Bellringer 1/2

On December 31, 2012 at midnight, the house approved of a bill that would end last year's temporary payroll tax cuts. At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect. The Senate version passed two hours after the deadline, and the House of Representatives approved the deal 21 hours later. The governement techincally went "over the cliff" since the final details weren't established until after January 1st. The Congressional Budget Office estimates that current plan includes $330.3 in new spending during the next ten years, and it will increase the deficit by $3.9 trillion in that time period despite raising taxes on 77.1% of U.S. households. The agreement currently on the table raises tax rates to 39.6% from 35% on individual with income of more than $400,000 and on couples with incomes of more than $450,000. It also lets the 2% payroll tax cut expire and delays spending cuts for another two months. Unfortunately, the fiscal cliff isn't the only problem facing the United States right now. At some point in the first quarter, the country will again hit the "debt ceiling" - the same issue that roiled the markets in the summer of 2011 and prompted the automatic spending cuts that make up a portion of the fiscal cliff.