Posted: Jan 2, 2013 5:32 PM by Tony Spehar - firstname.lastname@example.org
Updated: Jan 2, 2013 8:29 PM
It came down to the last minute, but Congress reached an agreement to avoid the automatic spending cuts and tax increases known as the "fiscal cliff" on Tuesday night.
Even after months of hearing about the fiscal cliff many people in downtown Colorado Springs, like Antonia Casillas, were still confused about what exactly the impact would've been on Americans.
"The few things I hear about it are just that it's going to affect the economy badly and everyone else badly," Casillas described.
Even with a deal to resolve the fiscal cliff finally done after months of political debate, the situation was still confusing on Wednesday afternoon.
"It just gets frustrating so you don't want to hear about it anymore," Casillas explained.
But experts say it's much simpler to give advice now that we know what will happen in the future with lawmakers coming to a final agreement.
"Everybody's going to see a two-percent boost in the social security tax," explained Craig Cranick, a certified financial planner. "That happens no matter what."
The social security tax automatically taken out of paychecks will increase by two-percent for every working American. Cranick estimated that for the average person that means they will be paid about $20 less a week.
The other big impact will be on those trying to file their taxes in the first few months of 2013. With the fiscal cliff deal just passed the Internal Revenue Service will spend the next few weeks writing new tax law, which will cause delays in filing and refunds.
"So people who are depending on refunds may find that those refunds are delayed 30 or 60-days," Cranick explained.
For the most part the fiscal cliff deal won't have a big impact on the average person in Southern Colorado. Additionally the deal, specifically avoiding automatic spending cuts, will be good for El Paso County.
"We stood to lose 2500 troops at Fort Carson if the planned cuts had taken affect," described Dr. Fred Crowley, an economist and professors at University of Colorado Colorado Springs. "But that's not going to happen this year. "But that's not going to happen this year."
Dr. Crowley said he was optimistic that avoiding spending cuts that would affect Fort Carson, an essential part of the economy in El Paso County, will give local leaders a chance to diversify the local economy. Military spending cuts could be on the way as Congress is set to begin debating the federal debt ceiling, but Crowley explained that further economic debate will allow cuts or tax increases to be implemented gradually rather than immediately.
"The fiscal cliff issue was everything happening at once, which would be chaos to the economy," Crowley described. "If we stage it in an orderly manner that will be OK."
Congress is expected to take up debate on the debt ceiling as soon as new members are sworn in. On Wednesday Moody's Investors Service said Congress needs to act quickly on deficit reduction or face a crucial credit rating downgrade.