‘Fiscal Cliff’ Could Put Millions of Taxpayers Into ‘AMT Shock’

[ProSense]

3. Fiscal cliff fear

is irrational.

The Washington Post was so upset over President Obama's latest budget proposal to Republican congressional leaders that it used a front page editorial to complain to readers. While the article included several comments from Republicans warning of the dangers of President Obama's not yielding to their demands. It added the additional assertion that the deadlock is occurring:

"with time running out for policymakers to agree on a plan to prevent more than $500 billion in tax increases and spending cuts that could rattle the economy."

This statement grossly misrepresents the reality, since the time will run out "to prevent more than $500 billion in tax increases and spending cuts" more than a year from now. We don't see all of these tax increases and spending cuts on January 1, as the article would lead readers to believe. They would only take place over the course of a full year if Congress and President Obama never reached a deal. For this reason, there is not much reason for concern that the failure to reach a deal by January 1 "could rattle the economy."

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