No matter what they decide in Washington in the next 28 days, the Fiscal Cliff is going to impact us PERSONALLY — in our pocket book.
It’s going to affect me, my wife, my son, my entire family.
Ditto for yours.
So this morning, I’m going to give you two real-life examples to show you precisely how — in dollars and cents.
Then, just a few hours from now, we’re going to get even more specific — in our online conference, America’s Date with Destiny: 11 Shocking Forecasts for 2013.
(Editor’s note: The conference begins sharply at 12 noon Eastern Time or 5:00 PM GMT. About 15 minutes before the hour, click here to go to the video streaming page and wait for it to begin.)
Yes, I know, Fiscal Cliff talk is everywhere. It invades nearly every conversation and pervades nearly every news headline. A featured story on Yahoo! Finance even tried to tie the Fiscal Cliff to the Petraeus affair.
But we don’t follow the crowd.
Long before virtually anyone else even knew what the Fiscal Cliff was, we were giving you a detailed scenario of what to expect.
On May 10, 2010, for example, we issued our first widely publicized challenge to Standard & Poor’s, Moody’s and Fitch to downgrade U.S. debt. (See Weiss Ratings press release.)
Why? Because their ratings were an obvious fiction and because we foresaw the Fiscal Cliff disasters that are now bearing down upon us.
Months went by. But still, the Big Three Wall Street ratings agencies took no action. Despite the looming Fiscal Cliff, they continued to give the U.S. their absolutely highest rating.
One full year went by, and we could wait no longer.
Our own Weiss Ratings took the next big step to help investors prepare for the Fiscal Cliff:
We became the very first ratings agency in the world to downgrade the United States government — by launching our sovereign debt ratings and giving the U.S. a C rating. (See press release.)
Finally, nearly three months later (August 5, 2011), Standard & Poor’s responded to America’s rapidly deteriorating fiscal conditions — but only with a minor downgrade.
Meanwhile, Moody’s and Fitch continue to maintain the fiction that America’s finances merit their highest possible grades to this very day.
Then, This year, We Stepped Up
Our Preparations and Warnings …
On June 11, 2012, we warned “the U.S. is careening headlong toward a fiscal cliff that promises to gut its GDP” — a forecast that was fully validated by the Congressional Budget Office (CBO) five months later.
Indeed, the folks at the CBO were quite explicit:
They declared that failure to avoid the Fiscal Cliff will drive the U.S. unemployment rate to 9.1% by yearend.
Worse, they predicted that, even IF the Fiscal Cliff can be avoided, unemployment will “remain higher than usual” and a continued surge in federal debt will “raise the risk of a fiscal crisis” that will “reduce the nation’s output” anyway!
On July 2, we AGAIN warned about the fiscal disaster ahead. (See 19 Countries in Fiscal Trouble; 10 in Good Shape.) But this time, to make sure you listened, we assembled a compendium of other expert opinions:
We cited the CBO warning that the U.S. debt burden was now greater than it has ever been except during World War II.
And we cited the US. Budget Commission declaration —
“The contagion of debt that began in Greece and continues to sweep through Europe shows us clearly that no economy will be immune. If the U.S. does not put its house in order, the reckoning will be sure and the devastation severe.”
Then, in August, we conducted a major survey to ask YOU for your views on the Fiscal Cliff. (See How to Survive America’s Great Fiscal Cliff.)
Nearly 20,000 readers participated.
And most said the consequences of the Fiscal Cliff would be a recession that’s worse than the Great Recession of 2007-09.
Also in August, we took the next big step: We searched high and wide for — and we found — the one man that I feel has a deeper understanding of the Fiscal Cliff causes and consequences than virtually anyone anywhere, Charles Goyette. And we promptly welcomed Charles to our Weiss Research team.
Charles was the featured presenter in our landmark online event, The Great Fiscal Cliff of 2012-13. And he pinpointed PRECISELY the three Fiscal Cliff time bombs that are threatening to explode in Washington …
Massive cutbacks mandated by the budget control act of 2011 … Taxmageddon … plus the virtual end of Washington’s bailouts and stimulus.
But now …
Here We Are, Just Four Weeks Before the Fiscal Cliff, And … Still, Washington Has Done Virtually NOTHING to Avert It!
We still face multiple fiscal time bombs that are already written into law and set to explode just 28 days from now:
We’re 28 days away from the expiration of the Bush tax cuts extended by President Obama in the Tax Relief, Unemployment Insurance Reauthorization, and in the Job Creation Act of 2010.
We’re 28 days away from across-the-board spending cuts (sequestration) to most discretionary programs, as directed by the Budget Control Act of 2011.
