If a fiscal cliff aversion deal was not reached, $536 Billion in tax increases would have initiated along with $110 Billion in spending cuts.
Republicans compromised their tax stance. Around one third of republicans voted for the bill which raises taxes on individuals making $400,000+ or couples making $450,000+.
New Year’s night the house passed final approval with a vote of 257 to 167. Less than 24 hours earlier, the senate passed the bill with ease.
Instead of “falling off of the cliff” the nation has begun to slide down the fiscal cliff. Instead of an automatic probable recession, it now seems to be a gradual one. Raising taxes on the wealthiest will hurt the unemployment rate in America. With the wealthiest being taxed more, they will have less resources to hire people, and maintain their current employees.
One of the main concerns from the GOP is that the bill was all about increasing taxes and not about decreasing spending.
According to CNN “The deal delays the sequester, a series of automatic cuts in federal spending, for two months.” So, in theory, the Fiscal Cliff issue is not completely resolved because the spending cut aspect has not been dealt with. The upcoming spending cuts are to be divided between defense and non-defense spending.
Initially the U.S. Dollar showed weakness since the open of the market. Since a deal was made, sentiment may be decent for the U.S. Dollar, but if the majority start to realize how bad of a deal was reached, we could continue to see U.S. Dollar weakness in the coming weeks.
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