Now that a last-minute agreement averting the nation’s going over the “fiscal cliff” has been reached, some are questioning how they will be personally impacted.
The U.S. House of Representatives on Tuesday voted to approve a bill allowing tax hikes on the wealthy, an extension of unemployment benefits and to delay automatic across-the-board spending cuts in federal spending for two months.
While the extension of unemployment benefits may come as a blessing for many here in the Valley, where unemployment remains about 26 percent, others question the merit of such a policy.
Although jobs are hard to come by these days, Lance Wiseman said extending unemployment benefits would further allow people to rely on government assistance rather than seek work.
“If you extend those benefits you’re enabling people to stay on unemployment,” Wiseman, a retired firefighter, said.
A resident of Hobbs, N.M., where unemployment stands at less than 5 percent, Wiseman also expressed concern that the deal’s tax hikes will not be enough to cover the federal government’s annual spending.
The non-partisan Congressional Budget Office projected that the plan would increase the deficit by $3.9 trillion during the next 10 years. The proposed legislation would also raise about $600 billion during the same time period, according to various estimates.
Congress is also scheduled to revisit the budget in two months when it votes on a debt ceiling.
In his estimation, the federal government is not doing enough to reduce the budget deficit and risks a lower credit rating, Wiseman said. Any additional lowering of the nation’s credit rating would have wide repercussions for the average American, he said.
“Better hold on because in the next four years it’s going to be rough,” Wiseman said.
The non-partisan Tax Policy Center reported that 77 percent of households will face higher federal taxes under the deal.
Those households earning between $40,000 and $50,000 will face an average tax increase of $579 in 2013, the center reported. The higher taxes would mostly be in the form of the payroll tax returning to a rate of 6.2 percent, up from the 4.2 percent rate Americans had enjoyed for the past two years.
For someone making $50,000 a year, their income tax had previously been $2,100. The expiration of the payroll tax holiday means that same individual will now pay $3,100 under the restored rate, a difference of $1,000 a year or $38 weekly.
As someone on a fixed income, Mario Castañeda said $38 a week amounts to a significant loss.
“Of course it would a make a difference,” he said.
Although the El Centro resident has been retired for the past 10 years, he constantly fears his yearly Social Security cost-of-living adjustment increases will not keep pace with rising taxes, gas prices and the state’s assorted government fees.
A lifelong voter, Castañeda said he doesn’t have much faith that Congress will be able to kick start an economic recovery anytime soon.
“I don’t think the politicians care about us small people,” Castañeda said.
Staff Writer, Copy Editor Julio Morales can be reached at 760-337-3415 or at jmorales@ivpressonline.com
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