We’re 28 days from the expiration of a 2% Social Security payroll tax cut — an event that will IMMEDIATELY hit the take-home pay of nearly all U.S. wage-earners at one minute past midnight, January 1, 2013.
We’re 28 days away from the expiration of extended federal unemployment benefits.
We’re 28 days from new taxes imposed by Obamacare — the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010.
We’re also 28 days away from a reversion of the Alternative Minimum Tax (AMT) thresholds to their 2000 tax year levels, literally entrapping millions of U.S. families in the snare of much higher mandatory tax bills.
And this last one hits particularly hard because it’s RETROACTIVE to this year’s taxable income. (More details on how it impacts you in a moment.)
All told, the dire reality is simple:
Even IF the White House and House Republicans Can Make
Some Deal to Defuse Some of These Time Bombs …
It Will Be Impossible to Stop All of Them from Exploding
The latest big stumbling block in Fiscal Cliff negotiations?
The same one that has bedeviled wannabe budget fixers for over a decade: ENTITLEMENTS.
Wall Street Journal columnist Bill McGurn puts it this way:
“Have you ever seen serious entitlement reform? I think it’s like the unicorn — I’ve never really seen it. [Asking about it] is like my daughter asking me how Santa gets in the house.”
The reason is obvious: Medicare is the single largest budget buster in America. But it’s also the single hottest hot potato in Washington. No politician wants to touch it. No one wants to be blamed for axing benefits.
How This Will Affect You PERSONALLY!
And What We ARE Doing About it NOW!
Never forget that ALL of these changes alter the lives of real, flesh-and-blood people in radical ways.
They have a direct impact on all of us: From young people just entering the workforce … to families that are struggling to build a future … to the seniors among us who are approaching or are in retirement.
Will Rogers once said …
“This country has come to feel the same when Congress is in session as when the baby gets hold of a hammer.” That’s where we are today.
So for a sneak preview of how this could affect your pocketbook, let me give you two real examples:
Example #1. High-Income Family
A good friend of mine with a home in North Carolina is a small businessman in a high income bracket, and right now, he’s bracing himself for a series of massive tax hikes.
If Congress does not act immediately to change the long list of laws I just told you about …
• His nominal tax rate goes up to 49% in 2013. Thanks to that tax increase alone, he says he’ll have to earn an additional $112,244 in 2013 just to have the same net income he has enjoyed in 2012!
• Taxes on the dividends he earns will nearly TRIPLE to a shocking 43.8%.
• To help fund Obamacare, he will pay an additional 3.8% tax on capital gains, interest, rent, annuities and more.
• When he sells his North Carolina home, he could owe the Feds an additional $57,000.
With two children now in college and with his own retirement rapidly approaching, these added expenses could not be coming at a worse time.
And still, this is only the beginning of sorrows for my friend and for every one of us, as you can see from …
Example #2. Middle Income Families
An associate of mine makes $195,000 per year.
And although President Obama has promised not to raise his tax rates, he’s still very worried about a whole series of other Fiscal Cliff changes that could hit him hard.
Prime among them is the Alternative Minimum Tax (AMT), which, as I stressed earlier, will be applied retroactively to your 2012 income.
Richard Hoey, chief economist at BNY Mellon calls it “AMT shock.” Normally some four million people pay the AMT. But if we don’t fix this on the 2012 income, what’s due in 2013 will be additional taxes for an extra 28 million households.
That impacts everyone in the $75,000 to $300,000 income bracket — costing taxpayers an average of $3,700 in extra taxes.
And finally, there’s the most outrageous and unfair tax of all: The inflation tax.
Make no mistake: Every dollar the Fed creates out of thin air decreases the buying power of every dollar YOU own.
Any way you look at it, when the federal government directly reduces your wealth, that’s a tax!
Whatever Washington does about the Fiscal Cliff, the impact on you, me and every other American will be enormous.
And ALL of this virtually guarantees that 2013 will be the wildest ride any of us has ever seen.
That’s why it’s so important you join us today for our urgent online conference, America’s Date with Destiny: 11 Shocking Forecasts for 2013!
About 15 minutes before 12 noon Eastern Time today, click this link to check your browser’s compatibility and connection.
If you have trouble accessing the link above, please copy and paste this link into your Internet Explorer browser. The link may span two lines so be sure to copy the entire URL with no spaces into your browser: http://finance.moneyandmarkets.com/reports/forecast/event/wfc-countdown.php
Then, simply make sure your computer speakers are turned up. America’s Date with Destiny: 11 Shocking Forecasts for 2013 will begin promptly at 12 noon Eastern Time (9:00 AM Pacific; 5:00 PM GMT).
I look forward to seeing you there!
Good luck and God bless!