Minding your company books is more important than ever these days, as Congress and the President are still at odds and without a compromise over taxes and spending or any type of budget deal. The threat of going over the “fiscal cliff” continues, with time growing shorter as the January 1, 2013 kick-in date approaches for sequestration, tax increases and the effects of many other economic problems.
President Obama is currently out of the country, and Congress is on their Thanksgiving recess, despite the urgency of this matter. If the country’s leaders do not come to an agreement, the country will go into a recession as taxes and unemployment rise. The enormity of the monetary figures is striking, as MSNBC recently pointed out, with a deal of almost 5 trillion dollars needed. Added to this will be the extra costs to consumers as mandated under Obama Care, which is essentially a new tax estimated to cost families several thousand dollars per year.
If no compromise is met, the Bush era tax cuts will expire, new taxes and costs will affect everyone, unemployment will rise, emergency unemployment benefits will be allowed to expire, payments to Medicare doctors under Obama’s Affordable Health Care Act will be cut, and there will be $984 billion in defense and other budget cuts. Right now, states rely on the federal government to provide roughly a third of their budget money, so lack of a deal will negatively affect the states and their populations.
Congress is not in agreement about what should be done, but both sides are talking in conciliatory tones now that the election is over. Democrats want taxes raised and Republicans want spending reduced. Still other independents, like Michele Bachmann of the Tea Party, believe it is best if the country does go over that fiscal cliff to force real action from Congress instead of stop-gap measures.
The L.A. Times reports that after the re-election of President Obama, markets were up on the hopes that finally some agreement might occur over what to do about these economic threats. Many feel some type of agreement or partial agreement will come from the lame duck Congress. Regardless of what happens before January 1st, companies need to be pro-active and make full use of CFO services to oversee and control expenses most effectively in order to remain profitable during the tough economic times expected ahead.