We aren't exactly visualising scenes from the blockbuster flick Armageddon here but the subtle patterns are hard to miss. Now figure this.
The scene of action is The United States of America; as always! A bunch of know-it-alls in starched pinstripe suits deliberate the future of the Earth. They'r just the talkers. Oops! "Policy Makers" that's what they are called, to use some correct political jargon! However, the real movers are a crack team of oil drillers hired by the top brass to save the Earth.
Well the plot seems fit for the silver screen and we'll let it be just there. What the American businesses can't afford right now is to rely on such Harry Stamper's and A.J's to burst into a last minute rescue.
Alarmist metaphors like "fiscal cliff", "fiscal slope" and "fiscal curb" are like stink bombs for the American public and businesses. No matter who currently sits on the political hotseat at White House, when it comes to policy, especially government spending and tax cuts, no one really understands what the topguns are actually working towards.
More so the common man on the street. He votes, puts his trust in the educated reps to do the right thing but the reality is different. No one has a clue what's going on.
When you don't know what the problem is how can you actually find a cure!!
So here's our simple take on what the hullabaloo is about.
Fiscal cliff was coined by Federal Reserve Chairman, Ben Bernanke for the Bush-era policy changes as regards taxes and government expenditure that will come into force from 2013. The so-called logic for the move is to bring in more revenues by increasing the tax burden on the consumers and businesses and reduce the overall government spending, amounting to as much as $109 billion annually for the next decade.
Well that's a normal economic act yet sparks are flying on either side of the political spectrum. Why?
Financial expert, Mike Periu explains that "Conservatives are concerned about the fiscal cliff because it will cause hundreds of billions of dollars in new taxes. Liberals are concerned because it will lead to hundreds of billions of dollars in reduced government expenditures."
To say it plainly, the government is going broke, with spendings more than earnings. So who bears the consequences? The public, who are being asked to adopt a minimalist lifestyle. The ambigious experiment with the laws is sure to hit an economy that thrives on consumerism and a strong middle class. And when this section is served the 'uncertainity pie', its a recipe for instant disaster.
In other words, if the situation prolongs it will tag along more ghosts with it:
High Taxes = Production Optimization = Lay offs/Unemployment = Fall in Growth = Slowdown = Recession
If you are an entrepreneur, questions such as what can i do to expand my venture or is it safe to hire more staff to increase the performance will haunt you. Well its a genuine concern in the light of uncertainity that's trickled down from the top. When you just don't understand what your actual tax bill will be, you really cannot sit down to chart out long term goals for your enterprise.
A letter, co-signed by 600 businnesses affiliated to the American Business Sustainable Council, sent to the Congress clearly sums up the views of the fraternity.
“Those who claim that tax cuts help small businesses are guilty of identity theft”So what can the government and businesses individually do? Well neither party can opt for an all out attack or compromise. Loosing out on most of your hard earned profits for the 'larger good to happen", well that's how taxation actually started off in the first place, its certainly not a "bottom's up" feeling you'll have. Consensus seems a far reality as of now.
Watch the video below for more insights.
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