The latter factor has been and will continue to be hotly debated. Many Republicans have resolved (or signed a pledge) to not permit any tax increases. While closing loopholes is on the agenda for both parties, Democrats argue that the necessary funds can’t be raised without new revenue streams, i.e. a higher tax rate for the wealthy.
Meanwhile, spending cuts will also be on the table, with the Democratic party this time playing defense. While Obama has alluded to a willingness to engage in more serious cuts to entitlements and consider strategies such as bumping the qualifying age for Medicare up to 67 years old, there is still a huge amount of disagreement over how much spending should be cut from what areas.
The one thing that both parties agree on is that taxes should not increase for the 98 percent of Americans who earn less than $200,000 per year. With the best interests of the middle class in mind, politicians will hopefully work toward a solution that prevents America from tripping over the fiscal cliff. While deep reform is necessary to fix the nation’s problems, it’s a short-term solution that will likely emerge in the coming weeks. The long, dreary road to full economic recovery will likely see action in 2013, after imminent financial collapse is (hopefully) avoided.
Following the post-election trend, U.S. equity markets are finished lower for the week. The Dow dropped 1.77 percent, the S&P dropped 1.45 percent, and the Nasdaq dropped 1.78 percent.
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