Cliff averted – what’s it mean?

I did several blogs on the lead up to the “fiscal cliff” and on New Year’s Day 2013 Congress passed a bill to avert the cliff.  I will share with you what I know about the law but information is still trickling in so this will be a conversation not a thesis…

Taxes will increase for individuals making more than $400,000 per year as well as on investment profits and dividends.  This is significant because it marks the first true tax increase in the US in the last 20 years.  Payroll taxes will go back up to 6.2% from 4.2% which will in reality be a tax increase for everyone who has a job.  Payroll taxes were previously reduced as a part of the governments stimulus plan those payroll tax reductions are now gone.  This means that someone making $50,000 will pay $1,000 more in taxes in 2013.

The agreement has significant impact on health care spending and I’m going to devote another blog to that topic.  It is interesting that the Congressional Budget Office predicts that the bill to avert the “fiscal cliff” which came about due to the US needing to raise its debt ceiling in 2012 will actually add to the deficit.  The estimates show deficits will increase by $330 billion in 2013 and increase the deficit by $3.9 trillion over the next 10 years relative to current law.  Instead of decreasing the deficit the New Year’s Day Law will actually increase it – which brings us to another point.

Although there was a lot of drama leading up to the vote on New Year’s Day it really was the easy part.  By February the US must raise it’s debt ceiling or the US Governement will default.  It is assumed that the lead up to the request to raise the debt ceiling is where we will learn about potential spending cuts and you can bet that health care will be a primary target.  The sequester, mandatory payment cuts to defense and other programs like Medicare, was postponed on New Year’s Day to March 1, 2013.  Health care providers are on the hook for a mandatory 2% decrease but it could be worse.  Finally, government operations are only funded through March 27, 2013 and a new Congress must pass new appropriations bills or they would be forced to shut down the government. 

The fiscal cliff seemed like a big deal but it may pale in comparison to what’s next.  Let’s hope Congress can be more productive in the first quarter of 2013 than they were in all of 2012 because they have a lot of work to do…

About Craig Thompson

I am a young professional with two great sons, and I work in the healthcare setting. I am employed in hospital administration and serve as Chief Operating Officer at Golden Valley Memorial Healthcare in Clinton, Missouri. These are challenging and exciting times in healthcare and my blog will focus on healthcare, raising boys or being raised by boys, and living in mid America.
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