House of Representatives The new bill will solve the fiscal cliff by raising most of the current tax rates, while the current unemployment benefits will be renewed In addition, the new bill will be delayed for two months to vote on the spending reduction program After “ fiscal cliff ” era of the United States is still threatened by fiscal problems  The two parties in the U.S. Congress after a round of fierce exchanges, the two sides finally passed a last-minute agreement to avoid the U.S. economy fell into “ fiscal cliff ” but high tax rates and the U.S. House of Representatives will follow the vicious fight may threaten the U.S. economy in 2013 U.S. House of Representatives passed a bill on Wednesday to avoid widespread tax increases, will delay spending cuts for two months, so that the U.S. economy is not affected for the time being But deficit reduction Wells Fargo (WellsFargo) senior economist Mark Vitner predicted that the U.S. economy will grow 1.5% this year, down from 2.2% in 2012, and the unemployment rate will remain at 7.7%. Even if a deal is reached, Wall Streeters will not jump up and throw their hands in the air to put it mildly, the federal government is clearly dysfunctional ” Congress postponed the deadline for government spending cuts by two months from January 1, which merely delays the emergence of a fierce battle scenario When the federal government cuts spending, the impact on economic growth In addition, another impasse is that Congress may have to raise the federal governments $16.4 trillion debt ceiling in February, so that the government can continue to pay bills such as payrolls If Democrats do not give in on spending cuts, House Republicans probably will not easily agree to raise the debt ceiling Democrats oppose deep spending cuts Bipartisan fiscal cliff deadline set a year ago, forcing Democrats and Republicans in The negotiation process to avoid the fiscal cliff once again highlighted how far apart the two parties positions are on taxes and spending, with Republicans not wanting to raise taxes and Democrats unwilling to cut government programs. DeutscheBank) economist JosephLavorgna said, “ nothing has really changed many of the major philosophical issues that we have not yet begun to deal with”.