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Fiscal Cliff / Avoided at What Cost?

Some thoughts on the new fiscal agreement: The economy needs a stimulus, but under the agreement, taxes will go up in 2013 relative to 2012 — not only on high-income households, as widely discussed, but also on every working man and woman in the country, via the end of the payroll tax cut. For most households, the payroll tax takes a far bigger bite than the income tax does, and the payroll tax cut therefore — as CBO and others have shown — was a more effective stimulus than income tax cuts were, because the payroll tax cuts hit lower in the income distribution and hence were more likely to be spent. The economy faces a long-term budget problem, but the bill substantially reduces future tax revenue relative to current law. Going over the cliff would have put us on a better budget path, but in fell swoop Congress and the Administration put us right back on the worse budget path, less than 24 hours after we had moved to the new path.

Choosen excerpts by Job Market Monitor from

Brookings

via The Fiscal Cliff Has Been Avoided, But at What Cost? | Brookings Institution.

Deal covers enhanced unemployment-insurance benefits

The main elements of the fiscal cliff were the expiring Bush tax cuts; expiring extended unemployment insurance benefits; an expiring payroll tax cut; automatic spending cuts worth $110 billion per year, spread equally across defence and domestic programmes (called a sequester); and the debt ceiling, the statutory limit on how much the Treasury must borrow, which was reached on Monday. The current deal covers only the Bush tax cuts and enhanced unemployment-insurance benefits, which will continue for one more year. The payroll-tax cut will expire as scheduled, sapping workers’ purchasing power by roughly $1,000 each. Together with the higher taxes on the rich, that will impose a significant fiscal drag on the still-fragile recovery early in 2013.

Choosen excerpts by Job Market Monitor from

Economistvia The fiscal cliff deal: Short-term relief, and little else | The Economist.

Unemployment Extension 2013

Legislation has been approved extending federal unemployment benefits.   Reports indicate that the legislation will continue the unemployment benefits that are currently in place for a year, through the end of 2013.

Here’s information on unemployment benefits for 2013, including regular (state) unemployment insurance, extended unemployment compensation (EUC) and extended benefits (EB) that will be continued under the same program that was in place in 2012.

Choosen excerpts by Job Market Monitor from

FireShot Screen Capture #243 - 'Unemployment Extension 2013' - jobsearch_about_com_b_2013_01_02_unemployment-2013_htm

Unemployment Extension 2013.

Related Posts

Fiscal Cliff / A Reminder

POSTED BY  ⋅ DECEMBER 31, 2012 ⋅ LEAVE A COMMENT

What is causing all the sturm und drang? Is this really a Mayan apocalypse of expiring tax breaks and sequestered spending cuts. Hardly — here is what we are discussing, in terms so simple even a congressman could understand it: • Bush tax cuts expire; tax rates revert to Clinton-era levels. Recall this was originally designed to get rid … Continue reading »

Fiscal Cliff / The Impact on American Jobs

POSTED BY  ⋅ DECEMBER 26, 2012 ⋅ LEAVE A COMMENT

As the year draws to a close, policymakers and the media have their sights fixed on the “fiscal cliff,” the federally mandated set of cuts in spending and increases in taxes scheduled to go into effect at the beginning of 2013. Most economic observers agree that, unchecked, this precipitous drop in government expenditures and spike … Continue reading »

Discussion

One thought on “Fiscal Cliff / Avoided at What Cost?

  1. Finally the agreement was signed. I was sure, the doubts come from what republicans required to democrats in order to accept it and avoid fiscal cliff.

    I wrote about it in my personal blog according this dates published in US media companies.
    http://nocionesdeeconomiayempresa.wordpress.com/

    Best Regards,
    David

    Posted by daviddematiasbatalla | January 2, 2013, 10:00 am

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