The U.S. is quickly approaching the “fiscal cliff,” a combination of tax increases and spending cuts that will take effect early next year unless a number of laws are changed.
The current deficit of $1.1 trillion could increase to $200 billion over the next 10 years if there is no change in current laws, according to the Congressional Budget Office. The increase in taxes would largely come from a combination of the Bush era tax cuts and Social Security tax cuts ending.
“Tax increases have to be done sooner or later,” Jeff Huang, a sophomore finance major, said. “We can’t afford spending cuts that would make a noticeable difference in the deficit”
If lawmakers make changes to existing policies to extend current tax rates and prevent spending cuts the deficit would increase to 90 percent of the nation’s annual output in 2022 and continue to rise, according to Congressional Budget Office predictions.
“I think it’s an example of American politics gone awry. We need some bipartisanship to overcome it.” Noah Berman, a sophomore double major in finance and Spanish, said. “There is plenty of unnecessary spending but we need revenue. If it needs to come from taxes, it’s just the way it is.”
If the laws are not changed and the deficit is reduced, the economy is expected to shrink. Unemployment is projected to reach 9.1 percent by the end of 2013 and the gross domestic product is expected to drop by 0.5 percent, according to the Congressional Budget Office.